As many asset managers see a waning business in providing investment guidance to pension funds, endowments and other institutions, more are turning to financial advisors as their next big opportunity.
Processing Content
That’s a market niche Clark Capital Management has concentrated on since its founding in 1986. CEO Brendan Clark said that his father, Harry, started the firm after leaving a role as a financial advisor at Merrill and placed an early priority on helping other advisors run their businesses.
Today, the firm works with more than 11,000 financial advisors managing nearly $50 billion in client assets, offering investment guidance, estate planning, tax planning and other services designed to allow advisors to function as a “mini virtual multifamily office,” Clark said.
As many asset managers move into advisor services, Clark said his firm’s experience in the channel has positioned it to benefit from the shift.
“We have seen that wealth opportunity explode in growth,” Clark said. “We’ve been fortunate to focus on that intermediary wealth space, retail wealth space, for our entire 40-year history.”
READ MORE: Managed accounts ramping up tax alpha services: Cerulli
Clark joined Clark Capital Management in 2001, working initially as a wholesaler offering the firm’s products and services to financial advisors. His promotion to the CEO position came in 2017.
Clark Capital Management
Among the many changes he’s since overseen was the firm’s sale this year to Raymond James. The acquisition brings many benefits to Clark Capital, he said, not least an affiliation with a deep-pocketed owner.
“For the first 39 years of our existence, we were self-funded,” he said. “We essentially had a startup mentality for a long time. It takes a lot to hit that escape velocity and go from a couple of hundred million right at our start to $50 billion today.”
Clark spoke with Financial Planning about why more asset managers are targeting advisors, how Clark Capital has changed over time and what the recent acquisition by Raymond James means for the firm’s future.
This article has been lightly edited for clarity and length.
Financial Planning: How has your business as an asset manager working with financial advisors changed over the years?
Brendan Clark: Originally, we were a lot like most other asset managers, saying, “Hey, we have a great product. You should use it in your portfolios.”
A lot of the earlier phases of Clark Capital was building out the individual product capabilities — in the late ’90s and 2000s — and putting that capability together in thoughtfully designed solutions for advisors to offer their clients. So rather than a financial advisor hearing 10 different stories from 10 different asset managers for 10 different products, an advisor can engage with Clark Capital and understand our holistic investment philosophy and how these different capabilities fit together.
FP: Who are your main clients?
BC: It’s predominantly inside the independent space. So think of the LPLs, the Osaics, the Ceteras of the world. They can be accessing our capabilities through the TAMPs [turnkey asset management platforms] like AssetMark, InvestNet, Orion, or directly on their home office platform, like LPL.
FP: Why is asset management becoming more necessary for financial advisors with retail clients?
BC: Clients’ expectations for a financial advisor have really stepped up over time. Advisors are in this position where clients are expecting more of them, and yet advisors have so much on their plates.
They have to go out and be client facing, and they also have to go out and find new clients to continue to grow the business. And they have to manage their own teams because they’re running a business themselves.
So we have seen a trend with financial advisors looking for fewer but more capable strategic partners to help them drive scale and deliver a great offering to clients.
FP: What sorts of services do you provide advisors beyond investment management?
BC: We launched our client portfolio management team in early 2016, and that was a mix of, hey, we think we can help advisors go up market. And in order to do that, we need to build a team of CFAs [chartered financial analysts]. Because how do you attract and retain high net worth households?
Many advisors don’t have the time to go hire a bunch of CFAs, hire a bunch of estate planners, and help them build out an almost mini virtual multifamily office.
FP: What else do advisors look for?
BC: Some advisors don’t dig into the weeds of portfolios. So we will do quarterly reviews or semiannual reviews with the advisor and their high net worth client to help them understand: What’s going on in the markets, and how does that impact the portfolio and their investments and their long-term plans?
We also do a lot of work on taxes and tax transitions. With the market at all-time highs, some advisors may have a hard time unlocking a prospective client portfolio because of the embedded capital gains.
FP: What about estate planning?
BC: Many of our advisors’ clients are getting to that age where they might want to have a liquidity event and sell the business that they’ve been running for the last 20 or 30 or 40 years.
So let’s get our estate planning attorneys in the room, because it’s important to make sure things are structured appropriately upstream before you begin even having those conversations. That will maximize the outcome for the client and provide the advisor the greatest probability of retaining those assets once that liquidity event occurs.
FP: How do you provide these services?
BC: We essentially become an extension of the advisor’s office. When our investment consultants go into an office, they present a team of 10 people.
Or when advisors come into Clark Capital’s office, they may ask: “Where’s my estate planning attorney? Where is my lead client portfolio manager? I want to meet with my tax transition specialist. I want to give them a thank-you for that phone call last week when Facebook took that big dive, and you proactively sold that position to realize that loss.”
It’s those kinds of white-glove touches that the full team of 10 provides to advisors.
FP: Where does Raymond James come into all of this?
BC: With the Raymond James combination, we have become the seventh investment boutique inside Raymond James’ investment management business. We are a wholly owned subsidiary. But we are the same people, running the same brand.
Raymond James was attracted to Clark Capital because of the wealth-focused asset management capability we bring to the table. And we previously had not been on Raymond James’ platform, so that opens up a whole host of new opportunities for us. Now we’re backed by the resources of a Fortune 400 company.
FP: Raymond James’ wealth business competes with a lot of your other clients. How is that going to work out?
BC: Listen, that’s one of the reasons why we’re keeping our brand, because we are going to continue to focus on delivering our tremendous value. A small number of our partners really wanted to double-click on that and understand that.
So we had those conversations. And the result was: “Congratulations. We look forward to continuing to grow our partnership with Clark Capital.”
