RIA That Lost Client Falls as Others Rise

RIA That Lost Client Falls as Others Rise
Stephens Inc. and Stephens Investment Management Group, both based in the Stephens Building in Little Rock, were both ranked in the Top 5 of Arkansas Business' Largest Money Managers list. (Abigail Fowler)

The pandemic years have been good for registered investment advisors, with most of the top RIAs based in Arkansas posting increased assets under management since Arkansas Business’ last list of money managers appeared a year ago.

Stephens Inc. of Little Rock, the largest RIA, reported assets under management of just over $14 billion in an ADV form filed with the U.S. Securities & Exchange Commission on Sept. 1, up from almost $11 billion in September 2020. The related Stephens Investment Management Group, which includes the Stephens Capital Management division, grew its AUM from $5.4 billion in June 2020 to $7.8 billion earlier this month, easily retaining the No. 2 spot on the list.

In fact, all but one of last year’s top 10 money managers reported asset growth on their most recent ADV forms, which can be updated at any time. The outlier is last year’s No. 5 RIA, Foundation Resource Management Inc. of Little Rock, where AUM plummeted from $1.27 billion in June 2020 to $631.4 million in March 2021.

“We had a 32-year client relationship in which the client hired a new investment consultant with whom we did not have a previous connection. Consequently, we lost those assets under management,” principal Mark W. Millsap explained in an email.

That hit sent Foundation Resource Management from No. 5 to No. 10 on the list. Millsap said AUM had recovered to $744.4 million as of June 30. Other notable changes among money managers:

► Last year’s No. 12 RIA, Smith Capital Management Inc. of Little Rock, disappeared from the list because it was acquired in December by MAI Capital Management LLC of Cleveland. Smith Capital, incorporated in 1984, managed assets of just over $500 million. Terms of the deal were not disclosed.

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► Replacing Smith Capital at No. 12 is Hexagon Capital Partners of Rogers, which made its first appearance on the list at No. 13 last year. It was incorporated in December 2019 by Brent T. Henry and Dustin Colebank, who left Morgan Stanley to form the new venture, growing AUM from $416.7 million in June 2020 to $597.2 million in March 2021.

► This year’s No. 13 is another new RIA: Naviter Wealth LLC was formed in January by Phillip Worthen, formerly of Stephens Inc., who was joined at the end of March by former Stephens Inc. Managing Director Bentley Blackmon. By July 20, it had $521.7 million in assets under management.

► Legacy Capital Wealth Partners of Little Rock jumped from No. 20 to No. 14 thanks to the acquisition in December of Trent Capital Management Inc. of Little Rock. Legacy Capital had $293.3 million in assets under management as of June 2020, while Trent Capital — No. 24 last year — had $200.8 million in July 2020. On an ADV filed in March, Legacy reported AUM of $514.4 million.

Brokers and Trust Departments

Stephens Inc. also remains No. 1 on the list of the largest broker-dealers in the state, although its number of licensed agents in Arkansas continues to shrink, 325 in 2019 to 297 in 2020 to 278 in 2021.

Notable on the list of broker-dealers is the upward movement of Wells Fargo Advisors, from No. 11 last year to No. 4 this year. Erica Hiquet, a communications consultant in Indianapolis representing Wells Fargo, explained the jump from 25 registered representatives to 124 as a combination of successful recruiting and more complete reporting of affiliated representatives in Arkansas.

The annual list of bank trust departments — and the state’s only stand-alone trust company — is generally stable, with a bit of jostling in the top five. Simmons First Trust Co., the trust division of Simmons Bank of Pine Bluff, remains well ahead with total trust assets on Dec. 31 of $5.8 billion, followed by Arvest Trust Co. of Lowell with $3.66 billion.

But Bank OZK of Little Rock dropped from No. 3 to No. 5 despite a small increase in trust assets. Evolve Bank & Trust of West Memphis recorded a 78% increase in trust assets, leapfrogging over both First Security Bank of Searcy and Bank OZK to grab the No. 3 position at $2.65 billion. First Security also overtook OZK with 16% growth in trust assets, ending up at No. 4.

No. 9 Community First Trust Co. of Hot Springs remains a stand-alone company, but it was acquired at the end of June by Farmers Bank & Trust of Magnolia, which operates the No. 13 trust department. For more on that transaction, see Community First Trust Attracts $6M Buyer.