A fast-growing, private equity-backed registered investment advisor in Minnesota made another deal this week.
Wealth Enhancement Group, a Minneapolis-based RIA that oversees $9.3 billion, has acquired OneSource Retirement Advisors, a Philadelphia-based RIA with $276 million in client assets. Terms of the deal were not disclosed and it’s expected to close in November.
The acquisition is Wealth Enhancement Group’s eighth in the last 5 years. Most recently, it acquired Retirement Strategies in July, a Jacksonville, Fla.-based firm with $350 million in assets under management.
Wealth Enhancement Group CEO Jeff Dekko said his firm was in touch with OneSource Retirement Advisors for almost 2 years leading up to the deal.
Both companies have cultures “committed to financial planning” and the two sides determined that OneSource Retirement Advisors and its employees would fit well with the buyer’s team-based approach to serving clients, Dekko said.
The acquisition also gives Wealth Enhancement Group a footprint in new geographic areas, a key factor as it expands and expects acquired firms to leverage its resources and grow.
Fueled by its relationship with private equity firm Lightyear Capital, acquiring other advisory firms has long been a part of Wealth Enhancement Group’s growth strategy. Although, most of the company’s new assets in recent years have not come directly through mergers or acquisitions. Client assets grew organically by more than $1 billion in 2017, far outpacing assets brought in through a handful of deals.
The strategy is, at least in essence, similar to that of other so-called consolidators and aggregators that provide benefits of scale to sellers, often along with more easily accessible capital. In turn, those firms are tied to the cumulative success of their affiliated partners or subsidiaries.
For example, executives at Focus Financial Partners, an acquirer of RIAs, said that during the company’s first public earnings call last month the pipeline for subsidiary firm deals is “at least as strong as the holding company transactions”; the subject sell-side analysts inquired about but executives declined to share specific details.
Like others observing consolidation in the wealth management industry, Dekko said there will ultimately be a handful of enormous advisory firms, managing more assets than even some of the largest RIAs currently, Wealth Enhancement Group included. He envisions the firm growing well past $10 billion AUM to maintain scale and efficiencies and to explore new ones.
