Creative Planning's megadeal with CPA firm highlights emerging business models for wealth managers

Creative Planning, a large independent firm, said Aug. 17 that it would acquire Wipfli Financial Advisors, the wealth and advisory unit of Wipfli, a sizable certified public accounting firm. 

The soon-to-be acquired wealth unit spans more than $5 billion in client assets managed by 95 financial advisors and employees. The deal, which is expected to close Sept. 30 under undisclosed financial terms, comes amid a flurry of recent moves and acquisitions collectively highlighting many new business models for the wealth management industry.

As part of the deal, Wipfli Financial Advisors closed down its brokerage, further reducing ranks that have tumbled by more than 1,000 over the past decade. Wealth managers are shuttering or changing their brokerages to complement RIAs, which are growing through consolidation and new launches. Wipfli's wealth arm terminated Wipfli Insurance Services, its brokerage, on July 30, FINRA BrokerCheck shows. The firm is bringing its insurance business under Creative Planning's umbrella, which made the brokerage redundant, according to Jeff Pierce, the CEO of Wipfli's wealth unit. 

With more than $430 million in annual revenue across units devoted to tax, audit and accounting, consulting and wealth, Wipfli has a long list of priorities, Pierce said in an interview. Now at the top of the list, alongside the other business lines: wealth management.

"The wealth management practice wasn't always at the top of those," Pierce said. Only about a third of the accounting firm's offices currently offer clients wealth management services, a share that Wipfli's wealth arm plans to boost under its new ownership. Joining Creative Planning will bring "a more singularly focused partner to take our business to the next level," Pierce added, citing impending investments in technology, marketing and client services, among other areas.

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Many large firms are eyeing future growth along a similar expansive model. Signature Estate & Investment Advisors, an RIA with $16 billion in client assets, is receiving an investment from private equity firm Reverence Capital Partners that will let the firm launch a limited-purpose brokerage and offer investment management to any advisory practice in the industry.  

In other significant moves from just the last three days, ex-private bankers with $6 billion in client assets launched an RIA, an $11-billion advisory firm closed its acquisition of a trust company, and a giant insurer is purchasing a bank wealth program with $600 million in assets. In another twist, a 401(k) and wealth practice with $2 billion in assets called Tax Favored Benefits formed its own RIA but retained its brokerage ties to midsize firm Ameritas Investment.

That new RIA, called TFB Advisors, fits a structure known in the industry as a "hybrid RIA" and more commonly associated with giants like LPL Financial and Cetera Financial Group. Similar to Wipfli wealth's plans, Tax Favored Benefits sought an arrangement that would enable the firm to expand through recruiting and acquisitions. The RIA gives Tax Favored Benefits the ability to use Schwab Advisor Services and AssetMark as direct custodians and to execute an eventual succession plan. The Ameritas relationship ensures the firm can continue servicing certain 529 plans and insurance products that make up the small part of its business in brokerage accounts.

"This is something we started working on a couple years ago," said Tax Favored Benefits Partner David Wentz, whose father launched the business more than four decades ago. "We saw this as an opportunity for us to get better and make the way for our clients to have a better experience too."

Ironically, Wentz noted that he was speaking from the firm's headquarters in Overland Park, Kansas, which is the same Kansas City suburb that's home to Creative Planning, whose CEO and president is Peter Mallouk, a member of the ownership group of the Kansas City Royals baseball team. The same KC suburb is home to competitor Mariner Wealth Advisors, whose CEO, Marty Bicknell,  moved earlier this month to acquire an RIA with $8.6 billion in client assets and another one in July that's opening a new strategic partnership with LPL.

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Creative Planning has done 12 deals over the first half of 2022, the most of any firm, according to investment bank and consulting firm Echelon Partners. Creative Planning has been hoovering up acquisitions since receiving its first outside private equity investment from General Atlantic in 2020, including a megadeal last year to buy the $110 billion retirement business of giant insurance brokerage Lockton. Mallouk said in an interview that the acquisition of Wipfli will give Creative Planning a stronger toehold in Wisconsin and open referral relationships at a national level, thanks to Wipfli's status as one of the larger CPA firms in the country.

"It really helped us with our national footprint, particularly in the Upper Midwest and making us more competitive in certain markets," he said. "All of those things made that extremely appealing right out of the box for Creative Planning."

The future parent of Wipfli's wealth unit now has $225 billion in client assets, but Wipfli itself isn't particularly small. With a mere 5% of its overall business, Wipfli's wealth arm produced $21.9 million in revenue in the last fiscal year, according to the firm's annual report. The RIA has $5.07 billion in assets under management and 80 investment advisor representatives, its SEC Form ADV shows. 

"This transaction creates a strategic relationship that will allow our clients to access a broad set of services through innovative financial platforms," Wipfli Board Chair Kurt Gresens said in a statement.

Tax Favored Benefits started in the 401(k) business, where it works with 500 employers as a third-party administrator and 150 other retirement plan sponsors. Under partners Wentz, Bill Stapp, Josh Selzer, Tim Gaigals, Dan Dolan and Adam Bettis and President Jeff Pytlinski, its client assets break roughly down the center between wealth customers and plan participants. Like Wipfli, Tax Favored Benefits sees potential for the future under its new setup, Wentz said, noting the convergence of services taking place amid the industry's continuing consolidation.

"We've got a window of time to really grow," he said. "There's a lot of opportunity with CPA firms and insurance planning firms that really haven't been able to help their clients with wealth management."