Summit Partners Launches Wealth
Mgt Firm With $35M

By Shasha Dai

2/6/2006 – Summit Partners has backed Focus Financial Partners, a newly-launched wealth management firm, with $35 million in debt and equity, hoping to capitalize on what it says is a growing demand for independent personal finance advisory services.

Most of the money is equity capital from Summit Partners Private Equity Fund VI LP, a $2 billion fund raised in 2001. The rest is debt from the $465 million Summit Partners Subordinated Debt Fund III LP, which closed in 2004, said Kevin Mohan, a Summit general partner.

Summit now holds a "major" interest in New York-based Focus Financial, which manages $3.5 billion in assets for clients, Mohan said. The company's management and other investors also own significant stakes.

Summit looks to use Focus Financial as a platform to acquire stakes of 40% to 60% in financial advisory outfits, primarily in the U.S. Already, Focus Financial has purchased stakes in four companies: Capital Advisory Group, of Richmond, Va.; Founders Financial Network, of Cupertino, Calif.; Geller Group Ltd., of New York; and Strategic Point Holdings, of Providence, R.I.

The firm believes that this is a good time to launch a company like this because a growing number of wealthy individuals are in turn driving demand for wealth management firms. Opportunities for independent financial advisers born out of the conflicts of interest that bigger firms have had in recent years are also a driving factor.

"We like all the macro-economic trends," Mohan said.

Focus Financial will have a fee-based advisory model, as distinct from a commission-based model. The fee-based model is a play on conflicts of interest concerns and an attempt to draw business away from brokers associated with big firms, mutual funds or insurance companies, said Ruediger Adolf, Focus Financial's founder and chief executive.

"The starting point of Focus' journey is the recognition that the traditional commission-based business model is a model of the past," Adolf said.

Focus Financial is led by a four-member team. Adolf was most recently a senior vice president at American Express Co.'s global brokerage and banking division. Before that, he was a partner at McKinsey & Co. in New York.

Senior Vice President Rajini Kodialam also worked at American Express, where she was responsible for the credit card company's online service business. Two other senior vice presidents both have wealth management expertise: Linda Moore was with Credit Suisse Asset Management's mutual fund business, and Lenny Chang was with the Boston Consulting Group.

Reach Summit Partners at 617-824-1000 and Focus Financial at 646-519-2456.

http://www.summitpartners.com
http://www.focusfinancialpartners.com