Typifying a growing trend in the independent advisory industry, two big California wealth management firms–Kochis Fitz of San Francisco and Quintile Wealth Management of Los Angeles–announced that they will merge their two firms into a new entity, effective January 1, 2008.
Kochis Fitz/Quintile’s 68 employees will manage or advise on more than $5 billion in client assets, will have as clients 385 individuals and families, and will be headquartered in San Francisco.
Kochis Fitz co-founder and CEO Tim Kochis will serve as CEO of the merged firm until sometime in 2009 when
Rob Francais (pronounced “Francis”), a Quintile co-founder and its current CEO, will succeed Kochis.
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With the naming of 18 new principals from both Kochis Fitz and Quintile as equity participants in the combined firm, Kochis Fitz/Quintile will have 32 employee-owners. That will allow the firm to finance future growth, according to Kochis, without relying on third-party capital.
Both firms had been approached by banks and brokers and rollup firms, Kochis says, and both wanted to expand into different cities. Each had considered merging or acquiring other firms, too, but the cultural fit wasn’t right. However, beginning with a lunch in Los Angeles that Kochis had with Quintile co-founder Bob Wagman in January of this year that morphed the same day into a longer discussion with Francais, “it became clear in a very short period of time,” Francais recalls, “that this was a very strong strategic growth opportunity for both firms.”
IA Editor Jamie Green interviewed the men in mid-November.
Rob, you say that one of the drivers of the merger was that it would help you retain your talent. Why?
Francais: Talented people want to grow their careers. Both firms were successful at attracting the right talent, but retaining them for a long period of time–like until they could retire–and establishing a model by which they could see themselves growing their career, growing their own wealth–well, it’s a model from beginning to end.
Kochis: Our people are financially very sophisticated. So it doesn’t take them very long to start thinking, ‘What does it mean for me?’ Not only how do I have a very rewarding professional experience, but how do I create a reasonable opportunity for financial success? So having a firm that has the very credible opportunity to remain independent and continue to grow is a better alternative than taking your chances with some bank’s stock options.
Almost half of the employees in the new firm will be part owners, correct?
Kochis: Right; it’s a pretty dramatic growth opportunity. With that large pool, people that range in age from their late 20s to their early 60s will have a very robust internal transfer opportunity. It will be possible for the ownership of the firm to continue to circulate, so that the people who are in their 20s today can look forward to their 20- or 30- or 40-year careers and there will be opportunities in the future for people . . . to take their place–eager and willing to buy their ownership interests.
Who are these owners–all advisors?