Sawtooth eyes new capital to stay competitive in TAMP marketplace

Turnkey asset management platform Sawtooth Solutions is eyeing an influx of new capital to increase resources, as competitors, like Orion and Brinker Capital, have consolidated in recent weeks.  

The $12.5 billion firm brought on Echelon Partners as its investment banker, as the TAMP looks to land the dedicated capital it feels is necessary to increase scale and stay competitive.

“We are helping them explore strategic growth options — in any form that may be,” said Michael Wunderli, managing director at Echelon Partners. 

Sawtooth is looking at handful of options to ramp up capital, as was first reported by Citywire. However, the firm is likely to avoid a full buyout, in favor of a minority investment, according to a source familiar with the matter. Those potential partnerships include deals with other TAMPs or with a private equity firm, the source said.

The market has been flooded with consolidations as smaller TAMPs look to partner with larger institutions. In late June, Orion Advisor Solutions, for one, merged with competing turnkey asset management platform Brinker Capital to create an investment management firm and technology provider with approximately $40 billion in managed assets.

Mergers open up potential opportunities for the combined companies to attain the scale necessary to join the ranks of TAMP powerhouses like Envestnet, SEI and AssetMark in terms of assets, according to Alois Pirker, research director for Aite Group's Wealth Management practice.

Consolidation in the TAMP market is likely to continue, Pirker said. “The TAMPs left that are not in the top three are likely asking themselves the same thing as Sawtooth: ‘Who can we partner with or align with from an M&A perspective in order to scale,” he said.

Sawtooth already has an integration with Orion Advisor Solutions. 

“We are going to see a lot more TAMP deals come through as advisers look to have their entire tech stack under one umbrella,” Pirker said.