Lisette Cooper founded Athena Capital Advisors in 1993 and was approached by interested buyers many times over the years but never sold. No suitors were a fit for the $6 billion Boston RIA, which works with only a few dozen ultra-wealthy families and institutions.
It had little reason to sell. Athena, which had 50 employees, was a tremendously successful wealth management firm, if by no other measure than its size. Only about 700 RIAs manage over $1 billion.
But things have changed over recent years. Cooper remembers a time when an RIA managing and collecting fees on $3 billion or more had the revenue to invest in itself, grow, compete and remain independent. But even with $6 billion under management, that isn’t the case anymore.
“We have a fantastic team but in today's competitive fee environment you need to be even bigger. You need to be $10 billion and larger. To have that kind of talent you need to spread [costs] over a larger asset base,” Cooper told RIA Intel.
Like Boston Advisors, an RIA that managed $2.37 billion in institutional and private wealth that split in two and sold the halves last fall, Athena faced uncontrollable industry headwinds that showed no sign of letting up and ultimately sold.
Fiduciary Trust Company International, a wholly-owned subsidiary of Franklin Resources (NYSE: BEN), announced Tuesday it had reached an agreement to buy Athena Capital Advisors, to the delight of executives on both sides. On a down day for stocks, Franklin Resources shares rose 1% on heavier-than-usual volume. The deal, whose terms were not disclosed, is expected to close in Franklin Resources’ fiscal second quarter, ending in March.
For Athena, the deal will deliver resources and technology its clientele have come to expect but it would have struggled to provide on its own. It will also be able grow its OCIO business as it wanted to and Athena clients will gain in-house trust services, which it had sought to add for some time, Cooper said.
Fiduciary Trust Company International (a different company than Boston-based Fiduciary Trust) also has much to gain from the deal. Athena was building impact investment portfolios, long before they came into vogue, aligning itself with clients’ interests, a capability it desired, according to FTCI Chief Executive Officer John Dowd.
FTCI will also meaningfully grow its assets under management to approximately $25 billion once the deal is complete. It advises on more than $75 billion.
The deal also marks an important new phase of FTCI’s “Project Snow Lion,” a three-year plan to put itself among the most competitive wealth managers. Dowd initiated the project when he became CEO of FTCI in 2016, after stints at Wells Fargo Bank and BNY Mellon. The company spent the first year researching and evaluating itself. Dowd was underwhelmed by the technology available and worried that clients would be, too. In the second year, it built a new data warehouse, proprietary technology suite, and client-facing portals.
Now, FTCI is leveraging its scale and new technology to attract financial advisors and potentially sellers. Athena is the first wealth manager FTCI has acquired since Franklin Resources bought the firm in 2001 and it plans to add more. Dowd thinks the company stands out and will win people over.
“There could be other firms out there like us. I don’t see them. I think we have a heck of an advantage,” Dowd said.