Affiliated Managers Group takes maiden wealth management stake with Veritable deal

Affiliated Managers Group Inc. has taken an equity stake in one of the industry's biggest RIA firms, Veritable LP. Newtown Square, Pa.-based Veritable has $10 billion under management for high-net-worth clients. The deal, announced yesterday, is the first wealth management acquisition for AMG, which owns stakes in 27 boutique money managers that have a total of $338 billion under management. Its affiliated firms include AQR Capital Management LLC, Aston Asset Management LP, Third Avenue Management LLC, and Tweedy Browne Company LLC. Some of those firms already serve wealthy individuals, but the Veritable transaction represents AMG's first investment in a partner firm focused on individual clients. “Over the next decade, the wealth management industry will benefit from favorable demographic trends,” said Sean Healey, AMG chief executive, in a statement. The firm expects to see a “significant increase in the number of high-net-worth individuals and … growing demand for institutional-quality wealth advisory firms,” he said. Last June, AMG hired former Morgan Stanley executive John Copeland to head up its new wealth management unit, AMG Wealth Partners LP, and begin acquiring stakes in high-net worth firms like Veritable. Details of the Veritable transaction were not released. “Veritable's senior professionals, who have made long-term commitments to the firm, will continue to hold a significant equity interest,” according to the statement from AMG. In most cases, AMG takes majority stakes in its affiliated firms, and shares revenues with them. AMG says its business model is designed to provide incentives for affiliates to grow revenues, while they can continue to operate independently and access the resources of a larger firm. “Veritable's success is based on our firm's culture, objectivity and commitment to client service, and our partnership with AMG ensures the preservation of these core principles — now and for future generations,” said Michael Stolper, Veritable chief executive, in a statement. The deal is evidence of “‘smart money' demonstrating confidence that the independent model will continue to win,” said David DeVoe, managing partner at DeVoe & Company LLC, a mergers and acquisition consultant. The transaction should provide liquidity to the Veritable management team and help facilitate succession planning, said Mr. DeVoe, who was not involved in the deal. AMG, which had revenues of $1.4 billion last year, has been a publicly traded company since 1997. Veritable is the No. 2 firm on the InvestmentNews' rankings of fee-only firms ranked by discretionary assets under management. A spokesperson for Veritable referred a call to AMG. An AMG spokesperson was not immediately available.