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Creative Planning grabs Texas firm on way to goal of doubling 2019 AUM growth

Rapidly growing RIA Creative Planning has inked its first deal of the year — an early step in its 2020 goal of doubling last year’s $10 billion growth. With its purchase of Stratford Consulting, which has $618 million in client assets, Creative Planning also expands its Texas presence.

“Dallas is a very big market, but to really be better known and more competitive there, you are going to have to have more scale than we have,” Creative Planning CEO Peter Mallouk says, adding that his firm is well-positioned to hit its aggressive growth target this year.

“We have the ability to make it happen,” Mallouk says. “Now we just need to do it.”

Creative Planning CEO Peter Mallouk.

The firm’s SEC Form ADV reports $45.8 billion of client assets. Mallouk says a more-accurate figure is $49.6 million as Creative Planning is still converting accounts from its four acquisitions last year.

Creative Planning has 700 employees around the country, a couple of hundred of whom work out of its shiny headquarters, built in 2018, in Overland Park, Kansas. There’s room to nearly double its workforce there, according to Mallouk. The firm also completed a hefty investment in technology, spending more in that category over the last 18 months than it has in its history, according to Mallouk. He did not disclose the amount invested.

“We’ve got the talent in place. We now have a physical footprint. We’ve invested in technology,” Mallouk says. “This is the first year at Creative where we’ve said we don’t need to focus on those things .... I think we would be disappointed if we didn’t have our best year ever.”

Over the past five years, it has grown its assets under management by 20% to 50% annually, he says.

Last year, Creative Planning bought low-cost 401(k) provider America’s Best 401k; Hogan Financial Management in Milwaukee; the Johnston Group in Minneapolis; and OptiFour in the Washington, D.C. area.

Taken together, the four deals accounted for about $1 billion of its 2019 $10 billion growth, Mallouk says, adding that the rest was organic.

“We just have clients that stay with us and refer to other clients,” he says.

Mallouk’s highly-publicized — and later scuttled — business ventures with motivational speaker and author Tony Robbins also continue to help spur growth for the firm in its new ultrahigh-net-worth division, Mallouk says. The connection to Robbins, who remains a client of the firm, continues to draw new clients in this category for people with assets ranging from $5 million to hundreds of millions. The two co-authored a book together, “Unshakeable,” and launched a partnership four years ago that came apart in May after Robbins was accused of sexual misconduct in a Buzzfeed investigation. The allegations were denied by Robbins through his attorneys in a letter to Buzzfeed. He also denied the accusations in a video posted to YouTube.

Allegations aside, Robbins “really helped us open up those categories,” Mallouk says of his firm’s wealthiest division. “The ultra-affluent practice has really taken off like a rocket. That has become the fastest-growing part of the firm. It’s really emerged in the last three years. Of the private assets we manage, even though it’s probably just a few hundred clients, I would say, it’s probably 15% to 20% of our assets now.”

Mallouk told Financial Planning last fall that Robbins’ impact on Creative Planning’s growth had been “grossly overstated by people who want to speculate.” At the time, he said Robbins was responsible for only a “single-digit percentage” growth rate at the firm.

Historically, Creative Planning’s biggest growth came between 2016 and 2018, when it doubled in size to $36 billion in AUM from $18 billion. That was during the heyday of the Robbins partnership. Mallouk says the stock market's performance drove growth during those years. "Was the relationship impactful? Yes. But it is responsible for a single digit percentage of our assets."

Aside from the ultrahigh-net-worth group, the firm’s other two divisions include the private wealth group, composed of “multimillionaires next door,” with assets in the low millions, he says, and the emerging wealth group, composed largely of family members of wealthier clients, who have under $400,000 to manage.

To work with clients across these groups, Creative Planning is looking to buy RIAs that meet strict criteria, Mallouk says. They must be willing to fully integrate their practice into Creative Planning’s software and tools. Their investing philosophy — passive stocks, combined with creative bonds, options and alternatives — must mesh with Creative Planning’s. And they must have a consultative, financial planning-oriented approach, he adds.

These are conditions many, if not most RIAs, especially large ones, can’t meet, according to Mallouk.

“It is very hard to find a like-minded firm,” he says. “When we do an acquisition we need to have a good fit around the board.”

For the right firm, however, Creative Planning’s scale and long-term vision can be just what they are looking for, he says.

“I’m an advisor. I lead the firm,” he says. “They know I’m planning to be in the business for a very long time.”

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