Schwab to Buy Dividend Manager ThomasPartners for $85 Million

The Wellesley, Mass.-based separately managed account provider has $2.3 billion in AUM

(Photo: AP) (Photo: AP)

No signs of slowing in the dividend space.

Charles Schwab Corp. announced on Monday it will acquire dividend-focused money manager ThomasPartners. The deal includes an upfront payment of $85 million in cash and the opportunity for additional payments depending on future growth in ThomasPartners’ assets under management, according to Schwab. The deal is expected to close during the fourth quarter.

ThomasPartners, based in Wellesley, Mass., has $2.3 billion in AUM as of Sept. 30, “in largely growth-oriented investment portfolios designed to generate dividend income streams.” It claims to have outperformed its benchmarks over the nine-year history since the introduction of its dividend product.

“There is a growing interest among investors and investment advisors in the growth-oriented dividend income approach that is ThomasPartners’ core focus and expertise,” Walt Bettinger, Schwab’s president and CEO, said in statement. “With more than 4 million baby boomers entering retirement age each year in the United States, and tens of millions approaching that milestone over the coming decade, a rapidly growing segment of investors and investment advisors are focusing on producing income within their investment portfolios.”

Post-closing plans include:

• The CEO and chairman of ThomasPartners, Gregory Thomas, and his investment team led by president, chief operating officer and chief investment officer William McMahon, will remain with the firm in order to maintain and oversee the investment and portfolio management processes in place today.

• Its money management solutions will be made available at a lower cost to clients of independent RIAs through the Schwab Advisor Services platform. At closing Schwab will waive transaction commission costs for ThomasPartners’ managed accounts custodied on Schwab’s Advisor Services platform.

• ThomasPartners’ portfolios will be offered to Schwab retail clients as part of its growing selection of advisory solutions, which include Schwab Advisor Network, Windhaven Portfolios, Schwab Managed Portfolios, Schwab Private Client, and access to third party portfolio management. Assets in advised accounts at Schwab have grown steadily over the years and today stand at $124 billion. After closing, ThomasPartners will no longer directly market to individual investors.

 “We have worked together with Schwab since 2001, with more than half our assets currently custodied on Schwab’s Advisor Services platform, and we are excited to be joining such a great company,” added Gregory Thomas, chairman and CEO of ThomasPartners. “We believe the stars are aligned for a growing demand for the kind of money management approach we deliver, and Schwab’s large national footprint, wonderful reputation and growing client base will enable us to reach a vastly larger potential pool of investors.” 

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