Dynasty Financial launches investment bank to capture a piece of the RIA M&A market

Dynasty CEO Shirl Penney

The new Dynasty Investment Bank will cater to buyers and seller regardless of whether they're part of the Dynasty partnership network.

Dynasty Financial Partners is expanding its footprint in the RIA space by launching an investment bank that’s geared toward supporting merger and acquisition activity in the financial advisory space.

In some respects, the new Dynasty Investment Bank is just putting an official brand on some of the services already offered by the diverse St. Petersburg, Florida-based back- and middle-office platform provider.

But Dynasty Chief Executive Shirl Penney insists the investment bank will help differentiate Dynasty from the industry consultants that can’t offer the same level of investment banking services as a firm affiliated with its own broker-dealer and with access to capital.

“I’m not sure how many pure-play RIA investment banking businesses there are with the comprehensive services we have,” Penney said. “If someone comes to us and wants to sell, we know what they need to do from a practice management standpoint to maximize the value. And on the buy side, maybe they need financing, and we have full financing capabilities.”

Penney said Dynasty is debt-free and “flush with capital” following its sale of minority stakes to Charles Schwab Corp. and Abry Partners in December.

Dynasty has $75 billion on its platform, which includes 50 partner firms and 325 advisors. It offers affiliated RIAs access to an integrated technology platform and has $38 billion on its turnkey asset management platform.

The investment bank, Penney said, was the missing piece.

“At Dynasty, we are facing substantial demand for M&A and investment banking services from advisors in our network and outside our network,” he said. “Whether a CEO desires to acquire an RIA or tuck in a group of advisors, wants to explore selling their business or is seeking a valuation to understand the value of their equity, RIA management teams seek high-quality and objective advice.”

[More: Rising rates, falling revenue will dramatically change RIA M&A activity in 2023]

Chuck Failla, founder of Sovereign Financial Group, described Dynasty’s investment bank as “another example of the amount of demand there is for all things RIA.”

“At face value, I see this as an additional resource for those looking to do something in the RIA space,” Failla said. “However, as with many resources in our industry, it will be important for people to look for potential bias. Whenever there is a solution designed to deliver advice that is owned by a potential beneficiary of that advice, one must be aware.”

By officially launching an investment bank, Dynasty is leveraging its capabilities to participate in the white-hot consolidation trend in the RIA industry, which is on a decade-long streak of setting new records.

“The independent wealth management industry has accelerated its pace of consolidation and maturation over the last decade,” said Harris Baltch, head of Dynasty Investment Bank.

“The headwinds of aging advisors, the valuation gap of succession and a higher interest rate combined with the influx of different capital providers and a multitude of business models will create a long runway for consolidation in the years to come,” Baltch said. “We believe this will create significant opportunity to provide independent, objective advice to CEOs, management teams and investors to execute M&A from start to finish.”