A year after
The New York-based private equity firm has signed a "definitive" agreement to invest in Wealth Enhancement Group in Minneapolis, Minn. Terms of the deal were not disclosed.
The announcement comes on the heels of
"Lightyear has just an outstanding track record in developing business to that next level. They took Cetera and obviously have a tremendous track record there," says Wealth Enhancement's CEO Jeff Dekko.
NATIONAL AMBITIONS
Dekko, who joined the firm in 2003 when it had $600 million in AUM, says he plans to use the investment and strategic guidance from Lightyear to expand nationwide. Today Wealth Enhancement operates in all but 11 states, according to its SEC Form ADV.
"We really believe that there is a wide open hole for a brand to build a financial planning firm at the national level," he says.
Wealth Enhancement's $4.7 billion in AUM is comprised of $3.6 billion in its wholly owned advisory subsidiary, Wealth Enhancement Advisory Services, and the balance that is held in securities sold through LPL, a firm spokesman said via email.
Right now the hybrid firm's 150 employees including 32 planners serve more than 8,400 clients, according to Dekko and the firm's ADV filing. Most of those clients are mass affluent, and not high-net-worth, the filing says.
About two-thirds of Wealth Enhancement's income comes from fees and the remaining roughly one-third from commissions, Dekko adds.
PRIVATE EQUITY STAKE
Private equity owners have owned pieces of Wealth Enhancement since 2003, the year that Dekko joined the company, he says.
Lightyear plans to purchase its stake from Norwest Equity Partners, a middle market private equity firm based in Minneapolis, which first invested in Wealth Enhancement in 2007, Dekko says.
Norwest was "outstanding in helping us develop and mature as an organization and they were with us through the ride of 2008 and 2009," he says.
Three cofounders started Wealth Enhancement in 1997 and built it largely through a radio program, Dekko says. The firm continues to expand through a weekly radio show in Minnesota and Iowa. It also uses educational seminars and webinars to attract clients, he adds.
Most of Wealth Enhancement's growth has been organic, although the firm did acquire Summit Wealth Advisors, in Chicago, two years ago and plans to buy more firms going forward, according to Dekko.
He adds that Wealth Enhancement used its own financial advisor William Blair & Co. for the Lightyear deal. One of William Blair's offers is investment banking.
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