Creative Planning, a Kansas-based independent wealth management advisor, announced it is acquiring America’s Best 401k, a retirement plan provider servicing clients throughout the country. The acquisition is Creative Planning’s second this year and only its second acquisition since the company was reestablished under the leadership of CEO Peter Mallouk as a registered investment advisor firm 15 years ago.
In an interview with WealthManangement.com, Mallouk said the acquisition was buoyed by the ongoing relationship between the two companies (Creative Planning has handled investments for America’s Best clients for several years). Since Mallouk took charge in 2004, Creative Planning has grown from $34 million in assets under management to more than $43 billion in AUM and 650 employees, with clients located throughout the country. After the deal, America’s Best 401k founder and President Tom Zgainer will retain his current position, according to Creative Planning.
Mallouk said the America’s Best 401k deal was emblematic of how the firm is approaching new acquisitions. The retirement plan provider offers clients low-cost plan options and an easy onboarding process, and acquiring them offered Creative Planning an opportunity to break into a different marketplace at an accelerated pace without needing to drastically remake the new addition’s culture or structure to align with the acquiring firm.
“One of the big things at our firm is we believe in creating the best process with the best people and building a strong foundation with a tight culture. At $5 billion or $10 billion (AUM), buying firms can derail a culture. Once we pass $40 billion in assets, that’s a different story,” Mallouk said. “It continues our theme of acquisition to complement rather than acquisition to create.”
According to Mollouk, Creative Planning had hoped to purchase America’s Best earlier, but after they couldn’t reach an agreement on a price the RIA firm sold its 3% equity in the retirement planning provider in January, with Mollouk saying they wanted to move away from partial ownership of other entites, prefering whole ownership. With the new deal, Creative Planning achieved this goal.
In the fifteen years since Mallouk took charge, the firm has largely relied on referrals and other organic methods of growth. However, since the start of the year, there has been some shifts; in February, the firm acquired the Johnston Group, a wealth management firm for families and foundations founded in 1994. These two deals highlight Creative Planning’s new willingness to utilize acquisitions as a method of accelerating company growth.
Additionally, Creative Planning made a national ad buy in January, costing at least $10 million. The purchase made Creative Planning one of the first RIA firms in the U.S. to run ads nationwide alongside the country’s largest brokerage houses (Creative Planning’s previous marketing expenses reportedly only extended to several thousand dollars spent advertising on local radio stations).
In a previous interview with WealthManagement.com in January, Mallouk said that while there were several large independent firms, one or two of them were most likely to “really take on the big brokerage houses in a different way.” Now, Mallouk said that deals like the America’s Best acquisition would help Creative Planning further specialize to meet changing client needs, positioning it to be one of those aforementioned firms.
“I think we’ve definitely changed the way a lot of independent firms do things,” he said. “What we really want is to take on the brokerage houses.”