Toronto-based CI Financial is buying the RIA unit of Eaton Vance Water Oak Advisors from Morgan Stanley, which is shedding the RIA it acquired when it bought asset manager Eaton Vance last March.
The RIA, Water Oak, advises on approximately $3 billion in assets. It was acquired by a unit of Eaton Vance in November 2020.
The purchase is being made by Pathstone, the advisory firm owned by CI Financial. It brings Pathstone’s assets under advisement to more than $35 billion and will expand Pathstone’s footprint in Florida, where Water Oak is based.
“We are very excited to welcome Water Oak to our family,” Pathstone President Matthew Fleissig said in a statement. “They, like Pathstone, are driven by innovation and believe that unique technology and process will keep us a generation ahead of the industry.”
CI entered the U.S. RIA business in January 2020. This and other pending deals will give it $133 billion in assets in the U.S.
“This is one of our largest U.S. acquisitions by assets to date and aligns us with a growing firm with a rich history, an exceptional team, industry-leading wealth management capabilities and loyal, sophisticated clients,” said Kurt MacAlpine, CI’s chief executive officer, in a statement.
John Furey, managing partner of Advisor Growth Strategies in Phoenix, said the RIA involved here was not a strategic fit for a wirehouse like Morgan Stanley.
“Eaton Vance bought Water Oak less than two years ago. Clearly the Morgan Stanley acquisition of Eaton Vance created either friction or (would have created) a change of strategic direction,” he said. “An asset manager bought an RIA, likely for a distribution play, then Morgan Stanley bought the asset manager and inherited an RIA not consistent with its strategy. So Pathstone just bought the RIA assets of Eaton Vance, carved it out.”
Furey said there is far greater alignment for Water Oak with CI/Pathstone. “I see this as a fantastic deal for CI. They acquired significant assets and a very strong team.”
Last year Morgan Stanley executed a similar transaction, selling E-Trade Advisor Services, an RIA custody business, to Axos Financial.