Beacon Pointe Wealth Advisors is bulking up again.

The $5.6 billion RIA with national aspirations is bringing on Independent Financial Advisors of Riverside, Calif., which has $100 million in assets under management. The deal adds a fourth partner firm to Beacon Pointe's roster.

Independent is affiliated with Roorda, Piquest & Bessee, a certified public accounting firm in Riverside. James Valmonte and Teri Parker, Independent principals, will join Beacon Pointe as managing directors and equity partners.

The Beacon Pointe-Independent deal was announced just as a new Pershing Advisor Solutions report was released  showing that 37% of all deals in 2012 consisted of an RIA entering into a "one-off" transaction with another RIA or an RIA making a series of acquisitions.

"The biggest trend in M&A is same-model marriages— RIAs rolling into other RIAs instead of into consolidators,"  Mark Tibergien, chief executive officer of Pershing Advisor Solutions, said in a statement.


Independent has “barely scratched the service” when it comes to leveraging referrals from the accounting firm, says Beacon Pointe president Matt Cooper, and has the potential to double its assets under management quickly, eventually reaching $1 billion.

Beacon Pointe is actively looking for more advisory firms with a CPA tie-in as it plots an expansion strategy of reaching 35 to 40 offices around the country in the next 10 years, Cooper says.

The firm, a subsidiary of Beacon Pointe Advisors, is targeting advisory firms with $100 million to $300 million, with an eye toward developing a national footprint, Cooper says. Based in Orange County, Calif., Beacon Pointe currently has three offices in California and one in Arizona; Cooper says he is in “active discussions” with wealth management firms in Boston, Virginia and Dallas.

“There’s a lot of activity,” Cooper says. “The biggest challenge is to sort through all of the potential partners.”


Beacon Pointe is hardly alone in its bid to expand nationally.

In addition to major national aggregators backed by private equity funding, such as Focus Financial and United Capital Partners, a number of other strong local firms are also seeking to partner with local wealth management firms around the country, aiming to take advantage of economies of scale in pricing, research, reporting, technology and compliance to leverage assets and revenues.

That list already includes Aspiriant, Presidio, Mariner Wealth Advisors, Washington Wealth Management, and, most recently, Highline.

Like Aspiriant and Presidio, Beacon Pointe has a partnership business model with internal financing.


“This is an equity swap deal, day one,” Cooper says. “Our partners contribute their business and, based on a weighted average of the previous three years' net income, they receive their initial equity percentage in Beacon Pointe Wealth Advisors. Each time a new partner joins, or at least once a year, we adjust the equity allocations relative to each partner’s net income. So we do not need any cash per se when a partner merges with us.”

The structure allows Beacon Pointe to grow deliberately and selectively, without being under pressure from a third-party outside investor for a liquidity event, Cooper says. “We’re not being built to be sold,” he stated.

When a partner retires, Cooper explains, “We must buy them out at fair market value, no discounts. The valuation is on the overall enterprise. Therefore, we must reserve cash over the coming years and effectively time -- or ladder, if you will -- the retirement buyouts of our

"Our current partners range in age from mid-30s to mid-60s, so we feel great about our ability to do just that,” he adds.


Industry observers give Beacon Pointe credit for its growth plan, but point out that none of its rivals have yet achieved a true national footprint.

“Advisor support, organization and services have to be consolidated,” says Elmer Rich, a Chicago-based marketing and mergers and acquisitions consultant. “There is good research that acquisitions, not organic growth, is the best way to grow. So acquisitions should be on everyone’s strategic planning agenda.”

That being said, Rich points out that integration of independent firms has been very hard to achieve and that firms usually need substantial capital requirements to achieve systems integration. “The whole process is just not that easy,” he says.

The lack of outside capital makes national growth harder for regional firms, agrees Michael Stier, president and CEO of Adhesion Wealth Advisor Solutions. Stier also pointed out that while a partnership model may be attractive to younger advisory firm owners, older principals are more prone to seek an “upfront cash-out.”

But Cooper says timing and demographics are on Beacon Pointe’s side, as aging advisors look for succession-planning options. “If you had tried this 15 years ago, it wouldn’t have worked,” he says. “Five years ago you should have been thinking about it. Now, with the technology that’s available and baby boomers looking ahead, is the right time to be doing this. And if we never do another deal, we still have done a great thing getting to where we are.”

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