This content is from: Practice Management

What One Wealth Manager Has Learned While Acquiring 50 RIAs

Every RIA contemplating a deal should consider this advice from Captrust.

Rush Benton leads the RIA acquisition strategy at Captrust, a Raleigh, N.C. company that manages $60 billion and advises on more than $600 billion. In January, he said sellers were trending larger. Yet another proof point emerged this week.

Captrust said Thursday it bought Nachman Norwood & Parrott Wealth Management (NNP), a Greenville, S.C. firm managing $2.1 billion, a large deal in terms of the seller’s AUM. 

The NNP deal also represented a milestone at Captrust, marking 50 RIAs acquired since 2006. 

Most RIAs never buy another firm, and acquiring more than a couple per year would rank a company amongst the most prolific buyers. Acquiring 50 other RIAs over the course of 15 years puts Captrust in the company of few others – and there is much to be learned from that volume of transactions.

Age demographics tend to be a reliable signal about a prospective seller, according to Benton. RIA owners in their 40s are smart to explore their business options, including opportunities to sell their firm. However, discussions with them tend to be short, Benton told RIA Intel. “They don't have the catalyst of age to spur them on.” The older the owners, the more incentivized they are to sell.

Acquiring a lot of RIAs has helped Captrust refine its prospecting, dealmaking and onboarding processes. The high volume has also proven that no two deals are the same. Benton likened the uncertainty of deals to urban warfare; on the same battleground, every building comes with unique, unknown challenges. It never gets easier, he said. 

Captrust has acquired 12 firms in the last two years, including five so far in 2021. On the other hand, it consciously chose not to acquire any RIAs in 2016. “We’re much more interested in quality than quantity,” he said.

Shares of Captrust, a private company, are part of the compensation sellers receive (and they have enriched some employees). Since they become true business partners, Captrust is pickier than some other buyers, who Benton says are doing transactions purely as a financial exercise.

Benton said Captrust feels no urgency to acquire other RIAs and other companies shouldn’t either. RIAs are consolidating but the number of independent wealth managers continues to grow. But whether a firm is looking to buy its first or fiftieth RIA, Benton urges patience. “You’re not going to miss out. It’s not like it’s happening and we’re going to wake up one day and it’s over.”

“Fifty is a number,” Benton continued. “I don’t think it's anywhere near the end of the story. I think that the vision for Captrust and others is that this independent RIA industry will evolve,” Benton said. 

“There will always be good, local, small firms. There will be good regional firms and there will be good national firms. A true national firm is what we want to be, and I think we're kind of already there. But we’re nowhere near the finish line.”

Related Content