Baker Street Reached $21B AUM Without a Single Acquisition

Baker Street Advisors has reached $21 billion in assets under management without making a single acquisition. Growth has compounded at about 12% a year for more than 15 years, driven by client referrals and advisors trained in-house, CEO Chris Wilkens said in an interview.

The path runs against the grain of registered investment advisor dealmaking, where private-equity buyers dominate the market for independent firms. Baker Street took outside capital once, from AMG Wealth Partners in 2015, and has stayed out of the acquisition market since.

Wilkens, among the firm's first partners when it launched in the early 2000s, took the CEO role relatively recently. The ownership story starts with a succession conversation in 2013. By then the business sat with three partners: Wilkens and founder Jeff Colin, with Mike van den Akker as the third, each roughly eight years apart in age. All three could see retirements ahead and wanted to pre-negotiate them without surrendering the independence they considered central to their fiduciary duty.

The conventional routes, selling to a bank or borrowing from one, were unattractive. "Selling to a bank would conflict with what made us special to our clients, and borrowing money from a bank might not be the advice we would give a client," Wilkens said.

AMG offered another route. Baker Street sold about 60% of the business and kept 40%, Wilkens said, and the partners have been recycling the retained stake over the past seven or eight years. AMG holds no board seat and no operational authority over how the firm runs. Wilkens called the pricing "definitely not profit-maximizing"; the draw was a partner with experience who could give guidance without taking control.

AMG Wealth Partners sits inside Affiliated Managers Group, the asset manager that trades as AMG. The stock carries a Moderate Alpha Score of 64 in AlphaScala's ranking. The AMG stock page carries the full profile.

Wilkens said the firm's thinking about growth has come into focus over roughly two decades. Early on, the motive was a more prosperous business, which he called "not something that you put on a bumper sticker." The durable argument arrived once Baker Street started hiring and managing teams. Clients tend to hire the firm for decades, and many are now on their second or third advisor at Baker Street.

"You're either growing sustainably, or you're getting closer to death professionally," Wilkens said. The failure mode is concrete: a flat firm gives younger advisors no room at the top, so the talented ones leave. Frayed advisor relationships follow. The decline, he said, "happens slowly, and then all at once."

Baker Street wants growth fast enough to fund the firm's tools without threatening durability. Very fast growth, Wilkens said, works only at low asset levels, where a firm can ride what he calls a sugar rush. At Baker Street's size, a 20% growth rate would have to come from acquisitions, and the returns would not flow to existing equity owners. "It isn't really a 20% growth rate for equity owners because you'd be diluting over time."

Scale moved from optional to necessary about five years ago. When Baker Street launched with roughly $50,000, a small RIA could buy reporting tools that beat the broker/dealers' offerings. The current technology costs more, Wilkens said, and a firm needs revenue to afford it and to negotiate better terms with sub-managers. Baker Street's client beta costs have fallen more than 40% over the past 15 to 20 years because the firm acts as a bulk purchaser on clients' behalf.

"I wouldn't want to be in this business and represent to a client that I could serve their needs for decades or even generations, with a couple of billion dollars under management," Wilkens said. Scale, he said, is also what lets the firm charge market-leading prices, "which means not the highest."

The acquisition path draws the same bluntness. Firms on buying sprees, Wilkens said, talk constantly about being a great home for advisors. His read is harsher: "These firms have become broker/dealers in an RIA wrapper." Baker Street wants the opposite. Its advisors develop within a single investment philosophy: simplicity, transparency, low fees and tax efficiency, run through centralized processing.

"We're not interested in advisors coming in here to build businesses," Wilkens said. "We're interested in developing advisors to do things in the way that our clients have hired us to do them."

The organic engine is geography and referral cultivation. Wilkens moved to Northern California from Buffalo, N.Y., in the late 1990s, which he calls "step one: right place, right time." The firm makes no unsolicited calls. "We don't do anything unsolicited, and it's not because of principle," he said. "It's just because we don't think it's a good yield on effort."

Growth comes from serving clients and making the firm visible to the professionals around them. Baker Street shows clients' lawyers and accountants that it makes their lives easier and is open for business, Wilkens said, and those professionals become referral sources. Clients bring a minimum of $10 million; many are on their second or third advisor at the firm.

Wilkens concedes much of the growth came from being in the right place. Asked whether the model would work in a less dynamic market, he said he does not expect the firm to have to answer that question any time soon. The wealth creation he sees today surpasses anything in his two-plus decades advising technology workers. "I have never seen what's going on right now," he said. Clients are signing up "on the precipice of liquidity of a magnitude that's unprecedented for us."

The instruments in play are the familiar ones, incentive stock options and restricted stock units among them. "It's just the numbers that are different," Wilkens said. "There are more commas, and there are fewer years. It's astonishing."