Creative Planning, the Overland Park, Kan.-based registered investment advisor run by CEO Peter Mallouk, closed on its acquisition of Goldman Sachs’ Personal Financial Management unit Friday morning. The terms of the deal were not disclosed.
Mallouk said he will revive the United Capital name, and the business will operate as a wholly-owned, independent entity of Creative Planning. It will be based in Irving, Texas, and operate under its own SEC registration and its own management team. Mallouk named Jim Rivers, a former region head of Goldman Sachs PFM for the Americas West Coast region, to lead the new United Capital as president.
In an interview with Wealthmanagement.com, Rivers said the "new" United Capital coming out of Goldman Sachs has 125 advisors in 25 states across 50 offices, and about $20 billion in assets. They will join as W2 employees, and their employment agreements will mimic those they had at Goldman, with the same compensation structures. They also will have the same non-compete and non-solicitation agreements. That includes a 90-day notice provision and six-month non-compete agreement.
There will be no repapering involved; all the advisors custody with either Schwab or Fidelity. While Creative Planning did enter into a multi-billion-dollar custodial agreement with the new Goldman Sachs Advisor Services earlier this year, none of the assets coming with the United Capital advisors are held there, Rivers said.
Indeed, the United Capital that is coming out of Goldman Sachs is smaller than it was when Goldman acquired it from founder Joe Duran in 2019. At that point, United Capital had $25 billion in AUM across 220 financial advisors.
At the end of 2022, Goldman Sachs PFM reportedly managed a little more than $29 billion with 349 investment advisors, according to federal filings.
When Creative Planning first announced the acquisition in late August, the firm gave advisors three choices: Join Creative Planning’s RIA, join the new United Capital, or buy back their business and leave. The vast majority opted to join United Capital, Rivers said, with one or two opting to move to Creative Planning.
Yet several large advisor teams have departed in the wake of the announcement. Some jumped to other firms, including Quotient Wealth Partners, a new RIA created by defectors, Meridian Wealth Management, Advisors Capital Management, Prime Capital Investment Advisors, Kestra’s Private Wealth Services unit and Dynamic Wealth Advisors, to name a few.
Goldman Sachs filed multiple arbitration claims against former PFM advisors to enforce the non-compete agreements these advisors signed.
“PFM advisors made a number of commitments to the firm when they signed their employment contracts, and we intend to hold them to those commitments,” a Goldman Sachs spokeswoman said in an earlier statement. “We take these matters seriously and will take appropriate action against any adviser who attempts to violate their contractual obligations.”
Some $7 billion in assets coming over to Creative Planning's United Capital are client investments in Goldman Sachs' own products, Rivers said. Under a deal with Goldman, United Capital's advisors will keep those investments intact but clients won't be charged Goldman's management fees on them, he said.
“The investment platform is not changing; Goldman is still going to continue to manage the assets they were managing for us, and our advisors continue to avail themselves of Goldman Sachs investments,” Rivers said.
At the same time, the advisors will have access to a broader array of investment options than they had at Goldman, and the latitude to make independent choices for their clients, Rivers said.
“Our advisors now will be able to avail themselves to all of the fantastic Creative Planning financial planning tools—estate planning, tax planning, business services, property and casualty insurance, life insurance, Medicare planning,” Rivers said.
The advisors will still have access to the same technology platform that they had inside Goldman, including all the old United Capital tools.
“We’ll be moving that platform over, and the advisors will continue to be able to use that. Honest Conversations, Money Mind, Advisor Center, Guide Center—all that’s coming with us,” Rivers said. “And we’re looking forward to enhancing those products as we move forward as well.”
Beyond Rivers, other members of the United Capital executive team include a mix of Creative Planning and Goldman veterans. Chief People Officer Marie Campion, Chief Compliance Officer Sonja Larimore, Chief Financial Officer Rob Mlenek and Chief Investment Officer Frank Salb all have tenure at Creative Planning.
Head of operations Jon Seiler and chief technology officer Melroy Saldanha are both former Goldman executives.
Duran founded United Capital in 2005. Over 14 years, he built the business into a national RIA through acquisition of individual advisors’ practices and an organic growth strategy focused on financial planning and based on what, at the time, were innovative ways to engage clients in conversations about their life and financial goals. By 2019, Duran said he realized that there were limitations to what the firm could do without the size and scale of a large financial services firm and he made the deal with Goldman Sachs.
Executives at the Wall Street firm saw United Capital as a way to implement a plan to broaden their wealth management services to the mass affluent and lower-end of the HNW market. Many others questioned the ability of a fiercely independent and entrepreneurial registered investment advisory firm to find any cultural alignment with Goldman Sachs. The price for United Capital was $750 million in cash.
Indeed, United Capital struggled to find a home inside Goldman, observers say, and Goldman Sachs has recently retreated from its mass affluent strategy.
Duran exited Goldman Sachs earlier this year, and just recently launched Rise Growth Partners, which will take minority investments in next generation RIAs with between $1 billion and $5 billion in AUM, with the goal of helping them become national RIA platforms.