‘Partnered Independence’ Key to Sanctuary Wealth’s Growing Success

Sharp strategizing and capitalizing on apt opportunities are keys to the rising success of Sanctuary Wealth’s ecosystem of “partnered independence,” as founder and CEO Jim Dickson describes in an interview with ThinkAdvisor.

The majority of the aggregator’s 82 independent financial advisory practices were previously high-performing wirehouse teams.

Now Sanctuary is zeroing in on practices that are already independent.

“We’re having more and more independent practices coming to us every day saying, ‘We don’t want to do all this [administrative] stuff. Can we join your platform?’

“[Increasingly],” he continues, “it’s about our buying minority stakes in already-independent firms and taking over a lot of the [things] they don’t want to do in order to help them grow faster.”

When Sanctuary invests in any practice using its platform, it takes a 20%-30% stake.

Buying an entire practice is “not a core part of our strategy,” Dickson stresses.

But “a really big focus of our strategy … and an important focus of our future … is having more and more practices in which we have a stake,” says Dickson, who, before going independent himself, ran Merrill Lynch’s midwestern division — comprising thousands of advisors — for 10 of the 20 years he was with the wirehouse.

In the interview, Dickson, 50, describes his firm’s growth from the time he left Merrill to form Sanctuary to serve advisors who felt limited and constrained as big-firm employees.

Sanctuary, launched in December 2018, has raised $225 million in the last two years from two sources: Italian asset manager Azimut Group, which bought a 55% majority stake for $50 million, and private credit manager Kennedy Lewis Investment Management, from which Sanctuary raised $175 million.

The company now has $27 billion in client assets managed by 82 partner firms — that’s more than 300 advisors — in 28 states.

About 40%-45% of the practices have moved from Merrill, says Dickson, whose firm is a 2022 ThinkAdvisor LUMINARIES award finalist in the category of executive leadership.

Sanctuary provides advisors with the services of a number of its fully owned subsidiaries, including an RIA, a BD, asset management, insurance solutions, a global division and a family office.

The Indianapolis-headquartered company has a growing Latin American division, based in Miami, for advisors conducting international business.

A midtown Manhattan office is set to open this month ahead of Sanctuary’s planned expansion into the Northeast.

ThinkAdvisor recently interviewed Dickson, who was speaking by phone from Indianapolis.

The persistent uncertainty of the economy and markets has in fact benefited Sanctuary.

“Since this volatility and bear market started, we’ve seen a surge in demand because a lot of firms are saying, ‘I don’t want to do all this administrative, operational and compliance stuff. I want to spend time with my clients.’”

Here are excerpts from our interview:

THINKADVISOR: You launched your own firm in 2018 after 20 years with Merrill Lynch. Please describe your business model.

JIM DICKSON: We’re an aggregator. We help very high-performing teams that have spent the majority of their careers at a wirehouse — Merrill Lynch, Morgan Stanley, Wells Fargo — set up their own business and use our platform.

Then, you’re seeking mainly wirehouse practices?

It started that way, but we’re having more and more independent practices coming to us every day saying, “We don’t want to do all this [administrative] stuff. Can we join your platform?”

So [increasingly] it’s about our buying minority stakes in already-independent firms and taking over a lot of the [things] they don’t want to do in order to help them grow faster.

Have many Merrill advisors moved to Sanctuary?

Probably about 40% or 45% of our partner firms came from Merrill. A lot of our old friends have followed us, and we’re very pleased.

Tell me more about your minority investments in the practices.

A really big focus of our strategy is to have more and more practices in which we have a stake.

It’s an important focus of our future.

We’ll buy a 20% or 30% stake in many of the practices that use our platform, which provides front office, back office and middle office services.

Sometimes we buy a [whole] practice, but that’s not a core part of our strategy.

The firms that we work with want to control their own practices; so [that’s why] many of our investments are minority investments.

Please explain why you use the term, “partnered independence,” referring to the practices that join you.

The firms are independent in that they make their own decisions; they run their own businesses. But they have a partner in Sanctuary to do a lot of the heavy lifting for them.

You were with a wirehouse for two decades. Why did you want to open your own firm?

I could see that more and more advisors at the wirehouses were frustrated about the restrictions and the bureaucracy.

I felt if we could build a platform where they could serve their clients better by, for example, using technology like video, [prospects] would be more attracted to them.

You’ve opened offices in 28 states, including Florida. Please talk about your Latin American platform.

The advisors at the wirehouses who were most frustrated were those who served international clients. So we felt there was a huge opportunity to spread the independent business concepts to the international markets.