$10M-$200M checks: Family Office invests in wealth management firms. Scott D. Roulston

Quick Overview

Scott D. Roulston transitioned from running his father's firm, which specialized in institutional investment research in the Midwest rust belt, to focusing on wealth management after regulatory changes and declining commission rates made the institutional business less competitive, eventually leading him to join the Pritsker organization in 2020 to advise on direct investments into the wealth management industry.

Key Points: Roulston's father required him to work elsewhere for three years after college; his first job was selling advertising for a rock and roll radio station in Detroit. In 1990, Roulston joined Rollston and Company, which primarily offered institutional research on 220 publicly held Midwest companies, serving clients like Peter Lynch of Fidelity's Magellan Fund. The firm shifted focus from institutional research (90% of revenue) to money management (10% of revenue) around 2000 due to falling commission rates and the rise of the internet, rebranding as Fairport Wealth Management before selling a controlling interest in 2007. Roulston joined the Pritsker organization in 2020, which had a thesis to invest directly into the wealth management industry using long-term, multi-generational capital. The Pritsker organization historically favors direct investing, similar to Warren Buffett's Berkshire Hathaway model, focusing on buy-and-hold private companies to achieve tax-free compounding. The Pritsker organization invested $100 million in Steward Partners, which utilizes a unique model to recruit breakaway advisors from wirehouses using forgivable loans for their book of business, aligning interests with long-dated family office capital. Registered Investment Advisors (RIAs) typically charge clients an Assets Under Management (AUM) fee, starting around 1% sliding downward, rather than the 2-and-20 structure common in private equity, and rarely charge carried interest.

Context: Scott D. Roulston discusses his extensive 35-year career in wealth management, tracing his path from taking over his father's research firm, Rollston and Company, in the 1990s, through the strategic pivot to asset management, selling his subsequent firm, Fairport Wealth, and ultimately joining the Pritsker organization to lead their direct investment strategy within the wealth management sector.