Snowden Lane Partners, a New York-headquartered registered investment advisor with just under $12 billion in client assets, has launched a five-year program that will allow retiring advisors to monetize their business and have a succession and continuity plan in place.
Retiring advisors who elect to enter what Snowden has dubbed its Practice Continuation Plan will receive an up-front, lump sum payment for their books of business at a “healthy multiple,” according to Rob Mooney, managing partner and CEO of Snowden Lane.
The firm will also accelerate a profit-sharing arrangement that’s baked into existing compensation plans. Snowden will look at the retiring advisor’s average profit share in the past, forecast that out for the next five years and accelerate it. Upon entering the program, Snowden will also match the senior advisor with a younger colleague who would inherit their book of business. Mooney points to the firm advisors’ average age in the mid-to-late 40s as providing an ample pool to pull from.
When entering the plan, the senior advisor will begin a revenue share arrangement with the inheriting advisor over the subsequent five years. At inception, the revenue share favors the retiring advisor, but the balance shifts to the inheriting advisor so that by year six, they’re getting 100% of the revenue that accrues from the book.
“[The program] promotes retirees staying with Snowden Lane; it promotes succession,” Mooney said. “It’s a great retention tool, and we also think it will be a great tool to attract advisors to Snowden Lane because they’ll see this as part of the program that enables people to stay for their career.”
Ultimately, the retiring advisors could get up to 250% of their trailing 12-months revenue, Snowden estimates.
The plan also includes a death benefit, which keeps the program in place should something happen to the retiring advisor during the five-year period.
“If you think about it, it’s a very nice way to insulate your family from any potential tragedy during that five-year timeframe,” Mooney said. “In the event of your death, the program continues.”
The idea for the plan arose from the firm creating customized retirement plans for advisors but found that senior advisors were looking for a more formal mechanism to monetize some of their books before they reached retirement.
“Everybody talks about that retirement date, but I think people actually look to set up some funding ahead of time and have it as part of their plan,” he said.
Founded in 2011, Snowden Lane has grown almost exclusively through the recruitment of bank and wirehouse advisors. Its mission is to create a private partnership of employee-owners that embodies the best of both the independent and institutional spaces. All recruits are brought in as W-2 employees, and principals are offered equity in the transaction.
Since September 2023, the firm has recruited 13 new advisors, representing $1.8 billion in assets. Last week, Alex Bryer, a senior partner and managing director leading the firm’s Bethesda, Md. office, added a business development role to his responsibilities. Bryer will continue to serve his clients but will also take on a leadership role in national recruiting.
Majority owned by Estancia Capital Partners since 2013, Snowden Lane has leveraged debt capital through ORIX Corporation to facilitate its recruitment strategy since 2018.
Based in New York City, Snowden Lane currently employs 147 people, including 82 advisors, almost all of whom are equity shareholders.