Dynasty Partner TritonPoint Wealth Launches Acquisition Model
TritonPoint Wealth, a $1.8 billion registered investment advisor that went independent with Dynasty Financial Partners in 2023, has launched TritonPoint Partners, a sister RIA that will acquire advisory firms and breakaways.
The new entity is led by CEO Harold Hughes, who joins from PNC Institutional Asset Management, where he served as a senior vice president, working with pension and corporate clients’ bond portfolios and endowments and foundations OCIO clients.
Hughes said TritonPoint Wealth launched the model as a way for advisors to participate in the growth of the firm through equity ownership.
“This is a succession and value growth vehicle for advisors who want to be owners,” he said. “In order to get the steepest possible slope out of that, you start with a separate firm.”
When an advisor joins, TritonPoint Partners buys 100% of their firm. That deal is structured as a minority cash investment of about 20% and an 80% equity swap.
“That’s where that multiple increase is so important because when they swap in, as we grow, their value grows as well,” Hughes said.
Advisors come on board as W-2 employees under TritonPoint Partners’ Form ADV. Those advisors have access to Dynasty’s platform, as well as other benefits TritonPoint provides, including CFO services, human resources, payroll and bill pay. It will be a multi-custodial platform, with the ability to support Schwab, Fidelity, Raymond James and Wells Fargo’s First Clearing.
“As we get larger, we’ll be able to create liquidity for succession, other events,” Hughes said. “At some point, if there’s a sale, then our partners are going to realize quite a balance sheet event.”
Dynasty owns minority stakes in both TritonPoint entities, and it will help fund some of the transactions. TritonPoint will also fund transactions through a combination of its own capital, a debt instrument and other debt lines. It used Dynasty’s investment bank to build the structure for the new entity, and it will serve as TritonPoint’s investment bank for acquisitions if needed.
Hughes said the firm has already brought on one advisor with $270 million in assets.
Before launching, Hughes said he studied how other rollup companies work and decided to do a few things differently.
“The expenses can get out of control,” he said. “The way in which income is distributed to the advisors by way of distributions is not inherently fair, so I eliminated distributions. Instead, there’s a production model. What you grow is what you’re actually getting.”
The way equity is awarded can also be unfair, he argued, if one team is growing faster than everybody else.
“We actually have a way in which equity is awarded to those firms that are driving that so that not only is the income allocation fair—meaning the people producing more earn more—the equity allocation over time is fair.”
Part of the equity is allocated on a pro-rata basis, while part of it is done disproportionately to higher growers.
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