Bigger may or may not be better when advisory firms merge, but collaboration is what really counts, say principals at the newly bulked-up Modera Wealth Management.

"Everybody talks about mergers, but making changes for the betterment of the entire firm is the hard part," says John Ceparano, a founder of Joseph Capital Management (or, more commonly, JCM) -- a Florida firm outside Tampa firm that merged this summer with New Jersey and Boston-based Modera. "We started collaborating before the merger as like-minded people committed to using the best qualities of both firms, and continued from there."


While finalizing the stock swap, principals from both firms set up an integration team, Ceparano says, to not only figure who should be doing what as the firms combined, but also what were hot-button issues to various staffers.

"The key thing when we made changes was to make sure they were our changes," he explains. "To the outside world, the merger was expressed in the unifying branding element. Internally, there were certainly heated discussions behind closed doors, but the objective was always to end up at 'we,' and not 'us' versus 'them.' Collaborating closely made everyone work toward our system."

Merging the planning-oriented Modera with JCM, which spun off from a public accounting firm, really was meant to create an improved entity, says Tom Orecchio, a founding Modera principal and well-known industry figure who is a past chairman of NAPFA and last year received the association's distinguished service award.


Ceparano had met Orecchio several years earlier, at an industry conference -- as JCM began looking for a partner, Ceperano found that both Modera and JCM had similar goals.

As the two began courting each other, Modera was impressed by JCM's tax expertise, software technology and portfolio model, Orecchio says. And JCM, a much smaller firm in search of growth -- it had less than $200 million in assets at the time of the merger -- was drawn to Modera's strong presence in the Northeast and its experience with the integration process. (Modera had already merged with Boston-based Back Bay Financial Group in 2011.)

"The fact that Modera had already been through a successful merger, had established best practices and proven to be collaborative in nature meant a lot to me," says Sally Long, a former JCM wealth manager and now a Modera principal.

Both firms saw the merger as a way to strengthen and diversify their skills, attract high quality talent and remain independent. "One of our goals is to remain independent as long as we can," Orecchio says. "Diversifying and deepening ownership helps us to do that - you're not counting on one to three owners to bring in all the business."


The firms looked for compatibility in fee structure and investment strategy.

"When we were looking for a partner outside Florida, we wanted to work with a firm with a similar culture," Ceparano says. "We narrowed it down to fee-only advisors and planners working with Dimensional Fund Advisors -- which is a very small universe east of the Mississippi."

JCM ended up in discussions with a few firms, Ceparano says, adding that the sticking points were less about money than timing and control. "People were not ready to let go," he says.

Deals are tough to do, Orecchio adds. "You're dealing with entrepreneurial individuals who are used to making decisions by themselves," he says. "You have to change behavior and adopt a new governance structure. And people have to be very forward-looking to see the benefits."

In addition to Ceparano and Long, JCM's Michael Tringali also joins Modera as a principal. The deal brings Modera's total number of principals to nine. The combined firm now has over $1.5 billion in assets under management.

The firm's immediate priorities include technology and facility upgrades and the development of a formalized executive structure by year's end.

While Modera is now considering opening other offices along the Eastern Seaboard, in spots like Philadelphia, Washington, D.C., southern Florida or Atlanta  -- where the firm already has an office -- it will also consider opportunistic mergers or acquisitions in the region, say Orecchio and Ceparano.

"It's easier to do deals in your backyard than establish a whole new location," Orecchio says.

Read more:


Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access