King of Kansas

As the last decade was drawing to a close, Creative Planning owner Peter Mallouk, an estate planning attorney who bought the firm in 2004, decided it was time to shift the business strategy.   

Since acquiring the firm, he had been relying on implementing a unified approach and process to clients’ financial planning, wealth and money across the firm to increase client assets. Organic growth up until that point was the name of the game for Creative Planning, and like many competitors, Mallouk also leaned on the RIA referral program from the custody group of the Charles Schwab Corp. to reel in new clients.   

It was time for a change. That meant, in Mallouk’s thinking, that it was time to start buying RIAs to add to the firm’s growth.   

Clearly the firm had been a success, with assets of $42 billion before it made its first acquisition in early 2019 for the Johnston Group, a registered investment advisor with $500 million.   

He decided to throw fuel on the mergers and acquisitions firepower of Creative Planning, which is based in Overland Park, Kansas, a financial advice industry hub that’s a suburb of Kansas City, Missouri. A year later, Mallouk sold a minority stake in Creative Planning to private equity firm General Atlantic, with Mallouk controlling over 80% of the firm’s equity.   

Mallouk’s personal stake in the firm could someday translate into an astonishing windfall for the 53-year-old son of an Egyptian immigrant. For instance, he hasn’t diluted his percentage of ownership of the firm by selling more to outside investors, like private equity investors hungry for the steady cash flow kicked off by RIAs.  

Giant RIAs like Creative Planning keep climbing in value; earlier this year, private equity manager Clayton Dubilier & Rice said it was acquiring the publicly traded Focus Financial Partners, an RIA aggregator, and taking it private for the price of $7 billion. Focus Financial Partners controls $300 billion in RIA assets, or just 20% more than Creative Planning.   

Right now, the firm’s employees and financial advisors can receive ownership grants or buy units at a discount in small bites. Mallouk is not selling any of his equity in Creative Planning and declined to say what percentage is controlled by employees, except to note that he is “shifting more of the ownership of the firm to his team.”  

Industry sources and competitors say Mallouk is hungry, intelligent and hard-driving, not surprising for someone who has built such a firm in 20 years.  

“Those words are true,” he said in an interview this month. “People who know me would say I’m competitive, driven and relentlessly focused on the best offering for the client.”   

And he has his quirks. Mallouk sticks to a personal rule of not traveling more than one day per week on business and staying out of town no more than once a month. That leads to more time with his wife and three kids, and his team at the home office, where he is a big believer in a player-coach approach.   

Indeed, several senior financial advice industry executives said they had only met Mallouk briefly at meetings or did not know him at all.   

“Just naturally, I’m focused on our clients and my team,” he said. “It helps me understand what people want. I have good relationships with several other RIA owners, but I’m not going to conferences.”   

And ever since 2020, his firm’s RIA assets under management have been growing at an incredible rate, from $69.5 billion in 2020 to $130.5 billion this year, according to InvestmentNews Research data. Creative Planning also controls another $115 billion in retirement plan assets and has close to 1,100 financial advisors under its roof.   

Many in the financial advice industry may regard Mallouk’s latest move as his most audacious. In August, Goldman Sachs Group Inc. said it was selling its registered investment advisor business, Personal Financial Management, with $29 billion in assets and a few hundred advisors, to Creative Planning.  

For the giant investment bank, it was a retreat from the mass affluent market. Goldman Sachs had bought the business, formerly United Capital Financial Partners, for $750 million in 2019.   

“Peter’s a man of action — years ago he said he was going to acquire and did so faster than anyone in the business,” said David DeVoe, CEO of the eponymous consulting firm that has worked with RIAs sold to Creative Planning. “And he’s actively involved, too.  

“And Creative Planning is trending further upstream when it makes deals,” DeVoe added. “Most consolidators or large buyers are landing firms with $750 billion in assets. Peter’s getting firms with $1.1 billion. And he’s moving toward having an RIA with a national footprint.”   

Mallouk has gotten where he is by sticking to his roots in Kansas, where he was raised and where he graduated from University of Kansas in 1993 with four majors. Three years later, he earned his law degree and a master’s in business administration from the same school.  

“My dad introduced me to investing after he got screwed over by a couple of advisors,” Mallouk said. “He would go to the library and read about and study investing, and wound up buying mutual funds from American Century,” an iconic Kansas City, Missouri, investing firm that opened in 1958 and featured no-load mutual funds.   

Mallouk read a book by the founder of American Century, James E. Stowers Jr., and that spurred an interest in investing, he said.   

But he wasn’t focused only on investing as a kid. His love for baseball eventually allowed him to run errands for the likes of baseball Hall of Famer Wade Boggs.   

“I listened to the Kansas City Royals when I was falling asleep at night in bed, and got to work in the clubhouse for the visiting team when I was in high school,” Mallouk said. “I did laundry for the players, cleaned their shoes, and even bought fried chicken for Wade Boggs,” who, out of superstition, ate chicken before every game.   

In 2019, Mallouk and his wife, Veronica, regarded as top philanthropists in Kansas City, became minority investors in the Royals, as part of a group that included star local quarterback Patrick Mahomes. Mallouk declined to say what percentage of the team he owned.   

Around that same time, Creative Planning launched a national TV advertising campaign. “Those [spots] were new ways to try to meet clients,” Mallouk said.  

Mallouk is currently being closely watched by the entire financial advice industry, some of whom, in the spirit of competition, likely hope he bungles his acquisition of the Goldman Sachs RIA, Personal Financial Management.   

According to industry news website Citywire, more than a dozen Personal Financial Management advisors have left the firm recently and could wind up in legal disputes with Goldman over noncompete or nonsolicit clauses in contracts.   

“I think you would struggle to find any RIA that doesn’t have a nonsolicitation clause in its agreements,” Mallouk said. “Our reputation for enforcing that is accurate.”