Franklin Resources’ Fiduciary Trust Co. announced two big acquisitions this month – and that is a taste of what lies ahead, executives said Thursday during an earnings call.
The New York-based wealth manager, which is wholly owned by Franklin, last Wednesday disclosed an agreement to buy another wealth management firm, The Pennsylvania Trust, which has about $4 billion in assets under management. That news followed the announcement Jan. 7 that Fiduciary Trust would scoop up Athena Capital Advisors, an RIA with $6 billion in AUM.
The two acquisitions would bring Fiduciary Trust’s AUM to about $29 billion. Fiduciary Trust has about 400 employees, according to a Franklin spokeswoman.
“This is probably the beginning of our strategy to grow Fiduciary Trust,” said Matthew Nicholls, Franklin's chief financial officer. “It wouldn’t surprise us if we doubled the size of Fiduciary Trust over the next year or two.”
The firm plans to expand further into the high-net-worth wealth management market, using more of its balance sheet for acquisitions, he said. The company expects to pay “low double-digit” multiples of earnings before interest, tax, depreciation and amortization for targets, he said.
“There are really a small handful of very focused pure ultra-high-net-worth managers,” he said. “The services you need to provide are very expensive to invest in, to retain and to have the right team to provide it. It is highly specialized.”
The company is considering targets in the $3 billion to $7 billion AUM range in several U.S. states, he said.
It sees opportunity for more business from advisers, particularly those with limited resources to invest in technology or specialized wealth management services that clients increasingly are demanding, said Jennifer Johnson, Franklin’s president and chief operating officer. In February, Ms. Johnson will succeed Greg Johnson, her brother, as Franklin’s CEO.
“There’s no question – wealth [business] is hard to grow, but it’s incredibly sticky once you have it,” Ms. Johnson said. “You’re seeing fee-based advisers trying to add more services to justify the fee that their clients pay every month. And they’re trying to add on more than just investment management.”
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