Legg Mason, Inc. (NYSE: LM) today announced that it has agreed to acquire an 82% majority equity interest in Financial Guard LLC, an online Registered Investment Advisor and innovative technology-enabled wealth management and investment advice platform. Financial terms of the transaction were not disclosed.
The firm will operate as part of Legg Mason's alternative distribution strategies business, which focuses on combining technology with Legg Mason's investment affiliates' capabilities to better serve clients. The investment is part of Legg Mason's overall long-term strategy focused on creating choice for investors across investment capability, product and vehicle, and distribution. The transaction expands Financial Guard's access to financial institutions that serve the needs of investors.
Financial Guard's aggregation technology provides advisors the ability to create a comprehensive picture of clients' financial positions and recommend potential solutions to meet their clients' investment objectives. Financial Guard is distinctive in that it offers portfolio analysis and recommendations for a large universe of both passive and active funds. By making the technology available to advisors and their clients, Financial Guard andLegg Mason intend to help financial institutions grow their advisory business and be well-positioned to conform to the new Department of Labor fiduciary standard, set to be implemented in April 2017.
A recent survey sponsored by Legg Mason for Investment News estimated that there is approximately $845 billion in small IRA accounts of less than $25,000 at U.S. wirehouses, independent broker dealers and regional brokerage firms that may be impacted by the new DOL rules. Legg Mason will offer the Financial Guard platform to firms who are looking for technology solutions to assist them in meeting expanded compliance requirements in a holistic, cost efficient way.
More broadly, as demand continues to grow for technology-enabled advice, it becomes increasingly important for firms to offer to all of their clients technology solutions that are intuitive and easy to implement across a client's entire portfolio. The technology offered by Legg Mason and Financial Guard can be implemented seamlessly at distribution partner firms to help them provide comprehensive advice.
"We believe this investment in innovative technology and people is a valuable addition to Legg Mason'sdistribution efforts over the long term. Technology innovation is redefining consumer expectations and financial firms need a comprehensive, accessible, secure technology solution to serve their clients in this dynamic environment. As an online technology platform that evaluates both active and passive funds, Financial Guard creates a complete digital solution for advisors and their clients. Together, we are well-positioned to help partner firms and their advisors by providing a simple and scalable platform coupled with compelling investment offerings," said Terence Johnson, Global Head of Distribution for Legg Mason.
"We are excited to combine our intuitive, wide-ranging technology solution with Legg Mason's diverse investment capabilities, scale and global reach. As adoption of technology-enabled advice grows, we believe we will be well-positioned to serve the advisor channel.
In particular, we see an enormous opportunity to serve the important retirement market, offering a cost-effective, comprehensive solution to plan sponsors and to easily serve the smaller segment of the market that will continue to need advice," said Cary Jenkins, Chief Innovation Officer, at Financial Guard.
Legg Mason plans to complement the Financial Guard platform's existing capabilities with investment products from its nine independent investment managers, including multi-asset class solutions from QS Investors.
KPMG Corporate Finance LLC acted as exclusive financial advisor to Financial Guard.
About Financial Guard
Financial Guard is a leading online investment advisor providing simple, professional and transparent investment advice through its interactive website. Financial Guard's technology allows investors to create a unique profile, view all of their investments in one place, assess their portfolios with a simple grading system, and receive guidance on how to optimize their portfolio(s) to reduce overall costs.
About Legg Mason
Legg Mason is a global asset management firm with $718 billion in assets under management as of May 31, 2016. The Company provides active asset management in many major investment centers throughout the world. Legg Mason is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM).
