Adam Malamed Reflects on First Year as Sanctuary Wealth CEO

This outlook spells long and busy days for Malamed and his leadership team — but that's how he likes it, especially after spending a few years away from the industry after his exit from Ladenburg Thalmann following its acquisition by Advisor Group in 2019.

"My wife would probably tell you that I'm happier now that I'm working big days again," Malamed said. "You can only spend so much time fishing or skiing before you need to be fully engaged again."

Here are highlights of our recent conversation:

THINKADVISOR: What's like to be tapped to take on the leadership role for Sanctuary at what must have been a bit of a disruptive time for the firm?

Adam Malamed: I think the best way to talk about that would be to start with some of my own background and my prior experiences in leadership.

I started in the wealth management space 30 years ago now. I started as an advisor, but I always knew I had that entrepreneurial spirit and ideas of management — ideas of owning and running businesses. So, I had started my own brokerage firm in 2002, and by 2006 I had my first big opportunity in partnering with Ladenburg Thalmann, where I became a director and their chief operating officer.

I took on that role at an exciting time, too, when they were looking to deploy capital where there was big growth opportunity in the independent wealth management space. Remember, this was back before it was cool to be independent. It was almost viewed as a fad that would fade away.

We knew that perspective was a mistake, so we started making those acquisitions, and we built tools around the advisors to allow them to enhance and grow their practices — to build real enterprise value in their business. That vision was validated in the sale to Advisor Group, when we had achieved $200 billion in assets and a $1.3 billion valuation.

Fast forward three years to late 2022 and I had spent a lot of time skiing and fishing, but I had also been introduced to Sanctuary Wealth through one of their capital partners. They asked me to join the board, and I got to learn all about the senior leadership team, the partner firms and the platform.

Given my prior experience, I knew immediately that Sanctuary had a bunch of check-the-box items for me. I knew this was something that I could sink my teeth into and which we could really grow and institutionalize.

That's what we have had our focus on for the last year, and we're seeing amazing success. We're at $30 billion in assets and we have 85 partner firms and growing, predominantly from the breakaway space. It's been a great year.

Why do you think many wirehouse advisors continue to express interest in breaking away?

There's a lot to talk about here, but the thinking isn't exactly new. You may remember that all the way back in 2012, Cerulli Associates came out with a special report that projected headcount in independent channel would likely surpass the wirehouse channel by 2018, and that actually did happen. It caused many people in the wirehouse space to take a pause and rethink their perspective.

I also believe that a big factor right now is the legacy of COVID. You had these very successful wirehouse advisors suddenly forced to leave the home office environment, and they were doing Zoom calls and taking meetings with clients that just felt more personal. And, lo and behold, they realized everything was fine. They realized that the relationship was actually between the client and themselves as individuals — not as a representative of a brand.

With the technology pivot, I think they also realized the potential of new platforms and new models. They could see that there was a way to run a firm and make more money for themselves in the indie space while also delivering superior services, especially to their biggest and best clients.

How do you decide which advisors or advisor teams to focus your recruiting efforts on?

To put it simply, we will continue to lean into the wirehouse space, and we benefit from the fact that our leadership team internally includes both former wirehouse executives alongside leaders in the independent model. We think it's a strong competitive advantage that we have executives from both worlds, so we can really recruit and speak to so many different types of advisors.

Another thing to point out is that we are very selective and will remain that way. We want to bring in the larger independent firms and the wirehouse teams that have elite advisors and a really impressive client base. Right now, our average partner firm has $350 million in assets under management, and our minimum acquisition target is higher than most other firms will tell you.

The advisors we target have to fit our pedigree and our profile. It's a white glove approach for clients, and we think there's a huge opportunity for Sanctuary to play in this space.

Do you see wirehouse firms and teams continuing to play an important role in the industry, for example in the recruitment of young people into the field?

That is a really important topic to address — the cultivation of next-gen advisors. It's something I'm so passionate about. To some extent that's true. The wirehouses have historically done this, and they will continue to represent a stepping stone for new advisors, but I think that is evolving, too.

In fact, we pretty recently went into the Kelley School of Business at Indiana University to set up a mentorship program. We did this because we realized that, yes, the wirehouses are doing a pretty good job of exposing themselves to students, but the indie firms aren't necessarily getting that same level of exposure.

So, we're trying to do our part to ensure that the next generation of advisors can learn about our model, as well. We have concluded that we can't just leave it to the wirehouses, and I think other independent firms have, too.

Look, Cerulli is projecting that headcount in the advisor space could fall by as much as 30% over the next 10 years. At the same time, huge amounts of assets will grow and change hands in that time period. In a sense, that means less competition and more opportunity if you are a young advisor coming into the business. We need to tell this story.

When you talk about the business of what an advisor does, the younger generation wants to do something with meaning. So, communicating the meaning of what we do is a big part of this, and that means showing how we are helping clients achieve goals and needs.

What do you worry about when it comes to Sanctuary Wealth's future?

There's always going to be bumps in the road, but our acquisition pipeline for 2024 is stronger than its ever been in our history, and we feel really good about our five-year plan.

What I can say is that the regulatory environment is always a challenge. We have an SEC that is committed to regulation by enforcement. We have the Department of Labor's independent contractor rule and the fiduciary rule to contend with. These things are concerning, but we also have some amazing industry advocacy groups to ensure we are telling the real story of what advisors do.

I would also say the evolution of artificial intelligence is an important topic, and it could have a big effect on different aspects of our industry. I think we need to focus on the question of how we can harness AI for productivity, but we can't let the human element of advice be diminished.