$3B team drops Royal Alliance for Captrust succession deal

A Captrust rival helped draw a major practice to its ranks by suggesting — correctly, it turned out — that the competitor would be “a very good fit for you,” according to a partner with the firm.

The surprising referral in Genovese Burford & Brothers’ talks with a different wealth manager led the four partners to select Captrust after their relatively brief three-month search, partner Kelly Brothers said in an interview. The Sacramento, California-based practice with 17 advisors and $3.13 billion in assets under advisement announced Feb. 3 that it had sold to Captrust.

Captrust and the hybrid RIA didn’t disclose the terms of the deal, which has closed and marks the second one unveiled by the consolidator in the past month for a team with more than $3 billion in assets. Its latest incoming team is leaving Advisor Group’s Royal Alliance Associates as part of a succession plan for its 40-year veteran founders, Mike Genovese and Lon Burford.

Succession is “always a challenge for a firm like ours,” says Brothers, noting that the partners, including the fourth, Alex Brown, each have their own timelines. The other major driver was “the realization that we all got into this business to be advisors,” he says. “Every year, more and more of our time and energy was being pulled into legal, administration, HR and compliance.”

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Representatives for Royal Alliance emailed a statement from CEO Dmitry Goldin on Genovese Burford’s departure.

“We want to thank Mike and Lon for their nearly 40 years of affiliation and loyalty, and we understand the unique drivers of their decision for this particular transaction during this stage of their business life cycle,” Goldin said. “We wish them all the best going forward.”

The team officially aligned with Captrust’s broker-dealer, Capfinancial Securities, on Jan. 29, according to FINRA BrokerCheck. They will adopt the buyer’s name and move the assets from its RIA, Genovese Burford & Brothers Wealth & Retirement Plan Management, into Captrust’s corporate RIA, according to Brothers.

Genovese Burford has about 40 employees in two locations in the Sacramento area, and its RIA has $2.16 billion in assets under management. The founders launched the firm in 1987, two months before they first affiliated with Royal Alliance, BrokerCheck shows. Brown is a 16-year veteran who aligned with the IBD in 2004, while Brothers spent 14 with Royal Alliance.

Their deal comes after wealth management M&A set records in 2020 for volume, total AUM and sellers above $1 billion in AUM, according to investment bank and consulting firm Echelon Partners. In addition, private equity firm GTCR’s 25% stake in Captrust at a $1.3-billion valuation was the second biggest minority transaction out of 26 last year, in terms of seller AUM.

Genovese Burford is the 46th team that has joined Captrust since 2006, and the RIA consolidator based in Raleigh, North Carolina, has more than $50 billion in AUM and 800 employees.