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Creative Planning Wealth Management President Peter Mallouk
Creative Planning Wealth Management President Peter Mallouk

Creative Planning Expands With Acquisition

The RIA makes its first purchase, but it's not in the Northeast or the South.

Creative Planning is acquiring Minneapolis-based The Johnston Group, a regional registered investment advisor with more than $500 million in assets under management, the company announced today. It is the first acquisition for the Overland Park, Kan.-based RIA, marking a shift from relying on referral-based growth to incorporating acquisitions.

Founded in 1994 and led by Brad Johnston, The Johnston Group specializes in goals-driven financial planning and wealth management for families and foundations. The acquisition will give the firm more comprehensive family office services, trusts services and tax and legal help, said Johnston, describing a situation that previously saw his firm dependent on others for collaboration. “When we set out to find a platform to expand our client services, my top priority was to partner with a firm that shared our overall values and intimate, comprehensive approach to client service,” he noted. 

“It is clear to me this industry is changing rapidly and those with the scale to deliver the most value to their clients will be in the best place to attract and retain clients," he added. "I am excited to bring this to the Dakotas where no RIA firm like Creative Planning exists.”  

The deal was initiated by a call from Johnston to Creative Planning, said the acquirer's CEO, Peter Mallouk. Part of the due diligence process was evaluating the philosophy of Johnston’s firm and ensuring it already had a strong financial planning–based approach to advice. “They have to start on third base for us to have a conversation,” he said. “We're not going to be running different software programs and different trading systems and adding 20 custodians. That's not what we're going to do.”

The turn to acquisitions doesn’t mean organic growth is being left by the wayside at Creative Planning. “It's an addition to our current strategy,” Mallouk said. He predicted this year to be the strongest organic growth in the firm’s more than three decades of business.

Meanwhile, the firm will continue making acquisitions and expanding to regions where scale can be achieved quickly, he said. “We're open to everywhere, with an emphasis in places where we don't have an office at all,” he explained. “We have such small market share everywhere that I can't imagine an area in the country where, for someone who was interested in joining Creative Planning, there would not be a path for an acquisition in that market.” One example he cited was Montana. 

The deal was funded without outside money and is expected to close within days, according to Mallouk. He noted Creative Planning doesn’t carry debt. Additional terms of the deal were not disclosed.

Creative Planning recently spent at least $10 million on a national advertising campaign designed to increase brand awareness, especially in the Northeast and South, where the firm is aiming to expand its physical presence. “Until now, we have always grown largely through referrals,” Mallouk said. “It’s clear that there are like-minded firms that can fit right into our model as we continue bringing fiduciary advice to Americans from coast to coast.”

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