Beacon Pointe Wealth Advisors today said it added a third advisory firm to its growing network of partner firms in what it hopes eventually will be a larger enterprise spanning the country.
Based in Newport Beach, Calif., BPWA completed an all-stock deal with Wealth Management Network, also based in Newport Beach, which has $130 million in assets under management. Wealth Management Network principals Mark Moehlman and Laine Ainsworth join BPWA as managing directors and equity partners.
Their firm joins two other advisory firms--one in Scottsdale, Ariz., and the other in San Jose, Calif.--that teamed up with BPWA in the past year and a half.
Through its parent partner Beacon Pointe Advisors, which has $5.5 billion AUM, BPWA says it offers its members a raft of benefits including Beacon Pointe's best practices, compliance and reporting, brand synergy, scale, maximization of enterprise value and succession planning.
Beacon Pointe President Matt Cooper says the company's strategy is the opposite of a roll-up strategy that typically pays for acquisitions with a combination of cash and company stock and promises a big payday from a liquidity event.
"There's a lot of uncertainty with a roll up," Cooper says. "Will they ever have an event and if so, how will the advisors be treated?"
Cooper says BPWA isn't being built to sell, but instead strives to build long-term value by creating a national operation that leverages its scale to make the practices of its members more valuable down the road when they decide to leave the business.
"The theory is that larger firms growing fast have greater valuation multiples," he says. "And that the succession plans [of BPWA firms] should be based on a greater valuation than if they remained a smaller, independent RIA."
Cooper notes this is a long-term commitment by advisors requiring six to eight years to position them for optimal valuation and to bring in the next generation. "We don't want people who want to bail out tomorrow," he says. "We want people who are excited about growing their business and want certainty about a succession plan when they're done."
Cooper says BPWA is contractually obligated to buy out its advisors at fair market value with no discounts applied when they're ready to cash out, with a mutually agreed upon third-party outfit to affix the valuation.