Jefferson National Financial, one of the first companies to develop a flat-fee variable annuity for the RIA space, announced Tuesday that it had completed a management buyout led by Financial Partners Fund, The Stephens Group and Eric Schwartz, a private investor (no relation to CEO and chairman of Cambridge Investment Research).
The transaction is valued at $83 million, which the company, based in Louisville, Ky., says will deploy “substantial new capital to accelerate growth and target several important secular trends.”
“We see the high-net-worth investors are the market’s fastest growing demographic; we see that RIAs and fee-based advisors, who serve the high net worth, are the financial service industry’s fastest growing distribution channel; and we know that these advisors and investors are demanding greater value,” Mitchell Caplan (left), CEO of Jefferson National, told AdvisorOne. “At the same time, we’re confronted with powerful cyclical disruptions—a highly volatile market and a move away from commission-based sales. At the convergence of all these trends, Jefferson National is poised to introduce new ways to help RIAs and fee-based advisors take their seat on the client’s side of the table—and new ways to create greater consumer value.”
“Beginning with the introduction of the flat-fee variable annuity in 2005, Jefferson National has actively sought to expand its reach in the RIA space,” added Deborah Newman, director of corporate communication at Jefferson National. “There were significant headwinds during that time, but we were able to partner with 1,500 advisors and achieve $1 billion in sales since then. This acquisition will give us the necessary resources to expand even further into the independent advisor business.”
Financial Partners Fund is a unit of Citi Capital and is led by Manu Rana and Steve Piaker. The Stephens Group is a private, family-owned firm that invests its capital in private and public companies.
Eric Schwartz is a private investor who is a former partner and management committee member of GoldmanSachs until 2007. Among other responsibilities, Schwartz served as co-CEO of Goldman Sachs Asset Management.
"The investors know each other and the management of the company, in some cases going back decades," Newman said. "They understand us as a company and what we are trying to acheive, which makes it a good fit."