Cambridge Investment Research, the Fairfield, Iowa-based independent broker/dealer, has launched a new registered investment advisory aimed at smaller, fee-only advisors looking for flexible acquisition options.
BridgePort Financial Solutions will be a standalone entity from Cambridge’s corporate RIA and broker/dealer, and it will take minority, majority or full ownership stakes in the advisor businesses that join the platform.
The firm has hired Eddie Rollins, who led distribution efforts at Horizon Investments for the last 14 years, as managing director of BridgePort. He will lead the direction, planning, growth and development of the new RIA and its services. He will also join Cambridge’s executive council.
BridgePort has completed three transactions so far, totaling $1 billion in assets under advisement, two of which were 100% purchases, with one minority acquisition, said Jeff Vivacqua, Cambridge president of growth and development.
The RIA will use Fidelity, Schwab, Pershing and SEI for custody, and Orion Advisor Solutions will provide the entire technology stack.
Cambridge has an affiliation model for fee-only advisors under its corporate RIA, with about 100 currently in that model. And while Cambridge has historically been focused on serving advisors who are heavily fee-based, Vivacqua said the firm noticed a gap in the acquisition marketplace for smaller, fee-only RIAs with between $50 million to $250 million in AUM.
“A lot of RIA firms were just looking at $1 billion-size AUM firms and up and looking to make 100% acquisitions,” he said. “That’s a model, and that model may work for somebody. In true Cambridge fashion, we approached the conversation with a little more flexibility. In that vein, we know there’s financial professionals who may want to look at continuity and succession differently than 100%.”
Some firms may be interested in doing multiple tranches that lead from minority to majority to 100% ownership over time. Cambridge hopes to “bridge” that gap, offering flexible ownership options for this segment of smaller advisors, hence the “BridgePort” name.
BridgePort Managing Director Eddie Rollins
Advisors who sell 100% of their equity become employees of BridgePort, and take on the RIA’s branding, whereas those who sell minority or majority stakes retain independent contractor status and their own branding.
In exchange, advisors who join the platform get access to the tech stack, as well as “soft services” that Cambridge provides, such as practice management and business consulting, lending services and outsourced services like websites and marketing.
“We see a business model here; in the fee-only registered investment advisor marketplace, there could be firms that are looking for flexible continuity and succession offerings, an advisory tech stack and soft services,” Vivacqua said. “And if they can keep it custodied right where they’re at—in some of the big custodial firms—this is probably something we think we can bring to market.”
He said the firm is seeing interest in the new RIA platform from advisors within the Cambridge ecosystem, as well as those outside, but, “The strategy is not to cannibalize Cambridge.”
To be sure, Cambridge is not the first IBD to get into the RIA M&A market. LPL launched a ‘liquidity and succession’ program a couple years ago, where it will buy 100% of an advisor’s practice from a principal or principals who are generally expected to remain for about three years.
In 2022, Osaic entered the RIA M&A market for the first time, making a minority investment in Signature Estate & Investment Advisors, a Los Angeles–based hybrid RIA, alongside Reverence Capital Partners, the b/d network’s majority owner. The move was part of a larger strategy to make investments in growing RIAs in the coming years.
Last year, Cetera Holdings, the holding company of Cetera Financial Group, acquired its first pure RIA, The Retirement Planning Group. That move came less than a month after the company hired former Fidelity Investments senior executive Mike Durbin as its CEO, signaling an intention to move more seriously into the space.
Commonwealth recently expanded its Entrepreneurial Capital program, where it will take up to 40% of a firm’s earnings in exchange for capital. The firm is also considering taking majority stakes in Commonwealth advisor firms, although that’s not an offering yet.
