Two RIAs managing several billions of dollars in client assets in their second generation of ownership are folding into bigger firms in an effort to ramp up their growth.
Dallas-based Quest Capital Management, a hybrid RIA with $1.5 billion in client assets and 24 employees and advisors previously affiliated with Raymond James Financial Services, sold to Mercer Advisors for an undisclosed amount, the firms
Upon close, the transaction will represent the largest ever by Wealth Enhancement, which had unveiled its
“The industry is changing so quickly now that I think people really have to stop and think, ‘Where do I want to be in 10 years?’” she said in an interview. “They need to be thinking outside the box and not have so many blinders on. That’s what I would have told me five years ago.”
Blessing said that Quest’s team thinks “very highly of their leadership team” at Raymond James, the firm she’s had as her broker-dealer for the entirety of her 27-year career to this point.
Representatives for Raymond James declined to comment on the departure. The exit marks the largest team to leave the firm’s independent broker-dealer in 2021, according to Financial Planning’s tracking of company recruiting announcements.
Besides Blessing, the five other shareholders in the firm include 2021 FPA president-elect and Quest Chief Operating Officer Dennis Moore, Robert Cox, Chandler Ferguson, Carl Kunhardt and Chris Young. The partners bought out the last founder roughly 10 years ago, after they didn’t find any fit among the available options at the time, Blessing said.
"We were keen to expand our service offering and add real horsepower to our middle and back-office resources to create scaled efficiency,” Moore said in a statement.
After the close of the second deal, Wealth Enhancement will surpass $50 billion in client assets and get its first location in western New York. CEO H. Edward Shill, the majority shareholder of incoming practice QCI, bought out its three remaining founding partners five years ago. He now runs the firm alongside portfolio manager Gerald Furciniti. Since most competitors in the region are using mutual funds and ETFs even though “most high net worth clients would rather see a custom-built portfolio,” QCI has reached its size on the strength of client retention and referrals, Shill said, noting that Wealth Enhancement’s marketing will further boost the practice’s reach.
QCI received about 20 offers from potential buyers in the past two years, although the number of suitors has accelerated in the past six to eight months, he said in an interview.
“I’m a control freak, personally, and I found that the fit with Wealth Enhancement Group was unique,” Shill said. “I rejected the other 19 out of hand pretty much. They wowed me with their long-term approach and their willingness to let us continue to be successful the way we've been successful.”
The wealth management M&A marketplace in 2021 has seen “not just increased volume, but also increased innovation and creativity” around ownership structure such as the many investors taking minority stakes in RIAs, said Brian Lauzon, managing director of InCap Group. While it wasn’t involved in either of the latest deals by Mercer or the Wealth Enhancement Group, InCap represents buyers and sellers and consults on firm valuations and capital raising.
The two RIA consolidators have “shown a strong ability to grow organically” as well as by making their notable volume of acquisitions, Lauzon said. Since valuations have maintained their high level due to rising equity levels throughout the year, more sellers are coming to the table, he noted.
“This is probably one of the most mistrusted bull markets in history,” Lauzon said. “Everyone is afraid to miss out on it, but they also don't trust it.”
