Rise Growth Partners, The RIA investment company was launched earlier this year by former United Capital CEO Joe Duranhas made its first investment in taking a minority stake in Bleakley Financial Group, a hybrid registered investment adviser with about $10 billion in client assets.
Duran said his firm invested more than $50 million. This follows news in February that the Growth Increase raised more than $250 million in funding from its management team and Charlesbank Capital Partners, the middle-market private equity firm that also backs Lido Advisors. Charlesbank will take a majority stake in the new company.
Last September, Duran, who sold his company, United Capital, to Goldman Sachs in 2019, revealed details about his new venture. He said Rise Growth would acquire roughly a 30% stake in next-generation RIAs with between $1 billion and $7 billion in AUM. In return, it will provide capital and growth resources to help the firms become national RIA platforms with $10 billion or more in assets.
Bleakley is, of course, outside of that target, and Duran says that after talking to dozens of firms throughout this process, his company will now target RIAs with $3 billion to $8 billion in assets.
“What I realized is under $3 billion, these firms don't have the platform to scale and typically haven't made the necessary investments, they don't have the leadership team,” Duran said.
During the search, Duran was looking for firms with three things: a strong leadership team that can think big, a scalable platform that has already invested in technology, customer experience, centralized investment and planning, and a growth strategy.
“Finding the combination of the executive team, the platform and the growth strategy — I just think it's hard to find under $3 billion,” Duran said.
Fairfield, NJ-based Bleakley was founded in 1985 by twin brothers Scott and Andy Schwartz as a practice affiliated with Northwestern Mutual. In the near decade since leaving the insurance firm, Bleakley has grown significantly, primarily by recruiting 1,099 advisers to the platform. After leaving Northwestern Mutual, the practice joined Private Advisor Group, a supervisory jurisdiction office of LPL Financial. But they decided to launch their RIA in 2022, maintaining the connection with LPL. About 98% of the firm's business is advisory.
The firm is now 100% owned by four partners, Scott and Andy, Michael Axelrod and Jack Cooney. This is the first outside capital they have received.
“The reality was that, over the last three years, a lot of people have been attacking us — some big firms, private equity firms — all good quality firms,” Andy Schwartz said in an interview with WealthManagement.com.
“We wanted more than money because it wasn't about how much money we could make right now,” Andy said. “We wanted expertise. We wanted people who are really great, at the top of their game, that I couldn't afford to put our P&L on. Joe assembled an outstanding team of professionals.”
The founders retain control of the business, but the investment allows Bleakley to introduce an equity ownership program for its advisers.
“Rise was able to come in and show us how to create an economic structure where all these 1099s, if they choose, can become partners,” Andy said. “The counselors we've recruited over the years now, we can do the same.”
Advisors who enter the program will participate in any type of liquidity event that may occur in the future.
Bleakley will continue to grow through recruitment, but Rise Growth's investment will also allow the firm to enter the M&A game for the first time. Rise Growth will help fund any deals Bleakley pursues.
Duran had originally said Rise Growth would invest in six to eight RIA firms, but he says it will probably end up at about four, given the time and energy they need to commit to each.
Duran has been building his management team over the past few months. In October, he brought Terry Kallsen as managing partner and team leader of the operating partnership. In April, the firm hired Stacy Coffeya former senior vice president of wealth strategies at Wealth Enhancement Group, as managing director and head of advisory partnerships.
He too caught by Will Armentaa co-founder of Opto Investments, earlier this year as managing director, working alongside Brian Shenson, managing partner and COO, to help firms fill gaps in their existing technology and operating platforms. In June, he added Jennifer Geoghegan as its chief marketing officer and Tony Ling as managing partner, investments, and last month, he brought on Ryan Beck, former director and head of partner integration at Sanctuary, as vice president of advisory partnerships, according to his LinkedIn profile. Beck previously worked with Duran at Goldman Sachs Personal Financial Management.
Rise Growth is one of a handful of new firms focused on taking minority stakes in RIAs. Karl Heckenberg, former CEO of Emigrant Partners, launched his own private equity firm, Constellation Wealth Capital, in late 2023.
In June, Jim Dickson, founder and former CEO of Sanctuary Wealth, announced launch of Elevation Pointan investment firm he says will take minority stakes in RIAs with $200 million to $3 billion in client assets and help those firms grow. Working with Mark Penske, founder and chairman of United Atlantic Capital and son of legendary race car driver and team owner Roger Penske, Elevation Point acquired Mount Yale Capital Group, an RIA and Chief Investment Officer with $3.4 billion in assets under management, to build the firm's infrastructure.