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Industry Spotlight > RIAs

Dynasty to Make Minority Investments in Network Partner RIAs

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What You Need to Know

  • The new program was created based on feedback from Dynasty’s RIA network.
  • The initiative will provide the RIAs with a competitive valuation and access to strategic guidance and specialized resources without onerous operational covenants or fixed liabilities.
  • New board member Rebecca Zeitels Alcalay is a GF Investments vice president.

Dynasty Financial Partners has rounded out its suite of capital solutions with the launch of a new program to make minority investments in its network partner RIA firms.

The firm on Tuesday also said Rebecca Zeitels Alcalay, GF Investments vice president, has joined the Dynasty board.

Related: Shirl Penney: Why Biden’s Tax Plans Could Push More RIAs to Sell Now

“Similar to nine years ago when we launched our lending programs for RIAs, or five years ago when we launched the industry’s first revenue purchase option for RIAs,” the new minority investment program was created in response to listening to members of Dynasty’s RIA network “on what they want and need from their integrated growth partner and platform services provider,” according to Shirl Penney, Dynasty CEO and president.

Because Dynasty is mainly a fintech, value-add business services and investment platform provider, that “allows us to be more flexible and accommodating in how we use our balance sheet for various capital solutions to meet the needs of our clients,” he explained in the announcement.

A growing number of RIAs are “choosing to have a partner — to be ‘independent but not alone’ — and to access synthetic scale and support in growing their businesses and caring for their clients,” he explained.

The new capital program adds to Dynasty’s existing programs offering traditional debt financing in addition to noncontrolling revenue interests.

“From a Board perspective, the addition of this new capital program is a natural next step for the company,” according to Alcalay. “As the race for growth and scale quickens within the wealth management space, there is increasing demand from RIAs seeking an equity partner,” she said in a statement.

“I have seen the success of Dynasty’s existing debt and revenue interest programs in providing RIA’s access to capital for succession planning, growth initiatives, operational enhancements and similar initiatives and believe the addition of this new minority investment program will add the final arrow to the quiver,” she explained.

The new program “will make Dynasty’s capital solutions the most comprehensive available in wealth management,” she said. “When combined with Dynasty’s middle- and back-office services, integrated technology, practice management and general access to best-in-class solutions for RIAs, it makes Dynasty the obvious stand-out choice as an equity partner.”

The Significance of Minority Equity

In the past year, minority transactions involving RIAs have more than tripled as companies in the sector are taking advantage of attractive market valuations and an influx of capital, Dynasty said.

“Minority equity is a valuable capital solution for a variety of strategic needs, including owner liquidity, M&A, and succession,” it explained. Minority capital can also “help institutionalize a brand and enhance credibility” with clients and advisor recruits, it said.

“The advantage of minority equity is that RIAs maintain control and independence while achieving certain strategic objectives,” according to Harris Baltch, head of M&A and Dynasty Capital Strategies. Dynasty is “getting capital from a partner — someone they already know and trust,” he explained.

“Our minority investment capital program is designed to offer our Network Partner RIAs not only a competitive valuation, but also access to strategic guidance and specialized resources without onerous operational covenants or fixed liabilities,” he added.

The strategy is to offer long-term, “patient capital without the restrictions typically found in fund-sponsored investments,” according to the company. Consistent with the firm’s history of helping advisors become entrepreneurs, Dynasty’s minority investments will have governance rights that it said are “in-line with a passive investor and will only require approval for significant business matters.”

More on Dynasty’s New Board Member

Alcalay has “provided significant input to the design of such programs and her joining” the Dynasty board is a “recognition of her contributions,” Dynasty said.

As part of its diversity and inclusion initiatives, the company “feels that new and different perspectives on how it meets the needs of its clients and employee partners is a competitive advantage in business today,” it said.

Calling Alcalay a “rising star,” Harvey Golub, Dynasty chairman, said in the announcement that she “will be a major contributor with fresh perspective as the newest member” of the firm’s board. “Her extensive experience and expertise in private investments will be invaluable at the Board level as Dynasty rolls out this new capital program and begins making minority investments in our client firms.”

She joined GF Investments, a single-family office based in New York, in 2017 and  is responsible for overseeing all aspects of that firm’s private equity investments, from due diligence to deal execution and portfolio management, with a sector focus in financial services, Dynasty said.

Prior to joining GF, she held investing roles at Temasek, a Singapore sovereign wealth fund, and Oak Hill Capital Partners. She began her career at Blackstone in its Restructuring and Reorganization Group.

Pictured: Rebecca Zeitels Alcalay, GF Investments vice president and Dynasty Financial Partners board member.


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