A billion-dollar registered investment advisory firm focusing on low-cost, passive investments folded into Wealth Enhancement Group to carry out its succession plan.
Equius Partners, a Novato, California-based RIA with seven financial advisors, five support staff members and more than $1 billion in client assets, sold itself to Minneapolis-based Wealth Enhancement for an undisclosed amount, the firms
Advisors Jeff Troutner and Phil Jonckheer — majority owners who established Equius 30 years ago — sought out a new parent firm for financing as Equius moves to the next generation under Troutner's son, CEO Thomas "T.J." Troutner, the elder Troutner said in an interview. The deal won't change Equius' approach to serving its clients, he added.
The number of RIAs with at least $1 billion in client assets
The younger Troutner has worked at Equius for the past 17 years, and his father and Jonckheer sought a partner to reduce operational tasks "pulling him away from his strength which is working with clients" and prospective customers, Jeff Troutner said.
"We needed to give the next generation a way to participate in ownership, and when you have a billion-dollar firm it's hard to pass on to the next generation financially because of the burden it puts on them in debt," he said. Besides support on planning, tax strategy, estates and in other areas, Wealth Enhancement enables "you [to] continue to manage relationships in a way that you feel is ethically sound and in the best interests of the client," Troutner added.
The number of billion-dollar RIAs surged by 232% to 1,447 between 2012 and 2021, according to data
Wealth Enhancement, which is
A continuing flow of breakaway wirehouse teams launching independent firms is fueling the massive rise in billion-dollar firms, too, according to Vince Fertitta, the president of wealth management at Sanctuary Wealth, an Indianapolis-based brokerage and RIA. In February, Sanctuary landed
Wirehouse teams "don't reach that level of success without an entrepreneurial mindset," Fertitta said. Still, he added that big teams often see no difference between themselves and many other brokers when it comes to compliance oversight and flexibility.
"They're not a business owner, they're not a CEO; they're just an employee, and they're treated no differently than an employee who's been there two years and does a fraction of the business," Fertitta said. "It just wasn't a very viable option when they had to try on their own to recreate everything they had in the wirehouse world. Now the industry has evolved to meet that demand."
Equius operated with a far different setup compared to wirehouse teams; the firm doesn't use any brokerage and primarily recommends selections among funds issued by Dimensional Fund Advisors.
The elder Troutner also owns a firm called
An unwavering focus on "regular investing, very broad diversification, low cost and really avoiding market timing and stock-picking," can help advisors and their clients avoid the pitfalls that come with reacting too much to bull and bear returns, Jeff Troutner said.
"We believe that the greatest value, in terms of financial outcome, is impacted more by smart, efficient, disciplined investment management, and that financial planning is an add-on that is important at various times in the client's life," he said. "It's an insecurity on the part of a lot of financial planners that they're adding more value having people have up-to-date wills and budgets and this and that."
Most of the firm's clients are individuals such as teachers, small business owners and physicians, with part of its base coming from work with endowments and 401(k) plans. Equius tapped DeVoe & Company as its advisor in its search for a larger partner.
"As we continue to grow, we recognize the importance of scaling locally to build strong communities for our advisors," Wealth Enhancement CEO Jeff Dekko said in a statement. "By expanding our presence in important markets such as Northern California, we are better positioned to deliver exceptional service and support to our clients while living our values and fostering a culture of teamwork."
