In what may be the largest departure from LPL Financial in nearly four years, a billion-dollar 401(k) and advisory team dropped the brokerage to join a private equity-backed startup firm.
Modern Wealth Management — a Monterrey, California-based registered investment advisory firm aggregator
Beltz Ianni is operating under its "next generation" four years after the retirements of its founders, and the team led by Michelle Cannan — who's now the head of company retirement plan services at Modern Wealth — explored potential deals with firms at LPL and elsewhere, she said in an interview.
"We decided as part of the succession plan that we wanted to continue to grow, and, in order to do that, we wanted to partner with a larger firm," Cannan said. "It was really important to us to find cultural alignment."
Representatives for LPL didn't respond to requests for comment on the move. The firm is reaching
In its present trajectory, LPL is avoiding mistakes it made in the past by allowing service levels to decline as the company "focused completely on growth," according to recruiter Ron Edde of
"They have since corrected that problem, and I think the current leadership appears to be cognizant of the fact that, as they grow, they need to add infrastructure," Edde said in an interview. "So far, they seem to be handling it pretty well."
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New suitors
Modern and a wave of well-capitalized startups led by former executives with big-name firms are adding more options for advisors considering a move of any kind. In addition to Modern and the prior tenures of its leadership with United Capital and Goldman Sachs,
While "some people just don't want involvement with a private equity owner," other advisors find offers that include some holdings in the startup firm's stock attractive, another recruiter, Mark Elzweig of
"For certain people, it's just too complex. There are too many moving parts," Elzweig said in an interview. "These kinds of firms are attracting very large and very high-end practices, so this is a very appealing model for a lot of advisors."
Beltz Ianni and other recent deals are helping Modern Wealth build "a full suite of capabilities for clients" beyond planning and investment advice, which are becoming the expected "table stakes" for all firms in the industry, according to Gary Roth, a co-CEO and co-founder.
The flurry of acquisitions so far has pushed Modern Wealth, which is backed by Crestview Partners, up to 28 advisors with $3 billion in client assets. Beltz Ianni's team can now assist others at the firm in advising on company retirement plans for their business owner clients and hosting meetings with 401(k) participants that could eventually convert them into wealth clients.
"We're really excited to have the retirement-plan services group as part of our team," Roth said in an interview. "It's a virtuous circle that has multiple elements to it."
In addition to Cannan, the incoming team includes executive financial advisors Kyle Dunn, David Germano and Stephen Howles, Executive TPA Consultant Jean Dailey and Executive Retirement Plan Advisor Bob Newton. Beltz Ianni has been operating since 2001, and it manages more than $700 million in retirement-plan assets for 100 companies and $500 million on behalf of individual clients. It refers to its 401(k) business as its "total retirement plan management" service for small to midsize sponsors.
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Key takeaways
Asked for any lessons that may be instructive to other teams considering a deal, Cannan cited the advice the company received from
"It can get overwhelming at times, so it helps to have a roadmap," Cannan said. "Taking your time and being really thorough with it helps to ensure that everyone is really comfortable and excited about the transition."
M&A deals for teams with at least $1 billion in client assets ticked down 2% year over year to 116 in 2023 due primarily to "macroeconomic headwinds, namely higher interest rates," according to the latest
Regardless, the "elevated number of larger transactions, in light of buyers facing a higher cost of capital and economic uncertainty, demonstrates buyer resilience and likely indicates that $1 BN+ deal activity will increase to 2021 levels or higher" after interest rates begin to fall, Echelon's report said. "The resiliency in this activity may also be a sign of increased creativity in deal structures adopted by firms striving to complete investments."
Teams of any size undertaking a sale should figure out their priorities for the transaction carefully, according to Roth, who suggested creating "your own little checklist or scoresheet" as part of the process.
"There are so many different flavors of buyers out there now," Roth said. "We talk to potential sellers all the time, but really it comes down to what is most important to you and are we a good match to that."
