Skip navigation
Peter Mallouk Photo by Jason Dailey
Creative Planning President Peter Mallouk

Peter Mallouk's Employees Take Equity in Creative Planning

Some 10% now have a stake in the fast-growing RIA. 'We anticipate that the percentage that’s owned by employees should increase every year from now and ongoing,' Mallouk said.

Creative Planning Chief Executive Peter Mallouk opened equity to employees inside the fast-growing registered investment advisory firm, with 10% of the workforce, or some 86 people, now partial owners, according to a company announcement.

Mallouk would not reveal the names of the firm's new principals but said it was largely those with long tenures at the firm. LinkedIn reveals managing directors John Baker, Tamara Lowenberg, Carlos Lopez and Jason Guehl were a few of many listed that added the title “principal” to their profiles in March.

Mallouk declined to detail the size of his employees’ ownership stake but said he maintains majority ownership. Last year, Mallouk sold a minority stake in the firm to private equity investor General Atlantic.

“There are people who come in with very significant amounts of equity in the seven figures and then there’s people who are just getting in from the beginning in a small way,” he said. “We anticipate that the percentage that’s owned by employees should increase every year from now and ongoing.”

Observers say such equity plans are good employee retention strategies but have not often been used that way in the RIA space. More often, equity is used for acquisitions.

“Given the strong valuations for RIAs, it can be expensive to acquire equity if the programs are not properly designed,” said Mark Bruno, managing director of Echelon Partners. “Firm leaders have to decide if the equity should be purchased, gifted or rewarded as incentive compensation—or all of the above.”

Employees at Creative Planning either took grants or purchased equity directly, said Mallouk. He said General Atlantic did not have any influence on the employee offer and that the company shares are “real transfers of units” where employees will have a stake in the company’s highs and lows.

Creative Planning was a top acquirer of other RIAs in 2020, adding eight firms, a pace matched by Hightower Advisors and CI Financial, according to DeVoe & Company research. Its latest acquisition was IRON Financial’s retirement division, with $6 billion in client assets. Total AUM at Creative Planning now stands at $75 billion.

“The move is likely to yield higher employee retention, more engaged staff and sets a clearer career path for ambitious younger employees, said David DeVoe, founder and CEO of DeVoe & Company.

It's also a benefit in recruiting new employees. “Rapid growth also means attracting and retaining quality employees. Adding an employee equity program will certainly strengthen their position in the talent acquisition world,” said Brian Lauzon, managing director of M&A consulting firm InCap Group Inc.

In addition to the employee program, Mallouk said he expects to announce Creative Planning's first equity-based acquisition within weeks. 

“Having equity as a currency in M&A deals will be beneficial too, since many sellers who aren’t looking to retire value the partnership and having another ‘bite of the apple’ down the line,” said Louis Diamond, president of recruiting and consulting firm Diamond Consultants.

TAGS: People
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.