In its first RIA buy, Alera Group nearly quadruples its assets to $4.7 billion

Alera Group Wealth Services, the $1.2 billion wealth management division of Alera Group, has acquired Wharton Business Group, a $3.5 billion financial advisory firm.

The deal kicks off an aggressive growth mode for Alera’s wealth management division, said Tina Hohman, the company’s executive vice president and wealth services practice leader.

“It’s a very nice complement to what we already have,” Hohman said of the Philadelphia-based registered investment adviser. “The Wharton Business Group fits in well with our goal to be at about $10 billion under management in the next year or so.”

That might sound like a bold statement coming from a firm making its very first acquisition in the wealth management space, but Alera Group, the Deerfield, Illinois-based parent company, has private equity backing and lots of acquisition experience across the insurance and retirement plan industries.

Alera was formed in 2017, when 24 employee benefit firms combined with the backing of private equity firm Genstar Capital. Since then, Alera has completed more than 150 acquisitions across its other three divisions.

With its employee benefits, property and casualty, and retirement plan services divisions gaining scale and a national footprint, the company's next target for growth is wealth services.

Hohman said the plan is to establish a wealth management presence in proximity to the other divisions at locations around the country.

When Alera was formed through the combination of two dozen firms primarily focused on employee benefits, total annual revenue was $150 million, and the other three divisions were “nascent,” Hohman said.

“Now our overall revenues are $1 billion,” she said. “And we have a laser focus on building out our wealth services division.”

David DeVoe, founder and chief executive of DeVoe & Co., described the transaction as “a textbook example of the strategic power of M&A.”

“This partnership will help Alera, a fast-growing and established firm in financial services, take their wealth management business to the next level, while Wharton gains the value of scale and broader capabilities to better serve their clients,” he added. “Alera is emerging as a major future player in the RIA space.”

The Wharton Business Group, founded 30 years ago, will continue to operate independently, without rebranding as Alera, Hohman said.

“Alera Group does not require any acquisition to adopt the Alera Group name,” she said. “Over time, we anticipate a lot of firms will change to Alera Group, but that is up to the firms.”

B.J. Webster, managing director and founding partner of Wharton Business Group, said the deal was largely driven by the need for a succession plan. He and his partners spent 14 months looking for the right partnership and received inquiries from more than a dozen potential buyers.

Even with $3.5 billion under management across a concentrated mix of 30 institutional clients and 100 wealthy families, Webster refers to Wharton Business Group as a “small firm” that grew to this point without making a single acquisition.

“I hope you can understand how this deal is very different from what’s going on in the RIA industry,” he said. “Scale for the sake of scale didn’t appeal to us. Fourteen firms wanted to talk to us, but we knew we didn’t want to go the route where we had to be in a model or a cookie cutter approach or had to raise our fees. We wanted to run independently because what we’ve done has worked for our clients.”