It ain’t easy being a political appointee.

Securities and Exchange Commission Chairman Gary Gensler’s future at the agency is in doubt after he’s weathered years of criticism from both sides of the aisle. Democrats like Sen. Elizabeth Warren have called out a sheer lack of enforcement action, while Republicans point to his stance on cryptocurrency as a major concern. Presidential nominee Donald Trump said Gensler is out Day One, and billionaire entrepreneur and Democratic campaign darling Mark Cuban said the commissioner is costing the US revenue.

Musical Chairs

Sure, healthy shade for your regulator is par for the course, but Gensler, who was appointed by President Joe Biden in 2021, seems to have become that houseguest who just can’t take a hint. Experts believe he will likely resign his post after November, a not-uncommon occurrence for political appointees during election cycles. 

“Gary Gensler has worn out his welcome,” said Bill Singer, a securities lawyer with more than four decades’ experience in the brokerage industry. “What was expected was decision-making, and what we got was academia.” 

There are a number of prominent replacements circling the rumor mills. The biggest issue to tackle on either side of the aisle is undoubtedly crypto. Any progress on crypto would require figuring out if it’s a security or commodity — and that requires cooperation from the CFTC. Former head of the Commodity Futures Trading Commission, J. Christopher Giancarlo (a.k.a. “CryptoDad”), has become a talked about name. Here’s a short list of other potential appointments:

• Hester Peirce. There are only two Republican commissioners currently at the SEC, and Peirce has been a staunch critic of Gensler’s approach to cryptocurrency. She even called fines levied on brokers over off-channel communications a “cash cow.” “I’d assume Peirce is in lockstep with Trump,” Singer said. 
• Mark Cuban. The billionaire investor has close ties to Vice President Kamala Harris’ campaign, and told Fox News last month that he would entertain the idea of heading up the SEC. “Harris is going to have to go out and find somebody to tackle crypto in a manner that is acceptable,” Singer said, adding that Cuban would likely weigh in on any SEC appointment.
• Dan Gallagher. Gallagher served as a Republican commissioner at the SEC under former President Barack Obama. He is currently the chief legal officer at the retail brokerage behemoth Robinhood, which offers crypto products to its customers. 
• Heath Tarbert. Tarbert was the head of the CFTC between 2019 and January 2021. “Trump 2.0 is going to immediately work on regulations to allow crypto,” Singer said.

In the Hot Seat. It’s rare for political appointments, especially those at the hotly-criticized SEC, to weather transitions of power or even serve out a complete term. Singer said any choice would inevitably come with political baggage and conflicts of interest, and the role can often seem like a revolving door. But sometimes, just sometimes, the new chair is up to the job. 

“Every so often, we’re surprised,” he said.

Major financial firms just can’t get enough of the advice industry lately.

Just this week, Neuberger Berman Capital Solutions and funds managed by NB Private Markets acquired a “significant” minority stake in Mariner — it’s one of the largest RIAs in the country, with more than $245 billion in combined assets. The new funding will be used to help scale the Overland Park, Kansas-based RIA’s national advisor workforce to 5,000 advisors, according to a release. NB joined Mariner’s board of directors, and Mariner CEO and president Marty Bicknell will continue to lead the company. 

The deal is the latest example of major investments into the RIA space, with much of the funding coming from private equity. Mariner already took on PE funding in 2021 when Leonard Green & Partners made a minority investment and joined its board. 

Crazy For RIAs

The deals are coming in fast. In the first half of 2024, minority investments accounted for 11% of all transactions at RIAs, according to DeVoe & Company. Plus, the size of RIAs selling minority stakes spiked above historic norms, as over half of the deals involved “mega-sellers” with more than $5 billion in AUM. 

The most notable deal in this recent RIA frenzy happened this summer, when Texas-based Fisher Investments sold a minority stake to PE group Advent International and Abu Dhabi’s sovereign wealth fund that valued the wealth management firm at $12.75 billion. And now it seems like everyone wants to get in on the RIA action:

• PE giant TPG splurged in September, acquiring minority stakes in both Homrich Berg and Creative Planning.
• Dynasty Financial Partners — an advisor services platform — closed a minority capital raise with backing from groups including BlackRock, JPMorgan, and Charles Schwab.

Stay or Leave? While many advisors welcome PE funding and minority investments — saying that the deals can help professionalize a firm and provide more capital for scaling — others still prefer to keep their distance. 

Some 40% of advisors are considering leaving their current firm within the next two years, according to a J.D. Power report. And PE involvement plays a major role in that, said Craig Martin, J.D. Power’s executive managing director.

“With private equity coming in snapping up different firms, advisors are saying, ‘This is not what I signed up for,’” he told The Daily Upside in July. “You are more focused on growth than you are on me.”

A little planning goes a long way. 

Financial advisors that specialize in comprehensive wealth management have larger average client sizes and assets under management than those providing financial planning on a case-by-case basis, according to a new Cerulli report. That emphasis on financial plans may even help firms manage four times more assets than their peers, according to the research. While that sounds too good to be true, just 22% of the industry charged for financial planning this year. 

“Financial planning and advice services are now a vital consideration for investors when choosing an advisor,” Cerulli associate director Andrew Blake said in a release.

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