Here’s How Wealth Management Firms Put Private Capital to Use

Private capital has become a core growth tool for wealth management firms. Flush with cash from private equity and other sources, registered investment advisors are upgrading technology, recruiting specialized talent, and pursuing both organic expansion and acquisitions. Here’s how CEOs of some of these firms put their capital to work.

Leo Kelly

Leo Kelly, CEO, Verdence Capital Advisors: Verdence Capital Advisors announced its latest private equity capital raise in March, a strategic equity partnership with Wealth Partners Capital Group and HGGC. The firms acquired a majority stake in Verdence, and prior PE owner Emigrant Partners exited.

We’re going to have a couple of announcements very soon. We already have a significant amount of assets under management that is currently in process for acquisition. And we are investing in and building out our platforms, which is our family office, our investments, our private equity, all that. We’re hiring folks.

So in this particular case with the private equity, this isn’t Wealth Partners coming in and saying, how can we cut costs and increase Ebitda? This is where we’re aligned because we’ve always been heavy investors in our business. What they’re saying is, how can we grow the top line with you? How can we get more people into your system, and then allow you to grow organically? That’s what we’re doing right now.

We are also hiring at all levels, from C suite to our family office as well as financial planning. Some of the talent is going to come from the new firms joining our company. This will be a mantra going forward. Part of our acquisition strategy is to acquire talent, not just for the teams coming on board, but for Verdence.

James Spinelli

James Spinelli, CEO, Great Valley Advisor Group: GVA received a minority investment by LPL Financial (via LPL Capital Partners) in September 2022.

We’re reinvesting in the business. We saw the AI wave coming, so we reinvested in a lot of the tools and technology we were using. We were already using platforms like Salesforce and Orion, but we made a conscious decision to reinvest in the technology stack and expand how we use it. We decided to build the infrastructure and data foundation that allows us to take advantage of AI as it continues to evolve and produce strong reporting and processes for the firm. Whether it’s Salesforce, Orion, AdvisorBOB, SecureOffice, or other tools, we want our systems connected, our data organized and our workflows automated so AI can ultimately help our advisors and staff operate more efficiently and spend more time with clients.

We added new individuals to the team and reimagined a number of roles. For example, our business strategy team, led by Kate Quinn, has expanded to include data analytics and strategic initiatives. We’ve also built out our advisor-success team and added Todd Cipperman as our chief growth officer. A big part of that evolution has been using better data, reporting, and faster processing to help our teams support advisors more proactively. We’re able to better understand what’s happening within an advisor’s business, identify opportunities and ultimately create a much more personalized experience for each advisor and their practice.

Historically, a lot of our growth came from recruiting advisors and teams to affiliate with us. With additional capital, we can also look at acquiring RIAs, advisor teams, and individual books of business where there’s a strong strategic and cultural fit. It gives us more ways to partner with advisors depending on where they are in the life cycle of their business.

Nate Lenz

Nate Lenz, CEO, Concurrent: Merchant Investment Management took a majority stake in Concurrent in 2021.

We grow primarily through recruiting, advisors who want to sit on the same side of the table as their clients, have access to multicustodian platforms and have every arrow in the quiver to best serve their clients. We provide them with the tools, resources, and the support to operate in that capacity. Having the capital has allowed us to really ramp up our recruiting efforts, which in turn has allowed us to grow our revenue and profitability. And that’s enabled us to invest in building out additional resources. So the private capital has enabled us to grow, and with that growth we’ve been able to scale our business, reinvest, and keep pace with the evolution within our space.

Our primary investments now are things that help our advisors expand the scope of services they provide to clients. We’ve been investing in our investment team, primarily with human capital. We’ve been investing in our advanced planning team—think JD and CPA types—who can support our advisors in serving their clients’ most complex needs. We’ve been investing in technology, first our data infrastructure and now we’re working on our AI solution. The capital has enabled us to take advantage of what I think is a tremendous environment for growth.

Jason Gordo

Jason Gordo, co-founder, president, Modern Wealth Management: Modern Wealth launched in 2023 with a majority ownership stake from private-equity investor Crestview Partners.

We could have launched without private equity; we’d just have to go a lot slower than we wanted to. Today we have around $16 billion of assets under management, and we couldn’t have gotten here without a private-equity backer. It helped us accelerate. We were able to buy an existing business with about $1.3 billion in total assets that had great tech infrastructure already, including a customer relationship management system, a portfolio accounting system, a financial planning suite. They had an HR team, a marketing team, a podcast team, a compliance department. They had all the elements of what a big firm would need.

We couldn’t have launched in the big way that we did without financial backing. It allowed us to invest in strengthening the platform, strengthening the marketing systems, opening our organic growth hub on day one, where we’re driving lead flow to advisors. We’re creating our own organic growth story. We’re not relying on Schwab or Fidelity’s custodial referral programs. Had we launched on our own on as a smaller firm, we would have had to make all those individual investments just to prepare the firm for scale.

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