The Rise of IPOs: Brace Yourself for a Windfall

The past year-and-a-half has seen a challenging landscape for companies going public. However, with chip maker Arm conducting a successful IPO and several more prominent companies expected to follow suit, it seems the tide could finally be turning. This anticipated wave of IPOs brings great news for company founders and top executives – a potential massive payday awaits them. However, it also poses sudden challenges that their advisors must effectively navigate.

Strengthening the Advisory Team

Advisors working with clients on the cusp of an IPO windfall face an important task – they must shore up their advisory teams to ensure they are well-equipped to handle the upcoming changes. With significant wealth about to be generated, it is crucial to have a cohesive and knowledgeable group of experts in place.

Reviewing Compensation Structures

Another key consideration for advisors is to thoroughly review the planned compensation structures. A sudden increase in wealth requires careful evaluation to ensure that the compensation arrangements are fair and aligned with the client’s long-term financial goals.

Preparing for a Post-IPO Cooling-Off Period

Looking beyond the initial excitement, advisors should also help their clients plan for a post-IPO cooling-off period. While an IPO windfall can be exhilarating, it is wise to strategically allocate and manage the newfound wealth. Taking time to adjust and reassess financial strategies can potentially lead to long-term success and stability.

Other Noteworthy Wealth Management News

1. Charles Schwab’s Asset Attrition: Last month, Charles Schwab reported a decline in core net new assets compared to the previous year. Schwab attributed this dip to a temporary attrition of TD Ameritrade clients and advisors as they integrated the two firms. Despite this setback, Schwab remains committed to the massive task of transitioning TD Ameritrade accounts onto their own platform.

2. Cetera’s Major Acquisition: Cetera Holdings recently made a substantial acquisition with its purchase of Avantax, a wealth management firm specializing in tax planning. The deal, valued at $1.2 billion (a premium of around 30%), marks Cetera’s second major acquisition this year. Their earlier acquisition of the wealth management business of insurer Securian significantly bolstered their advisor base and client assets.

The IPO landscape is shifting, offering tremendous opportunities and challenges for both companies and their advisors. By preparing for the windfall, reviewing compensation structures, and planning for the future, advisors can help their clients navigate this exciting yet complex journey.

SEC Dings Nine Firms in Marketing Rule Sweep

The Securities and Exchange Commission (SEC) has taken action against nine registered investment advisor firms as part of a comprehensive examination of the new Marketing Rule. These firms have been charged with violating the rule by advertising hypothetical investment performance to a broad audience. Under the Marketing Rule, firms must ensure that any hypothetical results they promote are relevant to their intended audience.

Insuring Homes as the Weather Gets Wild

As severe weather events continue to wreak havoc, insurance companies are making significant changes to their home insurance policies. This includes raising premiums and deductibles, and in some cases, completely withdrawing coverage from certain areas. In our latest feature, we asked advisors how they are assisting clients in protecting their homes and navigating this increasingly challenging landscape. We received valuable insights on comparison shopping, property maintenance, the advantages and disadvantages of self-insurance, and even the option of hiring private firefighters.

What’s Next for Joe Duran?

Joe Duran, a serial entrepreneur and prominent figure in wealth management, made waves in 2019 when he sold his registered investment advisor firm, United Capital, to Goldman Sachs. However, Duran recently left Goldman and has now unveiled his latest venture: Rise Growth Partners. This new endeavor aims to assist RIAs with assets under management ranging from $750 million to $5 billion in growing into national brands. By offering guidance and support for organic and inorganic growth, Rise positions itself as a partner and mentor to these firms. In exchange for a minority stake of approximately 30%, Rise helps RIAs achieve their growth aspirations.

Wishing you a wonderful weekend.