Moody’s and S&P Issue Negative Outlooks on Focus Financial Partners and Edelman Financial Engines
The recent negative outlooks issued by Moody’s Ratings and S&P Global Ratings on RIA aggregator Focus Financial Partners and Edelman Financial Engines have sent shockwaves through the financial industry. These ratings changes have raised concerns about the future prospects of these prominent firms, both of which have significant assets under management.
Focus Financial Partners, which recently underwent a major restructuring by consolidating its partner firms into a few key entities, saw its outlook downgraded from stable to negative by Moody’s. This move, aimed at improving profitability, has raised questions about Focus’s ability to meet its debt obligations, as its debt-to-EBITDA ratio has increased beyond expectations.
On the other hand, Edelman Financial Engines, a major player in the wealth planning business, recently proposed a new term loan to refinance existing debt. While S&P Global Ratings assigned a CCC+ debt rating to this new loan, Moody’s was slightly more optimistic with a Caa2 rating. Despite the junk bond ratings, Moody’s highlighted Edelman’s strong performance in 2023 and its successful transition to digital marketing.
Both firms are facing challenges in the current economic environment, but Moody’s outlook for Edelman remains stable, citing continued organic growth and improved results from digital marketing. Focus Financial Partners, on the other hand, faces uncertainties as it navigates its new business model and debt obligations.
These ratings changes serve as a reminder of the importance of closely monitoring the financial health of investment firms, especially in volatile market conditions. Investors and industry professionals will be closely watching how Focus Financial Partners and Edelman Financial Engines navigate these challenges in the coming months.
