Waddell & Reed Financial, Inc. Company Profile

Background

Founded in 1937 by Chauncey Waddell and Cameron Reed, Waddell & Reed Financial, Inc. was a prominent American asset management and financial planning firm. The company was among the first to offer mutual funds following the Investment Company Act of 1940, with its United Income Fund and United Accumulative Fund being pioneers in the U.S. mutual fund industry. Headquartered in Overland Park, Kansas, Waddell & Reed operated through subsidiaries such as Ivy Investment Management Company and Waddell & Reed Investment Management Company. The firm's mission centered on providing comprehensive investment management and wealth management services to clients across the United States.

Key Strategic Focus

Waddell & Reed's strategic focus encompassed three primary distribution channels:

Advisors Channel: A network of personal financial advisors offering tailored financial planning services.

Wholesale Channel: Distribution through unaffiliated broker/dealers, registered investment advisors, and retirement platforms.

Institutional Channel: Services for pension plans, defined benefit plans, endowments, and sub-advisory relationships.

The company emphasized delivering strong investment results and an excellent client experience, leveraging its long-standing heritage and diversified financial services.

Financials and Funding

As of September 30, 2020, Waddell & Reed's asset management business managed approximately $68 billion in assets under management (AUM), while its wealth management business had assets under administration (AUA) totaling around $63 billion. In December 2020, Macquarie Asset Management announced the acquisition of Waddell & Reed for $1.7 billion, offering $25.00 per share in cash—a premium of approximately 48% to the closing price on December 1, 2020. The acquisition was completed on April 30, 2021.

Pipeline Development

Waddell & Reed's investment products were distributed under the Ivy Investments brand, encompassing a range of mutual funds and investment portfolios. The firm's focus was on delivering diversified investment solutions across equities, fixed income, and multi-asset strategies.

Technological Platform and Innovation

The company utilized proprietary investment management technologies and methodologies to analyze market trends and manage client portfolios effectively. While specific technological platforms are not detailed, Waddell & Reed's long-standing presence in the industry suggests a commitment to innovation and adaptation to market changes.

Leadership Team

Prior to its acquisition, Waddell & Reed's leadership included:

Philip J. Sanders: Chief Executive Officer, who led the company's strategic transformation and growth initiatives.

Shawn Mihal: President, overseeing the firm's operations and advisor network.

Post-acquisition, the leadership transitioned under Macquarie Asset Management's structure.

Leadership Changes

Following the acquisition by Macquarie Asset Management, Waddell & Reed's executive leadership was integrated into Macquarie's organizational framework, resulting in significant changes and appointments within the company's leadership.

Competitor Profile

Market Insights and Dynamics

The asset management and financial planning industry is characterized by significant competition, with firms striving to offer diversified investment products and personalized financial services. The market has seen a shift towards fee-sensitive clients preferring low-cost, passive investment products over traditional actively managed funds.

Competitor Analysis

Waddell & Reed's primary competitors included:

Edward Jones: A financial services firm offering investment advice and services to individual investors.

Mutual of Omaha: A provider of insurance and financial services.

Eaton Vance: An investment management firm specializing in mutual funds and wealth management.

Transamerica: A financial services company offering insurance and investment products.

These competitors focused on similar markets, providing a range of financial planning and investment management services.

Strategic Collaborations and Partnerships

As part of the acquisition, Macquarie Asset Management entered into a long-term partnership with LPL Financial Holdings Inc., selling Waddell & Reed's wealth management platform to LPL for $300 million. This partnership positioned Macquarie as one of LPL's top-tier strategic asset management partners, enhancing the distribution and reach of their investment products.

Operational Insights

The acquisition by Macquarie Asset Management and the subsequent partnership with LPL Financial were strategic moves to enhance market position, expand capabilities, and leverage synergies between the firms. This integration aimed to provide clients with a broader range of investment solutions and services.

Strategic Opportunities and Future Directions

Post-acquisition, the combined entity focused on integrating Waddell & Reed's asset management business into Macquarie's operations, aiming to become a top 20 actively managed, long-term open-end U.S. mutual fund manager by assets under management. The partnership with LPL Financial provided opportunities to expand distribution channels and enhance client offerings.