This edition of the Deals & Recruiting Roundup features our newest Recruiter of the Month, Martine Lellis, Principal, M&A Partner Development at Mercer Advisors.
We also cover Hightower acquiring a majority stake in NEPC, Lido Advisors acquiring Pegasus Partners, Waverly Advisors acquiring 9258 Wealth Management, Modern Wealth Management acquiring Petso Financial Consultants, Lovell Minnick Partners acquiring a majority stake in Americana Partners, Greenwood Gearhart acquiring Boston Mountain Money Management, Rockefeller recruiting DiMedio Wealth Partners from Merrill Lynch, GoalVest Advisory launching its Venture Growth Fund, Realta Wealth appointing Abbey Eastham as Head of Advisor Relations, LPL’s Board of Directors confirming Rich Steinmeier as CEO and Morgan Stanley Wealth Management releasing its quarterly retail investor pulse survey.
Larry’s Take
This week’s M&A deals involve firms with strong investment management capabilities that have made it a priority to acquire or merge with firms whose value-add includes either enhancing or complementing those capabilities.
News around M&A deal flow justifiably often focuses on compatible firm cultures, succession planning and expanding into key markets. And financial advisors have good reason to say client retention usually comes down to trust, responsiveness and financial planning over portfolio performance. Yet, in many respects, investment management is still the heart of the industry.
That’s evidenced in a recent report from the Money Management Institute (MMI) and Broadridge Financial Solutions, which found that wealth managers want asset managers to ramp up their product specialist talent as the lineup of more complex investment products, such as alternatives, becomes ever more popular.
In fact, part of the appeal for large RIAs to acquire firms with robust investment consulting and outsourced chief investment officer (OCIO) capabilities is that advisors can then become less reliant on asset managers to provide the information necessary to safeguard clients’ portfolio performance. Therefore, expect to see more such deals in the near future.
If you would like to discuss this Larry’s Take further, including how these trends might impact your business, please contact me at larry.roth@rlrstrategicpartners.com.
Mergers & Acquisitions
1. Hightower To Acquire Majority Stake In NEPC
Chicago-based Hightower will acquire a majority stake in Boston-based NEPC, an investment consultant and OCIO. The combined firm is anticipated to represent over $1.8 trillion in assets under advisement (AUA) and $258 billion in assets under management (AUM). NEPC is expected to retain its executive team and investment process while its current clients continue to receive their same chosen services.
The firms also expect that, as private market allocations increase, NEPC’s institutional research and investment capabilities will enhance Hightower’s wealth management solutions for advisors and their clients. Moelis & Company advised NEPC on the transaction, while Berkshire Global Advisors provided Hightower with industry research on the institutional investment consulting and OCIO industry.
“Our relationship with NEPC stemmed from the exciting and distinctive opportunity that both businesses can offer the private wealth market when combined,” said Bob Oros, Chairman and CEO of Hightower. “In partnership with NEPC, Hightower advisor practices will have expanded access to investment management solutions, research capabilities, and a compelling set of investment opportunities.”
2. Lido Advisors To Acquire $3 Billion Pegasus Partners
Los Angeles-based Lido Advisors, an RIA with over $24 billion in AUM as of Sept. 30, will acquire Mequon, Wisconsin-based Pegasus Partners, an RIA that had over $3 billion in AUM as of Dec. 31 across 300 families. CEO Todd Krieg and President Matt D’Attilio founded Pegasus in 2015.
All 22 members of Pegasus will join Lido, and most of them will become partners. Pegasus provides ultra-high net worth (UHNW) clients with wealth management and family office solutions including investment management, financial planning, family wealth transfers and alternative investments. Park Sutton Advisors, a Waller Helms Company, was the exclusive financial advisor to Pegasus on the transaction.
“Serving the sophisticated wealth management needs of families in all aspects of their financial lives and legacies requires steadfast commitment to specialized expertise and the highest ethical standards. The Pegasus team exemplifies this commitment,” said Ken Stern, President of Lido Advisors. “Together, we will strengthen our engagement with UHNW families in the Midwest community and beyond.”
3. Waverly Acquires $1 Billion 9258 Wealth Management
Birmingham, Alabama-based Waverly Advisors acquired Cincinnati-based 9258 Wealth Management, an RIA with approximately $1 billion in AUM and approximately 25 professionals. The deal expands Waverly into Ohio with three locations there and takes the firm’s total footprint to 25 locations nationwide. Waverly has approximately $14.4 billion in assets across a team of more than 200 professionals.
Waverly provides investment management, financial planning and wealth management solutions for high net worth individuals, corporate retirement plans and institutional clients. 9258 Wealth provides investment advisory as well as tax preparation and planning services. Walt Lunsford founded 9258 in 2017. He has 33 years of industry experience and joins Waverly as a Partner, Wealth Advisor and Regional Director.
“Partnering with 9258 brings a wealth of benefits to both firms,” said Justin Russell, President of Waverly. “Not only do we expand our reach into another new market, but we acquire new lines of service and expertise, while providing greater resources and infrastructure to 9258’s existing clients.”
4. Modern Wealth Management Buys $1.4 Billion RIA Petso Financial
RIA Modern Wealth Management acquired Boise, Idaho-based Petso Financial Consultants, a fee-only advisory firm with about $1.4 billion in AUM. Petso Financial was founded in 2001 by David Petso and offers investment management, financial planning, estate planning and retirement income planning for individuals and corporate clients.
The deal, Modern Wealth’s sixth this year and 11th since it was founded last year, allows the firm to surpass $6 billion in AUM and expand into the Pacific Northwest region. Modern Wealth now operates 14 client-facing offices in 11 states, with a presence in the East, Midwest, South and Pacific Northwest. The asset purchase transaction was “guided by” the Alaris Acquisitions Deal Advocacy process, according to a news release.
“By acquiring high-growth firms that share our commitment to delivering comprehensive financial advice, we continue strengthening our team’s ability to serve clients across the country,” said Jason Gordo, Co-Founder and President of Modern Wealth Management. “David, Jennifer [Stone] and the full team at Petso Financial have built an incredible business in Boise, with an exemplary approach to client service, culture and growth that is closely aligned with Modern Wealth.”
5. PE Firm LMP Acquires Majority Stake In Dynasty-Backed Americana Partners
The private equity firm Lovell Minnick Partners (LMP) acquired a majority stake in Houston-based Americana Partners, a firm with over $8.5 billion in AUM and a member of the Dynasty Financial Partners network. LMP focuses on high-growth, middle market services and technology companies. It will become the first outside institutional investor in Americana, which was founded in 2015. Americana’s leadership and employees will remain significant owners.
LMP has raised over $5 billion of committed capital, invested in more than 50 platform companies, and conducted more than 200 add-on acquisitions since launching in 1999. Americana provides wealth advisory and family office services, including alternative and traditional investment solutions, to high net worth and ultra-high net worth clients.
“This is an important milestone for our firm, and it underscores our commitment to building the right destination for our clients and financial advisors,” said Jason Fertitta, CEO of Americana Partners. “We chose to work with LMP because of their extensive track record in accelerating growth for successful wealth management organizations, their deep bench of resources to support strategic acquisitions, and their underlying philosophy as partners and investors.”
6. $1.6 Billion Greenwood Gearhart Acquires Boston Mountain Money Management
Fayetteville, Arkansas-based Greenwood Gearhart, which has approximately $1.6 billion in AUM, acquired Bentonville, Arkansas-based Boston Mountain Money Management, which was founded in 2007 and had $196 million in AUM as of its February SEC ADV filing.
Scott Alaniz, who served as Principal of Boston Mountain, joined Greenwood Gearhart as a Managing Director. Greenwood Gearhart, which was founded in 1982, has a team of 18 financial professionals. It provides comprehensive wealth management services to approximately 1,000 families.
“We have long held Scott Alaniz in high regard and have considered Boston Mountain one of the premier investment advisory firms in the region,” Brock Gearhart, CEO and Principal of Greenwood Gearhart, said in a video to clients on the company’s website. “We’re excited to pair Greenwood Gearhart’s breadth and depth of services with Boston Mountain’s expertise in corporate benefits and financial planning.”
Advisor Transactions
7. Rockefeller Recruits $1.9 Billion DiMedio Wealth Partners From Merrill Lynch
New York-based Rockefeller Global Family Office, the wealth management division of Rockefeller Capital Management, recruited Newtown, Pennsylvania-based DiMedio Wealth Partners. Managing Director and Private Advisor Chris DiMedio leads the 16-person team, which previously oversaw $1.9 billion at Merrill Lynch, according to Forbes. He has over 25 years of industry experience.
The team’s Private Advisors also include Senior Vice Presidents Jonathan Battillo, Anthony Ferrandino and Sean Moreland; and Vice Presidents Sean Arnold, Percy Mason, Patrick Sweet and Kyle Comerford. As of Sept. 30, Rockefeller Capital Management oversaw approximately $149 billion in client assets across Rockefeller Global Family Office, Rockefeller Asset Management, and Rockefeller Global Investment Banking.
“Chris and the DiMedio Wealth Partners team bring a wealth of expertise, experience, and client focus to Rockefeller,” said Chris Dupuy, President of Rockefeller Global Family Office. “We look forward to working with them to deliver the distinct capabilities of our platform and our people to current and prospective clients across the United States.”
Strategic Partnerships
8. GoalVest Advisory Launches Venture Growth Fund
New York-based fee-only RIA GoalVest Advisory launched its Venture Growth Fund, which is designed for high net worth investors, including clients of other RIAs, to access successful venture-backed companies that traditionally have been limited to large institutional investors. The Venture Growth Fund has a minimum investment threshold of $250,000.
GoalVest aims to raise at least $50 million for the closed-end fund. It will follow GoalVest’s existing formula of multi-channel deal sourcing to build a diversified portfolio across thematic trends in sectors such as artificial intelligence, software as a service, climate technology, defense, fintech and consumer. GoalVest, which was founded in 2017, had over $463 million in AUM as of its June SEC ADV filing.
“Almost 90% of US companies are private, so giving clients the ability to invest in venture capital has been an effective way to capture growth and, we believe, has differentiated us from our RIA peers,” said Sevasti Balafas, Founder and CEO of GoalVest Advisory. “We are excited to build on our success and offer this fund to RIAs looking for access to high-growth investments at reasonable fees and minimums.”
Promotions & People Moves
9. Realta Wealth Hires Abbey Eastham From Cetera To Lead Advisor Relations
Abbey Eastham is the latest executive to join Realta Wealth. The former Cetera executive will take on the newly created role of Head of Advisor Relations, reporting to CEO Kevin Keefe. Eastham was brought on to enhance the relationship between Realta and its network of independent financial advisors. Eastham will work with internal departments on service delivery to advisors and assist in developing programs and initiatives to improve the advisor experience.
She has 15 years of industry experience. Most recently, she was a Senior Investment Solutions Manager at Cetera Financial Group. Earlier, she was a Senior Vice President of Advisor Relations at First Allied Securities. Realta recently recruited Paul Tyler from Ameriprise to its leadership team in the role of Senior Vice President and Director of Business Development, where he leads the firm’s recruiting efforts. Tim Bowman joined as CFO in March.
“I am thrilled to begin the next chapter of my career with Realta at such an exciting time for the firm,” Eastham said. “I love helping independent financial advisors grow their businesses and care for their clients. At Realta, I will ensure advisors receive the high-touch, bespoke service experience they deserve. It’s great to be part of such an impressive team of dedicated industry leaders.”
10. Rich Steinmeier Confirmed As LPL CEO, Joins Board Of Directors
LPL Financial‘s Board of Directors appointed Rich Steinmeier as the firm’s CEO after he had been serving as Interim CEO since Oct. 1, when he replaced Dan Arnold, who was removed as CEO and President. Steinmeier was also elected to the Board. Arnold had been LPL’s President since 2015 and CEO since 2017.
Steinmeier joined LPL in 2018. He served as the firm’s Managing Director, Chief Growth Officer and, before that, Divisional President, Business Strategy and Growth. The Board also named Matt Audette as President and CFO, expanding his previous role as CFO and Head of Business Operations.
“The success of LPL is shaped by the clear-eyed view from our talented team that all Americans deserve access to sound financial advice. It is an incredible honor to lead the company that delivers on this purpose,” Steinmeier said. “I’m fortunate to collaborate with Matt and our leadership team to elevate our service to clients, provide rewarding careers for our people, and to build on our momentum as one of the fastest growing companies in wealth management.”
Wirehouse Activity
11. Morgan Stanley Survey Finds Investors Still Bullish, And Still Wary Of Inflation
Morgan Stanley Wealth Management’s quarterly retail investor pulse survey conducted from Oct. 1 to Oct. 14 found that 59% of investors remain bullish overall, down 2 percentage points from the previous quarter, and that 64% of investors believe the Federal Reserve will achieve a soft landing for the economy, up 10 percentage points from the previous quarter.
However, inflation was still the biggest portfolio concern for investors, with 46% citing it as the main issue above the U.S. election and market volatility. From a sector perspective, 54% of investors were bullish on information technology, 3 percentage points lower but still the top sector, while 43% of investors were bullish on energy and 36% were bullish on healthcare.
“It certainly feels like we’re at a bit of an inflection point with the Fed in rate cutting mode and investors remaining bullish,” said Chris Larkin, Managing Director, Head of Trading and Investing, E*TRADE from Morgan Stanley. “With year-end in close range, investors are starting to take stock of where the market stands but questioning what’s ahead. Despite some trepidation from the election and geopolitical uncertainty, the momentum from September has investors confident.”
Recruiter Of The Month
Martine Lellis, Principal, M&A Partner Development, Mercer Advisors
At the start of October, Denver-based Mercer Global Advisors announced acquiring two RIAs: Oak Ridge, North Carolina-based Kiely Wealth Advisory Group (KWAG), which had $523 million in AUM, and Berwyn, Pennsylvania-based Kades & Cheifetz, which had $440 million in assets.
In September, Mercer announced acquiring Old Lyme, Connecticut-based Benchmark Wealth Management, which had approximately $412 million in AUA. Mercer has $63 billion in client assets across more than 1,150 employees and over 90 locations. It is majority owned by Oak Hill Capital, Genstar Capital and Altas Partners.
And now for our Q&A with Martine Lellis, Principal, M&A Partner Development at Mercer.
WSR: What types of firms make ideal M&A candidates for Mercer Advisors?
Lellis: Firms that join us are like-minded and always strive to do what’s best for clients. They often operate similarly, with financial planning at the core of their value proposition. They understand that joining Mercer Advisors will allow them to serve their clients more comprehensively – based on our family office model. They typically are looking to spend more time with clients and grow the number of clients they work with. This growth mindset is very aligned with how firms that join us can do the best work of their careers here.
WSR: How does Mercer Advisors strive to stand out as the M&A partner of choice for such firms?
Lellis: As a truly integrated firm with a growth-mindset, we want our partner firms to know and experience that they will be both surrounded by specialists yet empowered as individuals.
On day one, the principals and employees of a partner firm are part of a team that is unabashedly focused on coming together in a collaborative manner to serve our clients as fiduciaries. They become part of a network of advisors who are empowered – and expected – to help guide the strategy and make decisions on matters that are important to their clients, their team, and them.
Finally, our experience in integrating nearly 90 partners since 2016 gives us a track record of experience, which partners tell us gives them confidence in their decision.
WSR: What is your role personally in the M&A process at Mercer Advisors?
Lellis: As the leader of our M&A Partner Development team, I guide like-minded firms in their transition decisions. This includes understanding their objectives in seeking a partner, assessing fit, conducting due diligence and financial analysis, and seeing a deal from that first exploratory conversation to close.
In the end, it’s my priority to help ensure that every partner firm choosing Mercer Advisors believes joining us will provide the best opportunities and value for their clients, colleagues, and themselves. My goal is to build rapport with the principals and the team, which will provide a positive start to their formal journey with Mercer Advisors.
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com.
