This content is from: Wealth Management

Bain Capital Says It Invested Millions in Carson Group, a Technology Company. Is That What It Is?

Carson Group employs financial advisors, buys stakes in other RIAs, and has a coaching business. Something else helped make it worth $1 billion.

If someone stumbled upon the right videos on social media, they might guess Ron Carson is the founder of some successful technology startup.

He’s middle aged, but has a whimsy and youthfulness about him. His grey hair is long, past his ears. The length and tidiness of his ever-present beard fluctuate. Carson regularly appears online wearing athletic or casual shirts and beaded necklaces.

A year ago, while at 40 Years of Zen, the “most powerful 5 Day Neurofeedback Program on the planet,” Carson shared some self-improvement revelations and encouragement, common themes of his #Ronsense videos. “Avail yourself to the latest technologies and knowledge that we have to biohack ourselves, to have a more meaningful, fruitful, and enjoyable life.”

Like some technology companies, Carson Group also has a new headquarters emblematic of its growth and ambition. Employees recently began working out of an $80 million Omaha, Neb. building that will eventually be 200,000 square feet, complete with a gym offering fitness classes throughout the day and other amenities. 

A recent investment in Carson’s namesake company gave the tech founder narrative some verisimilitude.

Last week, Bain Capital, the $130 billion private equity giant, announced it invested in Carson Group, valuing “one of the fastest-growing financial technology and services firms in the country” at $1 billion. Bain Capital purchased the stake from Long Ridge Equity Partners, which led a minority investment in the company in 2016. No specific terms of the deal were shared.

But is Carson Group — which employs financial advisors, buys stakes in other RIAs, and has a coaching business for those professionals — a technology company? 

“We will always be a wealth manager, that is our core competency,” Teri Shepherd, president at Carson Group, told RIA Intel. However, the thorough answer to that question is more nuanced. 

Founded in 1983, Carson Group has three businesses. There’s Carson Wealth and Carson Partners (RIAs it owns minority and majority stakes in), which manage an aggregate of $17.6 billion in assets for more than 37,000 families from 110 offices. And any advisor, even outside the organization, can become a member of its third business, called Carson Coaching. The program says its members grow two and a half times faster than the average advisor over a two-year period. Cristian Jitianu, principal at Bain Capital, said it’s “the best coaching business in the industry.”

The success of those businesses stands out in the wealth management industry, with recent growth due partly to Carson Group’s investment in its own technology.

Five years ago, it created its own client portal called “CX” — something more than a nice-looking interface. Clients use CX to track their financial planning and goals, engage in behavior coaching, evaluate their risk tolerance, and view assets, even those held away. It already uses artificial intelligence to anticipate the needs of clients, and Carson Group envisions it doing more with help from Bain, an investor in Acorns, SigFig and other fintech companies.

Over the next five years, CX will expand to become a platform that investors without complex financial lives can leverage on their own without an advisor. At least initially, it will be offered to people who are tangential to clients of Carson Wealth or its partner firms, such as children and or other family members. Asked whether the company would consider broadening the availability of CX to investors and advisors beyond Carson Group’s universe, Shepherd said that is “definitely a possibility.” CX is being developed with that option in mind.

“Ron often says we don’t just want to make an impact, we want to make a local, national, and global impact,” Shepherd said.

Any expansion or evolution of CX won’t compete with advisors. As financial lives inevitably become more complex, there will always be a need for financial advisors, Shepherd added. If anything, a more commercial version of CX will widen the top of the prospect tunnel for Carson Group and its partner RIAs.

Bain Capital’s commitment to invest additional money across all the businesses, and its consultative approach, are what Carson Group likes about its new minority owner. Both parties believe there will ultimately be a handful of huge RIAs with national reach and recognition and that Carson will be one of those. (All others will be considerably smaller regional players or boutiques.)

To achieve that goal, Carson Group and Bain Capital say it must be both a wealth manager and a technology firm. That’s how it will stay ahead of the curve, according to Jitianu.

Added Shepherd, “We’re not just here to turn things around and sell it. We’re building it for the long term, not the short-term multiple.”

The company intends on being around for a century, or longer.

“Looking forward at this exciting inflection point, Bain Capital is the ideal fit for us — culturally and strategically,” Carson said. 

“We wanted an investing partner who brings deep operational knowledge and resources to help further our efforts and ensure we continue to deliver a compelling value proposition to our advisors and their clients. I can't think of anything more exciting than finding a partner like Bain Capital who shares our enthusiasm and drive for building a 100-year company." 

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