Message from America: Advice firms focused on ESG become acquisition targets

Liz Skinner, special projects editor at sister title InvestmentNews, explores the increase in M&A in the US adviser space as firms increasingly look to ESG

The world of financial advice firm mergers and acquisitions has taken a decidedly green turn in the US, as wealth management companies have begun buying up practices that have a significant focus and expertise in ESG investing.  

Two deals in recent weeks provide evidence that ESG investing has crossed over the threshold of being something that’s great to provide, to being tablestakes for advisers.  

Most recently, Abacus Wealth Partners announced it’s merging with San Francisco-based Robasciotti & Philipson, a $130m registered investment adviser with a particular focus on social justice and sustainable investing.  

Abacus already is a “values-aligned” firm with about $3.8bn in AUM, but bringing on co-founders Rachel Robasciotti and Maya Philipson will provide special expertise and relationships across the spectrum of social, minority and gender justice issues, said Brent Kessel, Abacus co-founder and CEO.  

Robasciotti and Philipson, who Kessel describes as “punching way above their weight class” in terms of impact investing and social justice issues, will concentrate their time managing their fund, the $43m Adasina Social Justice All Cap Global ETF (JSTC). 

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“This is a strategic merger for us,” he said. “We’re incredibly fortunate that Rachel and Maya will continue to work with Abacus to help evolve our practice to better serve people from racially- and gender-diverse communities.” 

Robasciotti & Philipson work with a lot of non-profits that work with minorities and women and social justice is part of the broader impact investing universe where Abacus has little experience. Social justice also has emerged from the ESG shadows over the past year as the pandemic and the Black Lives Matters events have highlighted the inequities that ESG and impact investing aim to correct.  

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“And on the client side, they have relationships with a lot of folks that are different from the typical client. The kind of people who don’t just want to grow wealth, they want to maximize the impact they’re having. That takes a different kind of financial planning perspective,” Kessel said.  

In an unrelated deal announced this week, a $10.3bn RIA and family office, Pathstone, announced it’s acquired Cornerstone Capital Group, an RIA that manages $1.1bn of client assets, mostly in sustainable and impact investing.  

“The depth and laser focus of Cornerstone, together with the scale and strength of Pathstone, now creates the preeminent impact investment advisory platform in the field,” said Erika Karp, Cornerstone’s founder and CEO who will join Pathstone as its chief impact officer.  

Both firms are committed to integrating customised financial and impact objectives in every client’s portfolio, they said. 

Outsourced advice

But mergers aren’t the answer for every wealth management firm that’s decided it’s time to take ESG investing seriously. Some are going the outsourcing route to gain the expertise.  

In November 2019, Wealthspire Advisors announced it was teaming with Align Impact, an advice firm that focuses on selecting investment options that meet prevailing ESG standards, and a couple of weeks ago the firm revealed a new suite of impact investing solutions for clients.  

“This offering can incorporate an individual’s values or an institution’s mission into the asset allocation and security selection process, and we believe it sets the standard for impact investing in the RIA space,” said Mike LaMena, Wealthspire Advisors’ CEO.  

The company described investments that can be structured to support social and racial justice, environmental sustainability, gender equity, animal welfare and other areas of interest, and will include U.S. and international stock and bond investments. 

“By combining industry-leading expertise across prominent impact investment themes with the rigor of our investment process, we’ve created diversified impact portfolios that can be tailored around clients’ values and the impact outcomes they seek,” LaMena said.  

Click here to see the Message from America columns from Liz Skinner.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...