Brookstone Capital Management and FormulaFolios, two turnkey asset management platforms, or TAMPs, have agreed to merge and create one of the largest in the U.S. with over $6.5 billion.
The companies announced the deal on Wednesday and the new company will be called Brookstone Capital Management. Terms of the deal were not disclosed.
The merger is the latest deal in a part of financial services where consolidation has been expected. In June, Genstar Capital, a San Francisco-based private equity firm with a long history of investing in wealth management companies, said it purchased a stake in Orion Advisor Solutions and planned to merge it with $24.5 billion Brinker Capital.
With over $6.5 billion, the new Brookstone will be one of the industry’s largest TAMPs. But it will still be small compared to others, in terms of assets. The three biggest TAMPs — Envestnet, SEI Investments and AssetMark —account for almost 60% of the estimated $524 billion market.
Chicago-based Brookstone, founded in 2006, provides fee-based asset management services to a network of over 400 financial advisors and firms with $2.95 billion. It is an “open-architecture” TAMP and offers advisors a variety of investment strategies.
In July of 2019, Brookstone partnered with AmeriLife Group, a company that develops, markets, and distributes life and health insurance, annuities, and other retirement planning solutions. (AmeriLife’s own business network includes 150,000 insurance agents and advisors from other companies, and 25 marketing organizations.)
AmeriLife is backed by Thomas H. Lee Partners, a private equity firm that has raised more than $25 billion of equity capital and also owns a stake in Hightower, a large RIA in Chicago.
FormulaFolios was founded in 2011 and manages $3.64 billion. The TAMP, which has offices in Grand Rapids, Mich. and Costa Mesa, Cali., uses algorithms to “eliminate emotion from the investment processes” and help advisors manage portfolios. Its founder, Jason Wenk, is also the founder of Retirement Wealth Advisors, a private wealth management firm, and Altruist, a digital, commission-free custodian for RIAs that launched earlier this year.
Together, the new company will have more than 100 employees who will continue to work out of offices in Chicago, Grand Rapids, and an office in California.
Five key executives plan to stay after the merger: Dean Zayed, who founded Brookstone, will be the CEO; and Jason Wenk will be the executive director. In addition to the two founders, Darryl Ronconi will be the president and chief operating officer; Jason Crump will be the vice president of Relationship Management; and Joel VanWoerkom will serve as the vice president of Operations at Brookstone. Zayed will continue to be the president of AmeriLife’s Investment Advisory Services division.
“Brookstone and FormulaFolios have consistently been the top two considerations for retirement advisors seeking an RIA partner supportive of their planning philosophies. It was a natural fit for us to come together as one. Now, advisors can gain access to all of the leading programs and resources each of our companies have to offer,” Zayed said in a statement about the deal.
