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Updated on Thursday, March 5, 2020
Headquartered in Los Angeles, Kayne Anderson Rudnick Investment Management provides investment management and wealth management services to individuals, high net worth individuals and institutions. The firm also manages and advises mutual funds, including some funds under the branding of its owner, Virtus Investment Partners. The firm employees more than 80 people spread over 10 offices, including 17 in investment advisory positions.
All information included in this profile is accurate as of March 5, 2020. For more information, please consult Kayne Anderson Rudnick Investment Management’s website.
|Assets under management: $22.8 billion|
|Minimum investment: $1 million for individuals, $50,000 for wrap accounts|
|Fee structure: A percentage of AUM from 0.6% to 1.0%, depending on the account balance|
|Headquarters:||1800 Avenue of the Stars, 2nd Floor
Los Angeles, California 90067
Overview of Kayne Anderson Rudnick
Kayne Anderson Rudnick opened its doors in 1984 to manage money for its founders, including John Anderson, a self-made billionaire. Headquartered in Los Angeles, today Kayne Anderson Rudnick has 10 offices nationwide; it is also located in the southern Californian cities of Newport Beach and Westlake Village, Boston, Denver, Salt Lake City, San Francisco, Seattle, Providence, R.I. and Scottsdale, Ariz. The firm employs 88 people, including 17 that focus on investment advisory or research, and it has grown its assets under management (AUM) to more than $22 billion.
Since 2005, the firm has been owned by Virtus Investment Partners, Inc., a publicly traded asset management business.
What types of clients does Kayne Anderson Rudnick serve?
Kayne Anderson Rudnick serves a variety of clients, including individuals, high net worth individuals and families, charities, foundations, endowments and other institutions. The majority of the firm’s clients in absolute terms are high net worth individuals, but it also serves a relatively large group of individuals. The vast majority of its total assets under management (AUM) is managed for investment companies and wrap programs.
For individuals to open an account directly with the firm, they would need to invest at least $1 million. The firm notes that the minimum annual fee is $10,000, and if clients fall below this annual minimum must pay $2,500 every quarter.
Kayne Anderson Rudnick serves as advisor or sub-advisor for wrap accounts sponsored by certain financial institutions. The minimum investment for this type of account usually ranges from $50,000 to $250,000.
Services offered by Kayne Anderson Rudnick
Kayne Anderson Rudnick provides investment management services, as well as advice on other financial topics, such as retirement. Advisors usually are given discretion to make decisions about what and when to trade, without getting client approval first, but about 20% of its assets under management are handled through non-discretionary relationships.
In particular, the firm specializes in working with clients who have received significant equity grants as part of their compensation, as well as helping associated non-profits with their investment strategy and research. The team may consult outside business partners in certain situations, such as for customized estate planning, tax planning and insurance.
Kayne Anderson Rudnick also offers other services to clients indirectly. You may invest in a mutual fund advised or managed by the firm, including roughly 20 funds affiliated with its owner Virtus Investment Partners. Or you may select one of Kayne Anderson Rudnick’s model strategies in your wrap account. Under this type of wrap program, offered by firms such as Charles Schwab, you receive advisory, custodial and brokerage services, including trading costs, bundled under one fee.
Services offered by Kayne Anderson Rudnick include:
- Portfolio management for private wealth clients
- Primarily discretionary, but also some non-discretionary
- May invest client assets with outside managers
- Financial planning
- Retirement planning
- Trust and estate planning
- Charitable planning
- Tax planning and management
- Cash flow forecasting
- Insurance/risk management
- Executive Services for clients with significant equity grants
- Tax-managed portfolio transition services
- Hedging services
- Exchange fund solutions
- Manages about 20 mutual funds with Virtus branding
- Advisor to other affiliated and non-affiliated mutual funds
- Consulting services to non-profit organizations linked to their private clients
- Investment advisory services to institutional clients, including wrap accounts
How Kayne Anderson Rudnick invests your money
For each private wealth client, Kayne Anderson Rudnick creates a customized portfolio that takes into account the client’s long-term goals, as well as their team’s future market expectations. Client accounts are invested in a broad mix of individually managed securities, affiliated and non-affiliated mutual funds, exchange-traded funds (ETFs), limited partnerships and structured notes.
The firm offers 22 investment strategies that focus on traditional equity securities, including U.S. and foreign large-, mid- and small-cap equities. The team also invests in some fixed-income securities that focus on intermediate-term bonds. Some of your money may be invested with other affiliated and unaffiliated managers of its choice.
When developing the firm’s proprietary strategies, the team relies primarily on their own research, and has a long list of specific characteristics it looks for in a company.
Fees Kayne Anderson Rudnick charges for its services
How much you’ll pay to work with Kayne Anderson Rudnick depends on the amount you’re investing with the firm, since it offers a tiered fee schedule. Private wealth clients will pay a percentage of their AUM, ranging from 1.00% for the first $3 million invested, then dropping to a minimum of 0.60% on amounts larger than $10 million. Clients with separately managed accounts can expect to pay an additional 0.30% each year.
Keep in mind on top of fees paid to Kayne Anderson Rudnick to manage your portfolio, you still could owe brokerage commissions, transaction fees and other related costs and expenses. Clients can choose between being billed directly for fees or to have fees directly debited from their account. Fees are paid quarterly.
|Wealth Advisory Fee Schedule|
|Assets under Advisement||Annual Fee|
|First $3 million||1.00%|
|Next $2 million||0.80%|
|Next $5 million||0.70%|
Kayne Anderson Rudnick’s highlights
- National recognition for its track record: The team’s advisors, and some strategies they have implemented, have earned high marks on coveted industry lists. For the last three years, Managing Director Caleb “Spuds” Powell has ranked number one on Barron’s list of top 100 independent financial advisors, which factors in quality of practice, assets under management and revenue generated. In 2018, the KAR Small Cap Quality Select strategy earned the number one spot on Pension & Investments list of top performing managers for several straight quarters. The firm as a whole ranks in the Financial Times list of Top 300 Registered Investment Advisors.
- Helps executives navigate equity grants: For clients who receive significant amounts of stock as part of their compensation, the firm can provide a few liquidity solutions such as hedging services, exchange fund solutions and tax-managed portfolio transition services.
- Advises non-profits linked to wealthy individuals: Endowments, foundations and other non-profit organizations linked to their wealth advisory clients will find a host of consulting services available, such as help designing and implementing your investment policy statement, creating your asset allocation, and selecting and evaluating managers.
- Creates its own unique research: When making investment decisions, the firm relies primarily on its own internal research. The team speaks with company management teams, customers, competitors and others to form their own unique opinions, helping to shape its investment strategies.
Kayne Anderson Rudnick’s downsides
- High account minimums: The firm typically requires a minimum investment of $1 million for individuals, making it a stretch for many retail investors. However, the firm says it may accept smaller accounts at its discretion.
- You could pay twice if you invest in the firm’s affiliated mutual funds: Your advisor may recommend that you invest in mutual funds managed by or affiliated with Kayne Anderson Rudnick under the Virtus branding. In this case, you could owe your wealth advisory fee in addition to mutual fund charges.
- Limited fixed-income strategy options: The firm invests primarily in traditional U.S. and foreign stocks — thus, for investors seeking safety over appreciation, only a handful of strategies exist, primarily investing in municipal and intermediate bonds.
- Less focus on financial planning than investment management: The firm offers financial planning at no added cost. But less than 100 clients tapped the firm’s financial planning resources during the last year, according to the firm’s form ADV. Also, the recommendations you receive may come from outside parties and not the Kayne Anderson Rudnick team itself.
- Pays others to recommend its services: Kayne Anderson Rudnick pays certain third parties such as Fidelity to refer clients. Be sure to ask anyone who recommends the firm to you for specific reasons why the firm is better suited to your needs than another firm.
Kayne Anderson Rudnick disciplinary disclosures
Since Kayne Anderson Rudnick is an investment advisor registered with the SEC, it’s required to disclose all material facts regarding legal or disciplinary events that could impact your evaluation of the firm or the integrity of its management team.
Over the last 10 years, it has disclosed only one event: In 2018, financial authorities in Norway charged the firm $18,500 because on two occasions the firm was late to disclose that it owned a large amount of shares of a Norwegian company. Otherwise, the firm has a clean record.
Kayne Anderson Rudnick onboarding process
To reach out to the company, click on the Wealth Management or Investment Management tab at the firm’s website, and you’ll find the contact information for each office.
If you establish a relationship directly with Kayne Anderson Rudnick, as opposed to through a mutual fund it manages, you can meet with the firm at least once a year, and sometimes quarterly if requested. Expect to receive at least quarterly reports laying out your holdings and performance, and relevant tax details.
Is Kayne Anderson Rudnick right for you?
Kayne Anderson Rudnick is well regarded for its equity strategies. It conducts its own original research on companies it’s considering for investment, including talking to company management, customers and competitors, and has identified a standardized list of characteristics it seeks out when hunting for prospects.
As for its client list, the firm aims to assist wealthy individuals, families and institutions manage their portfolios and plan for their financial futures. Investors who fall short of the typical $1 million minimum investment may not make the cut to become a client. You may want to look elsewhere, too, if you’re primarily looking for a financial plan, and not portfolio management. Before choosing a financial advisor, it’s your job to shop around to make sure you find someone well suited to your needs.