Aggregator United Capital Financial Partners is looking to bring some new advisors and top Registered Investment Advisor (RIA) teams under its wing, and has appointed a new East Regional Director to handle acquisitions and recruiting East of the Mississippi.
The firm has been recruiting individual financial advisors offering them administrative, compliance and other services in return for a share of their revenue stream. United Capital—which calls itself a strategic acquirer of exceptional wealth management practices—is also helping larger RIAs to grow their businesses where those advisory practices are willing to be bought out in return for a combination of cash and United Capital shares.
The company’s newly appointed director is Allen Darby. “I’m all over the eastern part of the country looking for financial advisors to go into our existing offices all the way from New York to South Florida to Texas,” he told eFinancialCareers in an interview from his office in Charlotte, N.C.
His firm is targeting individual financial advisors generating fees and commissions of $250,000 to $700,000 annually who want to improve their economic situation and move toward a recurring revenue business model, says Darby. He is also actively seeking larger practices seeking to join forces with United as shareholders if they’re typically generating revenues of $1 million to $10 million annually.
There are economic reasons to join a firm like United Capital. Financial Advisors are being wooed with the promise that they’ll keep more of what they earn than they would at a wire-house. Plus, there are “quality of life and integrity” reasons to make such a move. “You want to be able to wake up every day and know the service you’re delivering is conflict-free,” he says. Often, wire-house brokers are looking for such independence, he says, but “don’t want to go it alone.”
That’s where United Capital comes in. “We offer the administrative support they’ve been used to in those large corporate environments,” says Darby. Those joining United receive “beautiful offices, admin and operational support staff, along with our arsenal of new business-generating programs garnered from previously acquired firms across the country,” he adds.
The financial incentive: Typically, says Darby, at a firm like Merrill Lynch, for every dollar of revenue he or she brings to the firm, the financial advisor might get to keep 35 percent to 45 percent to keep for themselves. He says at United, it starts at 40 percent and eventually can go to 65 percent based on certain criteria. Those generating $500,000 and above will also have the opportunity to become shareholders in United, Darby says.
He notes that while wire-houses that recruit advisors away from the competition will often pay a substantial bonus upfront—maybe a one-time payment of $500,000 for a $500,000-a-year broker—that signing bonus often comes with some significant strings including “very restrictive non-compete contracts that hinder their ability to move in the future.”
At United Capital, he says he can increase an advisor’s revenue "in short order from new clients we give them or via our new business development programs” the firm is able to provide," noting that this is all recurring revenue as opposed to a one-time check.
United Capital has done 37 full-scale acquisitions of RIAs and is now focused on stocking those offices with talented advisors, says Darby.