In a new program at United Capital, advisors are getting a shot at liquidity every year.

A total of 10 advisors took advantage of the first round of the “perpetual liquidity” program last year, some selling shares of company stock for $500,000 or more, according to the firm’s Chief Financial Officer Gary Roth.

Ten of the 11 advisors who were eligible to participate with at least six years tenure at United Capital chose to do so, Roth says, and all sold shares worth at least six figures. Eligible advisors may sell up to 25% of their stakes at a time, he says.


“It’s a nice way for us to give people the opportunity to take some chips off the table if they want to and get some interim liquidity,” Roth says.

The program is intended to facilitate natural succession transitions as advisors prepare for their own retirement, according to Roth.

The strategy may be unique among other aggregators such as Focus Financial and Hightower, says Alois Pirker, director of research at Aité Group.

“I haven’t seen this from aggregation firms,” Pirker says. “Typically in the aggregation space, any spare cash is used to lure new advisors to the firm.”

However, as many aggregators prepare to go public in coming years, stock buybacks make sense, Pirker says. “I would expect to see [aggregator IPOs] happen in the next couple of years…. The buyback could help them maximize value.”

United Capital’s board and management team will decide how much money to set aside to fund advisor stock sales on an annual basis, according to Roth. Last fall, in the program’s first round, the company set aside funds “in the seven figures,” he says.

As more and more advisors become eligible to participate in the program in coming years, funds available for rounds will go to advisors who have not yet participated, Roth adds. Any unused funds will roll over to future years.


Phil Jacobson, a United Capital advisor in Rockville, Ill., says he sold 20% of his shares in the inaugural round of the program to cover college cost for his two children, one of whom is now a high school junior and the other is a freshman.

“It is one thing to go home and talk about the value [of being part of United Capital] with your wife and it’s another thing to bring a check home,” says Jacobson, who is 50. “We are staring college in the face so the liquidity event couldn’t happen at a better time for us.”

Advisors who sold shares ranged in age from their 40s to their early 60s, according to Roth.
Back in 2006, when Jacobson’s firm became the sixth to join the aggregator, he says, the firm’s leaders made aggressive promises about providing advisors with liquidity. But that was before the downturn of 2008 and 2009, he adds. 

In his view, Jacobson says, the buyback program amounts to the fulfillment of that promise.

“I think it was more to make good on a commitment,” he says.
Although United Capital is funneling cash to buybacks, it will still continue acquiring new firms on an aggressive time table, says Roth, who thinks the liquidity program will help in this effort.

“I would think from a competitive standpoint when people are thinking about joining us that they will realize that this is a firm that is committed to seeing that advisors get liquidity,” Roth says.
In October the firm’s CEO Joe Duran said its goal is to build its market capitalization up to $1 billion.

To that end, the firm this week also announced a new website, called Join UC, intended to help advisors determine if their practice might be a good fit for United Capital. Visitors to the site can learn about the company through stories shared by advisors who have joined the team and see an overview of the company’s focus, the firm said in a statement.

As the stock buyback program evolves, United Capital anticipates that most of its advisors will want to hold onto a substantial amount of shares in anticipation of an eventual public offering, according to Roth.

Jacobson says that’s his plan. “I’m hoping the next liquidity event that I participate in is in the go-public event,” Jacobson says. “I think the value that I will recognize at that point in time [will be] much greater than the one I took part in this year.”

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