Our US correspondent delves into the exit of Focus Financial Partner's CEO, the possible reasons around it and what the next stage will be for this firm, now owned by private equity.

Michael Nathanson’s sudden exit as Focus Financial Partners CEO, less than two years into the job, and in the middle of a major company restructuring that is far from completed, has left the RIA’s advisors and industry executives surprised and puzzled.

“It doesn't track that he would step down this quickly,” said one industry executive. “Michael is highly regard and well respected,” said another. “The timing seems odd, and the announcement seems vague.”

Nathanson, 58, (main picture) the longtime CEO of Boston-based The Colony Group, was named Focus CEO in April 2024, following the RIA’s acquisition by private equity firm Clayton, Dublier & Rice and minority partner Stone Point Capital in 2023. (See another analysis of the deal, written in September.)

One of the largest RIAs in the US, Focus’ RIAs have just under $200 billion in AuM, and the company says it has “more than $520 billion in collective client assets” spread over all its subsidiaries.

Focus did not respond to questions from FWR about the timing of Nathanson’s exit as CEO.

Network conversions hold key
Nathanson was tasked with a daunting assignment by CD&R operating partner Dan Glaser, known as a no-nonsense executive and turnaround veteran, who was Focus’ interim CEO: convert and consolidate as many of the RIAs’ nearly 90 semi-independent “network” firms into fully owned “partner” firms, as soon as possible.

Many in the industry think that Glaser’s assessment of Nathanson’s progress holds the key to the executive realignment leading to Focus president Adam Birenbaum replacing Nathanson as CEO in February, when Nathanson becomes chairman.

“Control PE firms often fire CEOs that are not delivering the short-term results they desire, regardless of whether the CEO is making good long-term decisions for clients and the team,” said Brent Brodesky, CEO of Savant Wealth Management.

If CD&R wasn’t happy with the pace of consolidation, “it was just a matter of time” before they made a move, said another knowledgeable industry executive.

The independent spirit of Focus’ network firms has been a longstanding issue, said consultant Alois Pirker, CEO of Pirker Partners. “As such it will take strong leadership to get people on board with the new direction. I am not sure if Nathanson or Birenbaum is better suited for that task, but I am sure CD&R must have great interest to make progress.”

Speaking at Schwab’s IMPACT conference a year ago, Glaser made clear that when a private equity firm makes an acquisition, “It always has a plan where the business will go.”

The executive realignment “implements a succession plan designed by Mr Nathanson in consultation with the board as part of the company’s long-term growth and leadership strategy,” Glaser, who is also executive chairman of Focus, said in a prepared statement.

Birenbaum’s meteoric rise
Attention now turns to the well regarded 47-year old Birenbaum, who has had a meteoric career trajectory to date. 

A graduate of Vanderbilt University and Saint Louis University School of Law, Birenbaum joined Buckingham Asset Management in St Louis as a law school intern. He became CEO of the firm, which had less than $1 billion in assets, when he was 31 years old. Buckingham became one of Focus’ earliest partner firms in 2007, and Birenbaum helped grow the company’s RIA and TAMP business simultaneously to more than $75 billion in combined assets.

Rebranded as Buckingham Wealth Partners in 2018, the firm merged with The Colony Group, helmed by Nathanson, to form a $115 billion “hub” within Focus last May. Nathanson became CEO of parent company Focus Financial Partners, taking over from Glaser. Birenbaum was named president of Focus Financial Partners and served as CEO of the Buckingham/Colony hub, Focus Partners Wealth.

“He is the right leader”
As Focus’s CEO, Birenbaum will “lead the execution of the firm’s ongoing strategic priorities, including fostering continued collaboration and consolidation across the Focus partnership,” the company said in a statement.

“Now that a strong foundation and clear strategy is in place, after consideration with the board, we determined that Adam is uniquely positioned to lead the organization through the next phase of its growth,” Nathanson said.

“This transition executes on the thoughtful succession plan we have long envisioned,” Glaser added. “Adam has been a key partner in advancing our strategic priorities, and he is the right leader to build on the foundation Michael set.”