The “why” behind CAPTRUST’s first acquisition in 2022

This week, CAPTRUST Financial Advisors announced its acquisition of Frontier Wealth Management, a leading boutique advisory firm based in Kansas City, Missouri.

Beyond its Kansas City office, Frontier brings an extensive presence in the Midwest, with additional locations in St. Louis; Denver; Wichita, Kansas; and Omaha, Nebraska. As Nick Blasi, founding partner and CEO of Frontier, explains to PLANADVISER, Frontier offers a range of financial planning, investment, insurance and other wealth management solutions. In addition to serving individuals and families, the practice provides advisory services to corporate pension plans.

This agreement marks the first M&A transaction CAPTRUST has completed in 2022, and its 57th since 2006. Consistent with previous ventures, Frontier will transition to the CAPTRUST brand.

Blasi says his company’s management and staff are eager to work with their new CAPTRUST colleagues, and he cites CAPTRUST’s distributed ownership model as a major calling point. Frontier’s current business volume exceeds $4 billion in client assets across five locations, with 46 professionals in the business.

Rush Benton, Senior Director of Strategic Growth at CAPTRUST, says the addition of Frontier marks one of CAPTRUST’s most sophisticated acquisitions to date, as Frontier has itself engaged in M&A activity. significant since its creation in 2007.

“Nick and his team have built an impressive company with many operational similarities to ours, which, along with strong cultural alignment, creates a great fit for CAPTRUST,” said Benton. “Frontier understands and shares our method of a unified practice, and we are excited to see how they grow and prosper as we join forces.”

The perspective gained

As Blasi recalls, Frontier’s early days were focused on growing a private family office business with an “all-inclusive” wealth management service model. After developing this side of the business, Frontier launched its institution-focused services by recruiting staffing clients.

Eventually, through a series of acquisitions, Frontier integrated its tax-focused team in Denver and a small trust-focused team in St. Louis. The firm’s most notable transaction, according to Blasi, was the acquisition of its current Omaha office, which focuses on institutional advisory services.

Blasi says Frontier has had a cordial competitive relationship with CAPTRUST for many years, but the possibility of an acquisition has started to become a serious topic over the past two years. While Blasi considers himself to have a long track in the industry, the company has begun to focus on the importance of longer-term strategic planning and business continuity. He also began to wonder if it would be better for the company to join a larger entity that could take on the incredibly difficult aspects of back-office operations, from cybersecurity to marketing to investment services. .

“The reason we went with CAPTRUST, aside from the cultural fit, is the fact that they have such broad and scalable capabilities,” Blasi says.

He also observes that company staff feel enthusiastic and optimistic about what’s next.

“For me, as a leader of the company, it is great to be able to bring our employees into an environment where they now have many career opportunities,” he adds. “We have a lot of talented young people working for us, and they now have the opportunity to grow with such a great company. Above all, they also have the opportunity to participate in and benefit from the growth of CAPTRUST.

CAPTRUST, Frontier and their peer companies face several challenges, Blasi says, but he notes that the consulting industry is poised for huge success if it can meet them. Beyond the traditional challenges of ensuring high organic growth rates and satisfying existing customers, new competitive pressures are emerging as consolidation reshapes the industry and new players seek to gain influence in the space. There is also the “decumulation challenge” to consider and a changing regulatory framework for rollovers and prohibited transactions.

“One challenge that isn’t talked about as much as it should is the battle for talent,” adds Blasi. “There is no doubt that recruiting great talent is more difficult than ever for this industry, and I don’t think that will change. This is another reason why scale is important and why things like the stock ownership program at CAPTRUST are important. Small businesses will struggle with this.

The buyer’s perspective

Benton says CAPTRUST is pleased to have revealed its first deal of 2022, following a scorching 2021 for the company and industry M&A activity in general. He is adamant that the pace of mergers and acquisitions is not slowing down, despite some speculation that heightened market volatility and recession fears are raining down the parade.

“Are things slowing down? I would tell you that, from our perspective, things are not slowing down at all,” Benton says. “Of course, we’re already at the end of July and we’ve only just announced our first contract of the year, but frankly it’s just a matter of timing. We were busy at the beginning of the year to conclude some of the major deals we announced in late 2021, and it was a complicated deal, with Frontier being a bigger, more sophisticated company.

Benton says CAPTRUST could end up signing about as many deals this year as it did last year, which portends a busy fall for M&A news.

“Look, we also don’t have a specific predefined budget for the number of deals we try to close in a given year or period,” Benton says. “The main event remains taking care of our clients and growing organically. It’s a bonus that the M&A pipeline is very full. We are already looking for other great companies that will add substantial scale, and we are also looking smaller companies with a lot of talent, which we could integrate into our existing regional offices.”

Benton says Blasi has already introduced CAPTRUST to one of these companies in the Kansas City area, and a deal is being worked on to bring this group in.

“Part of the national M&A strategy is to realize that talent is scarce. You have to find talent wherever you can find it and you have to be flexible,” says Benton. “Today we have a more dispersed workforce than ever before. We have a centralized trading desk, yes, but the professionals running the desk are actually spread across two or three locations in the United States.

Benton says the accelerating pace of M&A activity and the increasingly dispersed nature of the company’s talent puts a premium on protecting and emphasizing a collaborative corporate culture.

“In an environment like this, you just have to be so determined to understand and manage the culture,” he says.

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