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Tiedemann buys Threshold in blockbuster UHNW deal – Financial Planning

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There’s a new superstar wealth management firm in the UHNW space.

Tiedemann Wealth Management, a New York-based RIA, multifamily office and trust company with $8 billion in AUM and an additional $4 billion in AUA, is buying Seattle-based Threshold Group, which also caters to wealthy families, has $3.3 billion under management and a reputation as one of the country’s leading impact investing firms. Terms of the deal were not disclosed.

“This gives Tiedemann a truly national platform,” says investment banker Liz Nesvold, managing partner of New York-based Silver Lane Advisors, who has worked with Threshold. “Tiedemann was missing a presence in the Northwest, and this [deal] gives it to them in spades, in addition to being able to cross-pollinate Threshold’s ESG expertise, which many families are now demanding.”

Last year, Tiedemann bought San Francisco-based Presidio Capital Advisors, which had $4 billion in AUM. Tiedemann has a stated minimum of $25 million in investable assets for new clients and the average client has around $39 million under management at the firm, according to chief executive Michael Tiedemann.

IMPACT INVESTING KEY
Threshold’s impact investing expertise and work with foundations were key components of the deal, Tiedemann says.

“It gives us a very important capability in a fast-growing specialty that inspires great passion, including among our own clients,” he says. “This gives us a leadership position.”

The Threshold deal bolsters Tiedemann’s ability to compete in the notoriously fragmented and competitive ultrahigh-net-worth market, which includes well-capitalized global banks and independent powerhouses like Bessemer Trust, Brown Brothers Harriman and Hall Capital.

Tiedemann believes the UHNW market will grow as a result of secular and cyclical trends.

“Independent firms are a clear, continued area of growth on the secular side,” he says. “The market cycle is the other component. An extended period of market growth makes it easier for people to think they can do it themselves in single family offices. But when the markets become more challenging, they will need more help.”

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The Threshold deal bolsters Tiedemann’s ability to compete in the notoriously fragmented and competitive UHNW market.

Tiedemann says he is not “actively looking for more acquisitions” and will focus on integrating the two firms and organic growth.

GROWTH ISSUES
Industry consultants praised the deal, but cautioned that both firms have had growth problems.

“Threshold gets the capital they needed to invest in growing the business, where they have struggled for the last 5 or 6 years, since their acquisition of Ashbridge Investment Management in 2010,” says Brian Hughes, a consultant specializing in the UHNW market and president of Philadelphia-based Hughes Growth Strategies. “Threshold has a solid reputation as a completely client centric practice with a long history of helping clients with legacy, impact and education issues as well as investments. Few firms do it as well as they do, but given all of that, they just haven’t grown.”

UHNW consultant Jamie McLaughlin agreed.

“In a world where too many firms expropriate the term ‘multifamily office’ as a marketing tagline but can’t deliver, Tiedemann can, “McLaughlin says. “Nonetheless, both firms have struggled with growth and their margins have suffered accordingly. They need to build more sales muscle and even a little swagger and deserve to achieve operating leverage with organic growth as distinct from inorganic growth. Inorganic growth alone will not solve this inherent challenge.”

Tiedemann was founded in 1999 by Tiedemann’s father, Carl. George and Jane Russell founded Threshold Group in 1998 when George Russell sold his global investment services firm, Russell Investments. The firm made its first impact investment in 2006. The two firms have a “tremendous cultural fit and alignment of values,” according to Michael Tiedemann.

Former president of Russell Investments, Eric Russell, will join Tiedemann’s board of directors. Kristen Bauer will join the executive committee along with Stephanie Cohn Rupp, who heads Threshold’s impact investing team.

Tiedemann has offices in New York; San Francisco; Dallas; Palm Beach, Florida; Washington, D.C.; and Wilmington, Delaware. In addition to Seattle, Threshold has an office in Philadelphia.

Charles Paikert

Charles Paikert

Charles Paikert is a senior editor at Financial Planning. Follow him on Twitter at @paikert.

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