With private equity ownership now being a major factor in North American wealth management, the chances that some of these businesses could see investment "shifts" means that advisors should be prepared, a new report says.

Wealth advisors thinking of moving to a new firm must understand which of their potential new businesses are backed by private equity and potentially near an ownership change, a report says.

AdvisorPro, a business tracking ownership and timelines in the sector, has outlined a list of firms most likely to have an “investment shift” in 2026.

The firm cautioned, however, that its analysis is “not a prediction of future transactions; it is a compilation of firms that have reached this criteria in their PE journey.”

As regularly noted by Family Wealth Report, private equity ownership is a major factor in North American wealth management. In September, FWR looked at the strategy of Focus Financial Partners (Clayton, Dubilier & Rice), to give a prominent case. In December,  FWR examined the sudden exit of CEO Michael Nathanson from Focus, after less than two years in the job.

The AdvisorPro report noted the following firms that might, based on publicly available Form ADVs, “be experiencing an investment shift this year”:

Osaic Wealth (Reverence Capital Partners); Rockefeller Capital Management (Viking Global Investors); Wealth Enhancement Advisory Services (Onex and TA Associates); Janney Montgomery Scott (KKR); W1M Investment Management (Lovell Minnick Partners); Beacon Pointe Advisors (KKR); Hightower Advisors (Thomas H Lee Partners); Mercer Advisors (Oak Hill Capital Partners); Edelman Financial Engines (Hellman & Friedman); and Lido Advisors (Charlesbank Capital Partners).

“Advisors who are currently employed at a firm whose PE backing may be changing should brace for changes potentially in ownership and/or available resources,” Hesom Parhizkar, co-founder of AdvizorPro, said in a report issued this week.

“For those attempting to transition into a firm whose ownership is changing – perhaps wait until that firm’s PE backing has been solidified,” Parhizkar continued. “Or certainly at least ask about this during interviews to ensure there will be firm footing at the new firm. This PE transition period is also a notable time for asset managers and service providers as these instances are typically tied to vendor evaluations and platform investments.”

The private equity factor
The way that private equity ownership affects thinking of whether to join or move from a firm has become a more significant consideration in recent years. According to ECHELON Partners, an investment bank catering to the wealth sector, during the third quarter of last year, private equity firms were involved, either directly or as a sponsor of a strategic acquirer, in about 72.8 per cent of all year-to-date deals. The percentage of strategic acquirer deals involving a PE-backed buyer reached 75.4 per cent in the quarter.

A debate that continues is whether such owners, who typically want to achieve a profitable exit five years after the initial stake, have the patience for running a professional services business designed for long-term client relationships spanning decades. On the flipside, it might be argued that infusing capital to support growth is important as regulatory and technology demands rise amidst a multi-trillion transfer of wealth. Another consideration is that the listed ownership route has its challenges, imposing short-term shareholder pressures on firms to deliver fast results. Focus Financial, mentioned above, went private in August 2023, prompting thoughts from FWR here.

Parhizkar said that the information can show private equity firms and RIA aggregators where consolidation conversations are more likely to occur.

“As many players from wealthtech providers to aggregators and others watch if and how these situations will unfold, investment shifts will provide a clearer picture of the industry’s dynamics,” Parhizkar added.

(Editor's note: It should be noted that the firm's list of firms as mentioned in no way implies that they are likely to go through a change. It is important, at a time when ownership models of wealth management are changing and an important topic, to take note of how the dynamics play out.)