Just over a week ago, Pennsylvania-headquartered SEI purchased a majority stake in Stratos Wealth Holdings for $527 million. FWR asked SEI's CEO and other senior figures about the reasons for the deal, the outlook for wealth advisory, and more.

Nasdaq-listed SEI, which provides investment processing and management, and investment operations solutions, made a “strategic” investment in Stratos Wealth Holdings earlier in July. Stratos, based in Beachwood, Ohio, is a family of companies including affiliated registered investment advisors, operating in 26 US states and comprising more than 360 advisors. Family Wealth Report spoke to Ryan Hicke, CEO, and Michael Lane, head of asset management and executive vice president, about the rationale for the deal and where SEI is headed in the wealth management sector. Just over a week ago, SEI reported its latest quarterly results.

FWR: What is the prime rationale for this acquisition? 
Michael Lane: For more than 30 years, SEI has provided technology, operations, and investment services to independent advisors, wealth managers, and banks. Our partnership with Stratos emphasizes our commitment to helping financial advisors scale and grow their businesses, and it will provide us with important direct feedback that will allow us to enhance our wealth management ecosystem and align these services with the long-term trends in fee-based wealth management. 

With more access to the people serving end investors, we gain insight that will allow us to get smarter about how we enhance the solutions and services we provide to all financial advisors. 

FWR: What is Stratos mainly involved in, as a business, and why will adding this business benefit SEI and in which particular markets? 
Michael Lane: Stratos is both a fast-growing RIA that supports a network of independent financial advisors by providing flexible affiliation models, investment management, practice management, and other operational services. 

Stratos’ infrastructure is highly scalable; it has a successful track record of organic growth, advisor recruitment, and M&A. Our partnership unlocks operational and revenue synergies, expanding SEI’s capabilities, enhancing our offerings, and strengthening our position in the fast-growing RIA market. As consolidation continues, and fewer younger advisors join the workforce, we can provide optionality for advisors in business transitions and nurture the next generation of professionals entering the industry. 
 
FWR: What does the firm think about the purchase price for this stake – is it the kind of valuation that SEI is happy with for transactions such as this and when would the firm expect to see the benefits to its earnings come through? 
Ryan Hicke: SEI is paying $527 million for a 57.5 per cent stake in Stratos, at a high-teens EBITDA multiple, which aligns with SEI’s expectations for high-return capital deployment. Considering Stratos’s track record of double-digit organic growth, its national footprint, and the scalability of its platform, we believe the valuation aligns with other deals for RIAs with similar characteristics. 

The deal is expected to be EPS accretive based on Stratos’ current run-rate earnings, with benefits likely to start to show post-close in 2H 2025. Additionally, given the long-term focus with which we run the company, we are excited about the future growth prospects for our shareholders with this business.

FWR: There is a lot of corporate activity going on in the North American banking and wealth sector at the moment. What is your overall impression of the dynamics shaping M&A in the space today, for example the need for economies of scale, margin compression, etc? 
Ryan Hicke: We see the dynamics playing out in the wealth management space as long-term trends – not trendy moments. Firms are consolidating to gain operational leverage, reduce costs, and meet rising client expectations for integrated services and technology, so scale matters more than ever. Margin pressure is real, and fee compression across asset management, investment processing, and advisory services is pushing firms to diversify revenue and streamline operations. Advisor transitions are accelerating, creating market opportunities for acquisitions and partnerships, and scalable platforms that support advisor growth and the client experience are essential.

FWR: Is SEI's main growth strategy via organic growth, or will M&A play a significant part going forward? 
Ryan Hicke: Our business has historically grown organically. As part of our broader growth strategy and focus on delivering best-in-breed service and solutions to our clients, we consistently look for opportunities to strategically allocate capital to areas of our business where we believe we can deliver a high return on invested capital. 

Our strategic investment in Stratos is the largest in SEI’s history, but it still represents less than 5 per cent of our total market value. We’ll continue to pursue highly selective, strategic opportunities where we see strong alignment with our long-term goals, but the majority of our future growth will continue to come from enhancing our existing capabilities and expanding into new markets and client segments organically.

Michael Lane and Ryan Hicke: We believe the value of advice is more important than ever. Our investment in Stratos reflects SEI’s long-term commitment to supporting independent advisors, scaling our wealth ecosystem, and delivering high-return, strategic growth. We’re focused on helping advisors thrive in a rapidly evolving industry – through technology, operational support, and a deep respect for advisor independence.