If there was any doubt about the potential for scale in the wealth management space, it's being pushed aside by Modern Wealth Management, a brand-new private equity-backed company with a business model built around acquisitions.
In addition to $200 million worth of PE backing from Crestview Partners, the Monterey, California-based enterprise boasts the pedigree of industry veterans from Goldman Sachs and United Capital.
Modern Wealth is led by Co-Chief Executives Gary Roth and Mike Capelle, as well as president Jason Gordo. The three combine for more than 50 years’ worth of experience in the wealth management space.
Roth served as chief business officer and chief financial officer at United Capital, and as head of advisor strategy at Goldman Sachs Personal Financial Management. Capelle was chief platform officer at United Capital and head of product at Goldman Sachs PFM. Gordo was one of the architects of FinLife Partners at United Capital and head of advisor growth at Goldman Sachs PFM.
The registered investment advisor, which launched Wednesday, will focus on three primary business channels: mergers and acquisitions, recruiting advisors from other firms, and a referral service for advisors operating under the Modern Wealth banner.
With capital ready to deploy, Gordo said he expects to start announcing deals over the next few months.
“We’ll be a multibillion-dollar firm by year-end,” he said.
The same level of confidence is on display at Crestview, a private equity investor that is making its first foray into the RIA space.
“We’ve been active in the investment management space, broadly, and the wealth management space has been an area of active interest for years but we weren’t able to find the right platform and team, until now,” said Dan Kilpatrick, a partner at Crestview.
In addition to the team, which was responsible for 90 acquisitions while with United Capital, Kilpatrick said, “We really like the strategy they want to pursue of building a nationally scaled business over time.”
Crestview was established in 2009, and the $200 million commitment to Modern Wealth is part of the PE firm’s fourth fund. Kilpatrick expects the investment to be deployed over the next three to five years.
David DeVoe, chief executive of DeVoe & Co., said $200 million is a significant amount of financial commitment for an upstart firm, which he attributed to the reputation of the Modern Wealth’s founders.
“As the architects of United Capital's platform, this team is well positioned to create an integrated national footprint,” DeVoe said.
Angie Herbers, senior consultant at Herbers & Co., said the Modern Wealth business plan is well-suited to take advantage of the trend of an aging advisor population in need of succession plans.
“Effective succession planning requires multiple scenarios that give retiring advisors many options when they are ready for an exit,” she said. “The launch of Modern Wealth Management expands much needed succession options, and as an added bonus the firm is led by a team who has proven they can help advisors succeed while serving the best interests of clients.”
According to the Modern Wealth announcement, the company will take a “full team” approach to delivering comprehensive financial advice that will include tax planners, CFAs and estate planners to support advisors.
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