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Will Orion Be Sold? CEO Weighs In on Speculation

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Orion Advisor Services CEO Eric Clarke

Orion Advisor Solutions just passed the $1 trillion mark for assets under administration on its platform. It’s also nearing the five-year anniversary of its acquisition by TA Associates.

But with that private equity milestone comes talk that TA Associates could be selling its stake, according to a recent report from Barron’s. Orion CEO Eric Clarke isn’t sweating it, given the growing strength of the independent advisor channel and increasing interest in firms that serve this market segment.  

“There’s lots of talk about the next deal. We saw Envestnet and MoneyGuidePro consolidate, and then Charles Schwab and TD Ameritrade,” Clarke said in an interview Friday (as a bad winter storm approached Omaha, where he is based). “With all this activity, everyone asks what’s next, and this one [involving Orion] might be next.”

As PE and other investors look at financial services, the independent fiduciary space “is really exciting and growing,” he added. “It has good tailwinds behind it and is moving to where the puck is going. That means firms want to know how they can invest in it.”

“The independent fiduciary [channel] is growing faster than any other segment of the advisory business,” he said. 

“Naturally, it’s had lots of capital flowing into it …,” Clarke said. “We’ve benefited from partnering with one of the biggest private equity firms … in terms of resources and strategic capital needed to grow the business and independent fiduciary advisors in the process.” 

With consolidation and other pressures creating the race to zero in trading fees and competitive pricing, independent advisors are “set up to win in two areas” this year, Clarke says.

First, they can win over more prospective clients by offering them access to a custodial platform with zero trading fees and more innovative portfolios than some of their more captive, broker-dealer based counterparts.

Second, advisors now with such firms “want zero trading fees,” and they can be recruited (as “breakaway brokers”) at a faster clip than before, he adds.

Views on ‘Schwabitrade,’ New Custodial Players

But aren’t advisors in danger of losing out with two of the biggest custodians in the space — Schwab and TD Ameritrade — set to merge this year, which should lead to less competition?

There are still “formidable competitors in the custody arena,” according to Clarke, pointing to Fidelity and BNY Mellon Pershing. “We still have three very large competitors duking it out.”

Plus, “There could be some startup interest in the space,” he said.

Clarke also thinks “a large brand” could enter the custodial field, such as one of the traditional wirehouse firms or other large entities that has been losing advisors to the independent model.

“They might seek to retain assets and give [advisors] a new career path by expanding the custodial services to independents,” the executive said. 

“It’s highly likely that we could see this in the next year or so,” he added. “I don’t know who it will be, but you want a national brand with the positive recognition for the opening up of such a custody platform.”

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