CAPTRUST requires sellers of the firms it buys to take at least half the proceeds in stock. “We want the cultural buy-in to what we’re doing,” Miller said. “Once they see what we’re doing and that it’s a tax-free exchange” some sellers take even more stock.
Wealth management is growing in importance at investment-management consulting firms like CAPTRUST, which has increased its retail focus in the last few years.
Individual clients make up 35 percent of revenues, Miller says. “It’s big business for us. The six acquisitions we’ve done this year were wealth-management oriented.”
Demand for wealth management is strong, the institutional side has become more competitive, and there are more acquisition opportunities within the wealth-management universe, he said.
But the institutional side isn’t going away. “It’s very good sticky business,” Miller said.
Institutional consulting was built to deliver a fiduciary level of services for ERISA plans, and advisors in the original CapTrust had to escape the traditional-firm environment to minimize conflicts. Miller sees a similar change now being forced on the brokerage industry.
“The brokerage world is, frankly, broken,” he said. The big Wall Street firms “need to reinvent themselves to be viable 20 years from now. The [DOL] fiduciary rule was a shot across the bow.”