Raleigh, N.C.–based Captrust Financial Advisors has agreed to acquire Covenant Family Offices, a Texas and Oklahoma-based wealth management firm with $2.6 billion in assets across more than 500 clients. The Covenant deal, which is Captrust’s seventh in 2021, brings the RIA more scale in Texas and continues its strategy of combining retirement plan services with wealth planning.
Covenant, the 52nd firm to join Captrust since 2006, was founded in 2010 by John Eadie, and is led by Eadie, Barry Beal, Justin Pawl, and Karl Eggerss. Four other employees will also join Captrust, and Covenant will take on the Captrust name and brand.
Rush Benton, senior director, strategic growth for Captrust, says Covenant represents another example where Captrust is seeing growth in regions where they already had a strong foothold. Covenant has offices in San Antonio, Dallas and Boerne, Texas, as well as Oklahoma City, and the RIA’s leaders were friendly with the principals at South Texas Money Management, another San Antonio-based RIA acquired by Captrust in 2019.
Captrust also announced this week the close of its deal to acquire Ellwood Associates, a 55-person team in Chicago that oversees about $90 billion in assets. Ellwood serves endowments and foundations, retirement plans, hospitals, family offices and high-net-worth individuals, and the transaction brings Captrust to more than 1,000 employees.
Behind Captrust’s acquisition spree is a strategy to bridge the gap between the firm’s historic concentration in the retirement advisory space and its ambition to be a top wealth manager. The firm wants to combine retirement services with wealth planning and have the two complement each other. Wealth management now accounts for more than 50% of the firm’s total revenue, Benton said.
“Wealth management is definitely not a side show or after thought. It’s a very key part of our business,” he said.
“The wealth management part of the financial services universe is really attractive, and for an organization like Captrust, those margins tend to be bigger and the growth trajectory arguably can be steeper,” said David DeVoe, founder and CEO of DeVoe & Company.
Captrust’s deals are also getting larger, on average, a trend DeVoe says he’s seeing across the RIA industry.
“You could say it takes about the same amount of time and energy to do a $200 million versus a $2 billion deal, yet you increase your assets and revenue and profitability 10x,” DeVoe said.
“Captrust, Mercer, Wealth Enhancement Group, Hightower—all these firms used to focus to a degree on the $500 million or less, and they’ve all continued to move upstream. We’re starting to see some blue ocean in the $100 million to $500 million space.”