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New deal helps Creative Planning expand its retirement reach

Creative Planning is upping its retirement planning game with its purchase of America's Best 401k, a low fee 401(k) provider.

The $42 billion RIA based in Overland Park, Kansas, already manages around $3 billion in retirement plan and wanted to expand its footprint in the fast-growing sector, says CEO Peter Mallouk.

“We’re already doing a lot of offerings for larger plans,” Mallouk says. “We were not offering a low-cost plan and America’s Best gives us the technology and the ability to be much more competitive in pricing.”

Peter Mallouk-2019-Creative Planning
Creative Planning CEO Peter Mallouk wants the RIA to expand its footprint in the retirement market.

Creative Planning is already investment fiduciary and RIA for America's Best 401k. Acquiring the firm will offer more “brand cohesion,” Mallouk says. Tom Zgainer, founder and president of America's Best, will remain in his current role. The terms of the deal were undisclosed.

The deal is Creative Planning’s second of the year. In February, the firm bought The Johnston Group, a $500 million Minneapolis-based RIA with a footprint in Minnesota, North Dakota and South Dakota.

With just three months left in the year, Creative Planning is well short of the ambitious M&A aspirations Mallouk outlined for Financial Planning in March.

Creative Planning will be able to hold its own with deep-pocketed M&A competitors, says CEO Peter Mallouk.

In an interview, Mallouk now says his comments were misinterpreted and the firm is focusing on “quality over quantity.” In spite of the extremely competitive seller’s market for RIAs, Mallouk says “we are seeing more opportunities now than we ever thought.”

Creative Planning will be able to hold its own with deep-pocketed M&A competitors backed by private equity who are furiously vying for available RIA firms, Mallouk contends.

“We are one of the biggest players in the market,” he says. “If we want to buy a firm, we have the ability to buy a firm. But we are being more selective.”

Creative Planning has always prided itself on organic growth and AUM has soared to $42 billion from approximately $30 million since Mallouk bought the firm in 2004, with few acquisitions.

The firm’s emerging wealth division, which focuses on younger clients and has a $50,000 investable asset minimum, has grown to $1 billion in assets in three years, Mallouk says. Those clients are offered streamlined services and speak to planners over the phone, Mallouk says.

The bulk of Creative Planning’s growth came between 2016 to 2018, when it doubled in size from to $36 billion in AUM from $18 billion. That was the period when the firm had a partnership with motivational speaker and author Tony Robbins, which ended in May.

Robbins touted Creative Planning’s services to a mass-affluent audience and received a percentage of revenues generated by his referrals. Mallouk says Robbin’s impact on Creative Planning’s growth has been “grossly overstated by people who want to speculate.”

According to Mallouk, Creative Planning has grown at a steady clip of over 25% annually, a rate that “did not change” during the firm’s association with Robbins. The telegenic self-help speaker, Mallouk asserts, was responsible for only a “single-digit percentage” growth rate.

Creative Planning parted ways with Robbins after accusations of sexual misconduct were reported by Buzzfeed Newsin May. The allegations were denied by Robbins through his attorneys in a letter to Buzzfeed. Robbins also denied the accusations in a video posted to YouTube.

A forthcoming financial planning book by Mallouk, “The Path,” will have chapters written by Robbins and Jonathan Clements, the former Wall Street Journal personal finance columnist who is Creative Planning’s director of financial education.

The book is set to be published in the first quarter of next year. Mallouk says he is currently in the process of "finalizing an agreement" with a publisher.

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