Living the 'lifestyle practice' dream

More than a decade of record-breaking merger and acquisition activity across the wealth management industry means nothing to Ken Van Leeuwen, because the 64-year-old owner of a $300 million advisory firm is happy right where he is.

In the parlance of industry analysts, Princeton, New Jersey-based Van Leeuwen & Co. is known as a lifestyle practice or legacy firm, meaning the owner isn’t looking for growth through acquisitions and definitely isn’t interested in selling to the highest bidder.

“Why would I sell now when I’m only 64 and it feels like time is working for me?” he said. “We’re just coming into that point where we’ve got a good nucleus of AUM, we have good financial planning fees, and it’s really working to the positive.”

In a modern wealth management industry where multibillion-dollar aggregators like Hightower, Creative Planning, Mercer, Focus Financial, and CI Financial are building national and international conglomerates, the lifestyle practice is often overlooked as an outdated mode of providing financial advice.

According to Echelon Partners, of the roughly 30,000 registered investment advisers in the United States, nearly two-thirds are registered at the state level, meaning they manage less than $100 million in client assets.

While lifestyle practices tend to be on the smaller side, assets alone don’t always suggest a lifestyle practice because many small firms are just getting started or may have recently broken away from a brokerage firm.

Van Leeuwen estimates his RIA could fetch about $5 million in today’s white-hot market, but that doesn’t even move the needle when he weighs it against some of the client relationships he has had for more than 30 years.

“Last week I got a text from a client telling me her husband broke his neck skiing in Aspen,” he said. “The guy’s going to be OK, but the fact that she texted me right after it happened tells me I’m important in their lives. You can’t replace that, and it would be difficult to just transfer that relationship to some acquirer.”

It isn’t like there hasn’t been a steady stream of inquiries from potential buyers.

Van Leeuwen’s RIA is a hybrid firm through LPL. In addition to requests from headhunters, aggregators, and other RIAs, he said he gets calls from competing independent broker-dealers, including Raymond James and Ameriprise, asking him to switch firms.

“We get calls a couple of times a week, but I’m proud of what I’ve built, and I don’t want to give that away,” he said. “The interest is very high, probably because of my age and our AUM, which is not super large but it’s not small and inconsequential either.”

Mark Bruno, managing principal at Echelon Partners, said with so much attention being paid to large, high-profile deals, the traditional lifestyle practice is often overlooked and sometimes looked down upon for being less focused on building scale.

“We talk with advisers who like what they’re doing, have no interest in retiring, and plan to work into their 80s,” he said. “The typical RIA has a 25% profit margin, which is a good business. They enjoy what they do, like working with clients, and have good cash flow.”

Van Leeuwen is the sole owner of his firm, but this year will start gradually selling ownership stakes to some of his 12 employees as part of a succession plan.

In addition to a second home on the Jersey Shore, where he often spends long weekends, Van Leeuwen is also thinking of buying a place in “Florida, or somewhere warmer than New Jersey.”

Van Leeuwen has been working in the financial services industry since 1979 when he started in private banking at Morgan Guaranty Bank, the precursor to JP Morgan.

After the bank gig, he joined the RIA, Integrated Financial Services, where he worked for 10 years before launching his own firm in 1997.

“I left Integrated because I wanted to build a company,” he said. “My plan is to work for as long as I can, as long as I want to and for as long as the team wants me around.”