&Partners, the St. Louis-based hybrid broker/dealer launched by David Kowach, former president and CEO of Wells Fargo Advisors, has been on a recruiting rocket ship since it launched in August 2023.
According to RIA Catalyst, &Partners was the fastest grower in its asset range in the first quarter of this year, seeing a 1,106% growth rate by assets under management. The next closest, Modern Wealth Management, had a growth rate of 197%.
Today, &Partners is comprised of 83 teams overseeing $39 billion in AUM, according to a spokesperson. However, Kowach and co-founders Kristi Mitchem and John Alexander have aggressive growth plans for the next three years, with a target of 150 teams, $120 billion in assets, and $800 million in revenue.
WealthManagement.com spoke with Kowach and Mitchem, a former asset management executive focused on investment offerings, about the firm’s origins and why they see its equity structure as a key differentiator.
The following has been edited for style, length and clarity.
WealthManagement.com: What would you point to as key differentiators for your recruiting?
David Kowach: I was 30 years at Wells and its predecessors, and I think this background is important to what we’ve built here.
I started a little broker/dealer in Richmond, Va., called Wheat, First Securities. When I got there, there were 500 advisors, and we were totally focused on being great for clients every day. It was an employee-owned company—it was culturally a diamond. If you think about the environment in the mid to late 90s, the competitive landscape was: you had big New York-based wirehouses on one side of the barbell, and you had regional employee-owned broker/dealer firms on the other. At Wheat, being smaller, it was tough to compete, largely because the big firms back then had the best technology and the best research. That required capital. And we didn’t have any capital. We made a decision to sell the firm to Union Bank, which eventually became Wachovia, which eventually became Wells Fargo, and they gave us all the capital that we needed to build tech and research. We grew the firm from 500 advisors when I got there to 15,000 advisors when I retired as CEO.
The one thing that we started asking ourselves, though—with the RIA business effectively exploding, and the independent broker/dealer businesses exploding—is whether the scale had become an advantage, or was it actually a disadvantage? Our assessment was that the technology across the industry had been totally democratized. And research today is available to everybody. Adding to that, bureaucracy has an impact on your speed of decision-making and your ability to use judgment because judgment gets replaced by policies written by people who have never had clients before.
We had great relationships with people who also grew up at regional, family-owned or employee-owned companies. And we thought there was a calling to create that type of company in the marketplace again. But not at all trying to look back and recreate the past, because today, things are better, right? So the question becomes: Can you give people all the advantages of being smaller and more boutique, but give them better technology, better service, a better environment around escalation and decision making, a better investment platform, and a better concierge service? We walked away believing that we could create something great and then share it with people with the same vision we had.
WM: The “small feel with scale” is a common message in the space. How does your employee-ownership structure differentiate you?
Kristi Mitchem: We wanted to give people the same sense of true alignment and shared ownership that they felt when they were part of a smaller firm. The way that we did that is through broadly distributed equity. Advisors at our firm will be the largest shareholders of the company once we fully distribute all of the equity. I think it is that sense of ownership in combination with addressing pain points that has made our story sing in the marketplace.
The equity is the real selling point because that’s actually what they can’t get elsewhere. Normally, when professional operators come in to build a business, they get backing from private equity. The firm is very well run and very well managed. But there isn’t a big equity opportunity for the advisors that come in, particularly those that aren’t in that very first wave of advisors.
Once we realized that we were going to broadly distribute the equity base, and that everyone would win together, that’s the light bulb. Because of that offer, advisors, when they realize they can come to a firm, can be part of building that firm, owning that firm. They can create life-changing money for themselves, all while doing something demonstrably better for their clients.
WM: Why do you stress your CIO concierge service for advisors?
KM: We started off with the proposition that we wanted to bring institutional calendar investing to the everyday investor. That was our mantra. We started to think about the different structures that are available today in terms of how advisors interact with investment professionals, particularly at the largest firms. We realized there was a lot of investment content and, quite frankly, a lot of good product that sits at a large wirehouse or a large independent, but it’s almost as though that product and advice sits in one place, and then the advisor and the client relationship lives somewhere else.
We want to close that gap. We want to helicopter down to create this concierge CIO function where, in fact, we are the person that you text, we are the person that you call, we are the person that you email when you have a question about markets, when you want to debate something in the context of a client portfolio.
We do an incredible amount of bespoke work. In fact, before I dialed into this call, I was actually working on a proposal, because I’m flying out with an advisor to pitch for a $15 million endowment client on Friday.
DK: It’s totally different from how things were when the firms were smaller. There used to be intellectual debate about money and markets, and what’s happened is that, across the industry, we’ve watered it down.
I’m a big believer in planning, and we can differentiate ourselves around planning. But we should also be differentiating ourselves around intellectual debate. That’s a huge advantage to be able to debate money in markets with a team that includes Kristi Mitchem or Frederik Axsater (a partner) or John Crowley (a partner)—people that are the real deal in the asset management space that are trying to tell an advisor what to do.
WM: What about your investment platform?
Kristi Mitchem: We are completely open architecture. We do run some in-house strategies, but they are all offered at zero fee to the clients. We don’t charge for proprietary management. We don’t charge for models. We are completely a triple-clean share class, meaning we do not take revenue share. We did all those things to de-conflict our model so that when we sit at the coalface with an advisor we can help them generate strong advice for clients that they know is unbiased. Most of our advisors are invested in our models. Even advisors that came to us that were 90% rep as PM, where they’re managing the money, now they use our models for 90% of their clients. That’s the level of trust we’ve engendered.
WM: Many advisors who have joined you came from Wells Fargo and Edward Jones. Should we expect that to change as you grow?
DK: I think our mix is good today. It’s not just Wells and Edward Jones. We’ve attracted people from UBS and Merrill—we have people from lots of different places. But generally, all of us have known each other or grown up with each other in the business. They may have gone to other places, but all of us have roots together. We don’t recruit the way that other firms recruit. In many ways, we feel like we’ve got something really great, and we’re inviting friends to tell them about what we’re doing and saying, “Hey, if you want to be part of this with us, we would love to have you.” But we’re also not in the business of brow-beating our friends to join. If you’re happy where you are, whether that’s at Wells or Jones or wherever, then we’re happy for you.
WM: You’re targeting roughly $150 billion in AUM. Why is that the right size for an RIA today?
KM: I think to be truly relevant to a lot of your providers, you probably have to be gearing towards the $100 to $250 billion AUM mark. But I refer to it as the “Goldilocks number” because it has to fit the model that you are espousing.
We want one-to-one service. We want concierge investment advice. We’re selling the idea of coming to a firm where you’re a name, not a number. Our choice, with respect to size, has to fit our story. If you’re an advisor that is looking to evaluate different opportunities, look for that bit. Are they espousing this really cool, boutique culture that’s small and feels like a family, but they want to grow the thing to $500, $600, or $700 billion in assets? That’s just not going to work.
DK: I have an interesting example. I have a friend who’s going to join us, and she had a problem this morning at 5 a.m. By 5:30 a.m., we were on the phone. By 8:30 a.m. the issue was totally solved. That’s the type of company that we want to be. It’s one where escalation and ideation and resolution works. It’s not five phone calls to a slow no.
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