Leading wealth managers to merge
Two of California’s largest independent financial advisory firms will announce today that they’re merging, in a move they say is a first step to going national.
The companies -- Los Angeles-based Quintile Wealth Management and San Francisco-based Kochis Fitz -- say their combined $5 billion in client assets will make the new firm one of the nation’s biggest wealth advisors not owned by a bank or brokerage.
Each firm oversees about $2.5 billion for well-heeled investors. But their client bases are substantially different.
Quintile is a so-called multi-family-office advisor. Its clients are 62 wealthy families, most of which have the firm’s 35 employees handle their investments as well as estate and tax planning and an array of other personal services.
Kochis Fitz, with a staff of 33, provides financial advice and management to about 320 corporate executives and other affluent individuals.
Tim Kochis, the 61-year-old chief executive of Kochis Fitz and a longtime leader of the independent advisor industry, said he had been looking for a way to expand his business while preserving its status as an independent firm -- as opposed to selling to a major bank or brokerage that has in-house products to pitch.
Kochis said talks with Quintile began in February, and he quickly saw that “for the most part the cultures of our two firms are very similar.”
Quintile Chief Executive Rob Francais, 42, said the businesses complemented each other. Quintile’s wealthy families, he said, would benefit from Kochis’ expertise in areas such as managing stock portfolios for executives.
Kochis’ clients, Francais said, would have access to the legal services, estate-planning advice, philanthropic consulting and other services that Quintile provides.
The multi-family-office wealth advisory business is an expansion of the way the super-rich have long conducted their financial affairs. Individual families often have employed a staff to manage all aspects of their wealth.
Over the last few decades multi-family offices emerged, representing, in effect, a pooling of management resources by families that may not have been Rockefellers but had substantial wealth nonetheless.
As a family’s net worth expands, “financial products take a back seat to things like giving back to the community and wealth issues for the kids,” Francais said.
Most of Quintile’s clients, he said, “now have more wealth than they can possibly imagine consuming.” Advising people at that level of affluence “is a service business, not a product business,” Francais said.
Quintile’s average client has assets of about $50 million, the firm said. At Kochis Fitz, the average client has about $7 million in assets, Kochis said.
Kochis and Francais said their long-term goal was to take the business national.
“We want to become the largest independent wealth-management firm in the country,” Francais said.
The combined firm, which will be owned by 32 of the total 68 employees, will be known as Kochis Fitz/Quintile. Kochis will serve as CEO of the company until mid- to late 2009, when Francais will succeed him, the two executives said.
Quintile’s roots go back to 1999, when its partners ran the L.A. office of a financial advisory business called MyCFO. When that operation was sold to Harris Bank in 2002, the L.A. partners chose to stay independent and formed Quintile.
Before he joined MyCFO, Francais, a certified public accountant, worked for the accounting firm Deloitte & Touche.
Kochis Fitz was founded in 1991. Tim Kochis has been one of the guiding lights of the financial-planning industry. He helped oversee the creation of the exam used to qualify candidates for the certified financial planner designation.
Kochis has been included in Worth magazine’s list of the top 100 U.S. wealth advisors every year since 1994.
