Ron Carson,
LPL Financial Corp.'s most prominent financial adviser, seeks to create a national wealth management franchise, joining the fray with other noted investment advisers desiring a national footprint.
Carson Wealth Management Group, which is based in Omaha, Neb., and controls $2.6 billion in client assets, today is announcing the purchase of two advisory firms in Washington state.
Mr. Carson said in an interview last week that he expects to buy five more practices next year. To do so, he likely will tap into a network of hundreds of advisers who subscribe to his training program, called PEAK.
Mr. Carson, chief executive of the firm, said that he is also beefing up his staff as part of the national expansion and is close to hiring an investment strategist with a known track record.
“We have a natural market of advisers,” he said, adding that the cost of doing business for many advisers has risen in many areas in the country. Running a business in Omaha gives the firm an advantage of controlling costs, Mr. Carson said.
“We can squeeze out expenses for advisers,” he said.
Mr. Carson is the latest well-known adviser to attempt to build a national network of offices. His competition includes firms with widely different business models and targeted clients, including
Edelman Financial Services LLC and
HighTower Advisors.
Building a national wealth management and financial planning firm requires a coordinated strategy that can be replicated in offices throughout the country, said Ric Edelman, chief executive of Edelman Financial.
“It's the difference between being a really good cook and a successful chef,” he said. “A lot of people can make a great brownie, but can you replicate that for a thousand people?”
Fairfax, Va.-based Edelman Financial began its national expansion in August 2009 by opening six offices in the New York metropolitan area. The firm now has 17 offices, and Mr. Edelman said that it could add as many as 30 next year, with launches planned for January in Boston and Detroit.
The wealth management business is extremely fragmented, crowded and competitive, particularly on the East and West coasts, said Sean Cunniff, research director at The Tower Group Inc.
“But I don't think it's impossible” for a firm to expand nationally, he said.
“If [Mr. Carson] has maxed out his geographical space, it's the only logical thing he can do,” Mr. Cunniff said.
“Some advisers have problems running their own business,” said Douglas Flynn, who is affiliated with LPL Financial and whose practice, Flynn Zito Capital Management LLC, controls more than $265 million in assets, with more than $100 million in discretionary accounts. The new Carson venture “could be successful for some advisers,” he said.
Mr. Flynn's firm subscribed this year to Mr. Carson's PEAK coaching service. Mr. Flynn said that Mr. Carson, like other local businesses that expand nationally, will have to adjust to regional differences in communication.
One competitive advantage Carson Wealth Management can exploit is its focus on investors with $1 million to $10 million in assets, Mr. Carson said.
“We rarely have any competition for those assets,” he said.
The firm's investment specialty is protecting clients' “irreplaceable capital” and “protecting against the downside,” Mr. Carson said.
Advisers will run their businesses “the Carson Wealth Management way,” he said.
With many broker-dealers and investment advisers seeking capital to build businesses or even remain afloat, Mr. Carson said that the funding for the expansion will come from his own pocket. He also said that the expansion won't alter his relationship with LPL Financial, which is the major broker-dealer unit of LPL Investment Holdings Inc.
The parent company filed for an initial public offering with the Securities and Exchange Commission in June.
Carson Wealth Management's offices will differ from the industry's various so-called roll-ups in the industry, which buy the practices of life insurance agents and financial planners, said the firm's president, Jonathan Foster.
“It's different because of the consistency of the service and process,” he said. “This is not a co-op of advisers who want to do their own thing.”
E-mail Bruce Kelly at bkelly@investmentnews.com.
