Hungry RIAs Creative Planning, Mercer Advisors Snap Up More Firms
Attesting to the rapid consolidation of assets within the registered investment advisory industry, two fast-growing RIAs this week announced their fourth and eighth acquisitions this year.
Denver-based RIA aggregator Mercer Advisors, which received a private equity infusion earlier this year, on Tuesday announced the acquisition of Adam Financial Associates, a Boca Raton, Fla. firm managing $190 million in assets for about 200 households.
The acquisitions come on the heels of Creative’s purchase two weeks ago of McLean, Virginia-based OptiFour Integrated Wealth Management, an RIA overseeing $400 million in assets, and Mercer’s swallow the same week of AL Hewitt Inc., a Camarillo, Calif. fee-only RIA managing $100 million in assets.
Terms of the new deals were not disclosed.
The acquisitions continue a record M&A year in the RIA industry, as existing financial planning entrepreneurs continue their growth spree and private equity players join the fray. As of the end of the third quarter, 101 deals have been announced this year, including 55 acquisitions of RIAs with less than $500 million of assets, according to Devoe & Co., a financial planning M&A advisor.
“We want to become more competitive in local markets as quickly as possible,” said Peter Mallouk, Creative’s 49-year-old president and chief investment officer, noting that his firm was managing about $350 million in assets in Wisconsin prior to the Hogan acquisition.
Creative’s snowballing growth is highly controlled, he insisted, to ensure that acquisitions fit in with his management and investing philosophies. Paula Hogan, who founded her firm in 1992 and shares her partner title with fellow advisor Clint Wondra, fits the bill, he said.
“We really value education and credentials and her office, like our office, is all certified financial planners, people with designations to support the work that they’re doing,” Mallouk said in an interview. “They share that commitment to credentials and a needs-based approach.”
Creative Planning will acquire one more firm before year end, and it will be its largest of 2019, Mallouk said. He declined to provide details.
His RIA custodies client assets and executes their transactions with units of Charles Schwab Corp., TD Ameritrade Holdings and Fidelity Investments. Schwab’s planned takeover of TD Ameritrade to create a $25-trillion custodial behemoth will likely affect the generally smaller RIAs that TD Ameritrade services, Mallouk said. (Hogan uses Schwab, TD Ameritrade and two other custodians, according to its most recent regulatory disclosure.)
“If I were a betting man, I would bet that a lot of smaller advisors are going to have to find a new home,” Mallouk said, “or are going to find their costs of custody going to…something very substantive very quickly after the merger.”
The acquisition of Adam Financial brings Mercer Advisors’ offices in Florida to three, its total offices to 46 and its assets under management to $17.5 billion. The firm has a “family office service model,” it said in announcing the Adam Financial deal.
Mari Adam, a certified financial planner who founded Adam Financial in 1995, and her three-member “next-generation” advisory team specialize in working with high-net-worth clients, particularly women, according to Mercer’s announcement. Adam also has coached or mentored “dozens of women” interested in becoming CFPs and planners, it said.
The deal is Mercer’s second since announcing in September that private equity firm Oak Hill Capital, whose founders managed money for the Bass family, had acquired a stake in the RIA aggregator.