Employee-Owned and Committed to Client Service

We believe broad employee ownership is one of the best ways to align our interests with our clients – leading to better service and long-lasting relationships. Even so, it seems like this ownership model, more and more, is becoming the exception, not the rule, especially for wealth management firms like ours.

The reason is directly attributable to the explosion of wealth management M&A activity in recent years. According to research and investment banking firm ECHELON Partners, deal volume for RIA firms like ours reached $576 billion in 2021, setting an all-time high.

For perspective, deal volume in 2014 was $53 billion. That’s an increase of over half a trillion dollars in just eight years.

What makes the 2021 figure even more astonishing is private equity firms accounted for about 70% of it. To us, not only is this development anathema to the way we like to do business, but it may be unhealthy for our industry.

To be clear, there’s nothing inherently wrong with private equity, which in many cases provides businesses with capital to allow them to develop and grow quickly. Yet the model comes with a price when you apply it to wealth management.

As you can imagine, acquiring assets, packaging them together and then offloading them for a massive profit a few years down the line may entail cost-cutting that will inevitably impact service. Indeed, it’s hard for RIAs to invest in technology, talent, and support tools if they are also trying to boost margins in the short term.

Naturally, Coldstream wants to expand and do well for all our stakeholders. At the same time, we don’t believe the prevailing industry approach serves anyone well – not our employees, not our clients, and not our business. That’s why we’ll continue to spurn private equity money and remain employee-owned going forward.

Not subject to the whims of outside owners and unbothered by financial engineering considerations, this approach allows us to strongly influence our destiny and take advantage of select opportunities to grow the business on our terms. To that end, over the last 12 months, we have partnered with RIA firms in our region that share our culture, values, and commitment to focusing on our clients’ ongoing success.

In May 2021, we merged with Paracle Advisors, a firm just down the street on Mercer Island, Washington, and later in the year entered into a similar agreement with Rosenbaum Financial, a Portland, Oregon-based firm. More recently, we teamed with Legacy Wealth Management in Alaska. Notably, we have also opened an office in Boise, Idaho, which has emerged as a key economic hub in the Pacific Northwest.

Our healthy organic growth along with recent mergers landed Coldstream on Financial Advisor Magazine’s list of Top 50 Fastest Growing Firms in 2022. We ranked #17 amongst the list of growing RIA’s. Holistically looking at that same list, Coldstream was #1 in the US last year for growth for our peer group of employee-owned, qualifying RIAs with $5 billion+ AUA. Amongst an industry of P.E. backed firms, Coldstream continues to grow and be an industry leader.

Additionally, as part of our strategic growth plans, we’ve hired Natalie Straub as Chief Revenue Officer. A Schwab veteran with extensive experience consulting/advising a wide variety of RIAs, she will support existing wealth management teams by introducing consistent business planning and coaching programs that reinforce each wealth manager’s goals and work to scale Coldstream’s business, positioning it for continued success.

Each of these moves brings something unique to Coldstream, whether it’s a new perspective on financial planning or a toehold in an area of our part of the country where we think we can make a difference. Importantly, each also provides the firm added scale and resources, which will allow us to continue investing in the long-term health of our business while avoiding conflicts of interest, and maximize the delivery of exceptional client service.

At the end of the day, each business must decide how to reach its goals. We are confident in our chosen path and thank our loyal clients for their trust in us. We do not take our responsibility to them lightly and will continue to make business decisions for our firm with their best interests in mind.