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Creative Planning could acquire 100 RIAs

RIA Creative Planning could acquire as many as 100 RIAs in the next several years in its quest to grow to $100 billion in client assets under management.

That's according to the firm's president, Peter Mallouk. "We are determined to become the leading national independent firm. We are on a mission to do that," he says.

Mallouk has made much of his firm's track record of bulking up to its current $39 billion in AUM solely through organic growth over the past 15 years.

But that phase of Creative Planning's life is over.

It's now ready to turbocharge its next expansion through a headlong plunge into M&A, Mallouk says.

"I think we will be a great option for firms that are looking to fold into a larger partner," he says.

Peter Mallouk headshot 3 1 19

To make that happen, it has doubled the size of its workforce to 600 in just the past year and rebuilt its technology infrastructure. It also has busted out of its previous headquarters' 30,000-square-foot capacity to a new building with 175,000 square feet in Overland Park, Kansas. Half of that space sits empty, ready to absorb a wave of new hires.

This week, it put its toe in the M&A waters by announcing its purchase of the Johnston Group, a Minneapolis firm with $500 million in AUM. It is in talks with "two or three" other prospects right now, according to Mallouk.

"If it fits, we would do 100" more deals with RIAs, Mallouk says.

Creative Planning's numerous competitors in the race to build nationally recognizable independent RIAs include Edelman Financial Engines, which manages more than $205 billion after the merger of Edelman Financial Services and Financial Engines, which serves the 401(k) market. Others include Fisher Investments, founded by Kenneth Fisher, which manages $96 billion in client assets; Carson Group, founded by Ron Carson, which says it has more than $8 billion; and a panoply of aggregators or rollup firms, including Focus Financial Partners, Dynasty Financial Partners, Mercer Advisors, Mariner Wealth and United Capital.

Creative Planning stands apart from its competitors by virtue of the fact that it is not distracted by private equity backers, while also being run by a CEO who still actively works with clients, Mallouk claims.

"That's in my DNA," he says. "I see clients. I'm a practicing advisor, so I'm very attuned to what clients are thinking about in delivering and making recommendations to them."

Mallouk wouldn't say how many clients he serves, but he added that "it's more than seven." While most of them have $25 million or more in assets, he routinely helps other advisors in his firm with clients at all asset levels.

Creative Planning's clients have an average of about $1 million to invest, he added.

His firm's strongest selling point to other RIAs, Mallouk thinks, is that his model is "proven."

While competitors grew to scale through M&A and brought on investors, Creative Planning grew to its current size by adding clients organically, he claims.

"Without running around acquiring firms, we've grown to $39 billion," he says. By contrast, "a lot of [competitors] at $4 billion, they were running around acquiring equity."

Creative Planning, he says, is a firm "that [clients] have chosen year in, year out." Now he thinks RIAs should do so, too.

"We are open for business," Mallouk says.

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