Deals & People May 3, 2023

Franklin Buys Managed Accounts Firm to Expand Adviser SMA Offerings

The investment manager’s purchase of volScout will add to its managed investment strategies for advisers working with institutional clients and high-net-worth investors.

Reported by


Investment manager Franklin Templeton, owned by Franklin Resources Inc., announced Tuesday the acquisition of a startup firm focused on providing personalized investment portfolio management.

Franklin Templeton’s purchase of volScout LLC, a startup that provides separately managed accounts and manages investor portfolios, will add to San Mateo, California-based Franklin Templeton’s managed option solutions on offer to advisers serving institutional clients as well as high-net-worth investors, according the announcement.

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“SMAs are an important vehicle used by many advisers and clients, allowing for greater transparency, personalization and customization to specific client objectives,” Kristopher Smith, head of product solutions strategies and initiatives at Franklin Templeton, said in an emailed response. “In addition, with the ability to provide a tax management overlay, clients can garner additional benefit, especially during market volatility like we’ve recently experienced.”

SMAs have seen growth in recent years as advisers look to provide more personalized investment that allows for tax management, income production, state-specific needs and cash flow options. Assets in managed accounts grew 24% in 2021 to a high of $10.7 trillion, according to the latest data available from Cerulli Associates.

The founding partners of volScout, Brad Berggren, Jon Orseck and Roger Weber, will continue on after the acquisition, operating as the newly formed Franklin Managed Options Strategies LLC, or Franklin MOST, according to the announcement.

Product head Smith said the acquisition allows Franklin Templeton to expand and complement its suite of SMA options with call writing—a type of options trading—and hedged equity strategies that help advisers offer clients incremental returns while reducing downside volatility in their portfolios. The offering can be used in a separately managed account format or through other private fund structures, according to the announcement.

“We see this as a great extension of the solution set we’re able to bring to both institutions as well as advisers serving high-net-worth clientele,” Smith said.

Franklin Templeton currently has $110 billion in SMA assets under management, the firm noted.

Deals & People May 2, 2023

Hub Snags PE Firm Minority Stake, Announces More to Come

LGP has taken a minority stake in the insurance, retirement and wealth management aggregator to build on what the firm says has been fivefold growth in the last decade.

Reported by


Hub International Limited, the insurance brokerage, retirement planning and employment benefits firm, announced Friday it has entered into an agreement for funds from private equity firm Leonard Green & Partners LP to make a “substantial” minority investment and join Hub’s board. The Chicago-based insurance brokerage and benefits aggregator said the PE investment will be followed by more this year.

Neither Hub nor Los Angeles-based LGP disclosed the amount of the stake, but the firms said the investment will go toward expansion that has seen Hub reach a total enterprise valuation of $23 billion, growing fivefold from a valuation of $4.4 billion in 2013.

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Hub President and CEO Marc Cohen said via email that the firm’s rapid growth has been helped by acquisitions, but the “real power” has come from investments made in industry and product specialization, broadening of employee benefit and human resources services, expansion into retirement and private wealth, and growth in insurance wholesale capabilities, among other areas.

“Despite the headwinds of the pandemic, interest rate hikes, and a global economic downturn, HUB has demonstrated its ability to persevere and excel,” Cohen said in a statement with the announcement. “Our relentless focus on investing in boundaryless resources that provide best-in-class advice and solutions for our customers and our dedication to attracting and retaining the best talent in the industry affirms my optimism and energy for the future potential of HUB.”

HUB remains “bullish” on its acquisition strategy and expanding its geographic footprint, according to the announcement. The firm is also counting on more PE money to help with the expansion, noting that the announcement signals its intention to “explore bringing on additional minority investors in the coming months.”

“We have admired HUB for a long time and are excited to partner with the entire HUB management team, Hellman & Friedman, and Altas to support the next phase of the company’s growth,” Adam Levyn, a partner at LGP, said in the announcement.

PE Interest

Private equity has backed firms making acquisitions in both the retirement and wealth management space in recent years, such as OneDigital, CAPTRUST Financial Advisors and SageView Advisory Group LLC.

“The outsized demand for firms that have the ‘golden mix’—insurance/retirement/wealth—goes beyond just well-diversified revenue, but speaks to their ability to ‘wrap’ clients in value-add services,” says Rob Madore, a vice president with consultancy MarshBerry, which provided market research assistance on the deal.

Madore notes that firms like Hub can offer end-to-end solutions, starting on the corporate side with group benefits and retirement consulting, and then “bridge over” to individual services like wealth management, in-plan advice and personal insurance lines. By looking at the public details of the deal, Madore notes that Hub is being valued at 6.6 times its revenue.

“They’re proving out the thesis both in ability to create organic growth by leveraging the large client overlap opportunity across business lines, while complementing this with a steady stream of high-quality acquisitions that round out their national or multi-national footprint,” Madore says.

Team of Investors

The proceeds of the LGP investment will go toward paying off initial equity holders, according to Hub’s announcement. An initial investor in 2013, Hellman & Friedman, will keep a controlling interest in the firm, and Hub’s management team will continue to hold large equity positions. Cohen said in the email there will be no change to Hub’s management team or structure, and he will remain as CEO, president and a member of the board of directors.

San Francisco-based H&F made its investment in Hub 10 years ago when the firm had a $4.4 billion valuation, with more than $1 billion in revenue. In 2018, Hub had revenue greater than $2 billion and a valuation of $10 billion when it received a minority investment from New York-based investor Altas Partners. As of 2022, Hub’s revenue had risen to $3.7 billion, according to the firm.

“We have high expectations for LGP and we expect the firm to bring HUB great value through their extensive experience working with other portfolio companies,” Cohen said in the email. “When combined with the expertise of Hellman & Friedman and Altas Partners, HUB’s ownership represents a real powerhouse in the brokerage industry.”

The vast majority of PE investments such as the one made with Hub are done through cash and equity in varying percentages, says Keith Soltis, managing partner and co-general agent at Summit Risk Management.

“Some PE firms and private partnerships may be using some dry powder, from capital that was secured at a lower interest rate and has not yet been deployed,” Soltis says. “As interest rates rise, we expect to see less PE activity and a normalization of company valuations as they level out following increased financing costs.”

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