After record 2021, Captrust is focused on wealth management deals

Eight of the 11 acquisitions Captrust did last year involved wealth management firms, a trend that Rush Benton says will continue.

Captrust Financial Advisors announced two acquisitions Wednesday that were completed in late 2021 and added more than $1.5 billion in assets to the Raleigh, North Carolina-based registered investment adviser. Captrust, which added a record 11 firms in 2021, acquired New Orleans-based Crescent Capital Consulting and Nashville, Tennessee-based New Market Wealth Management.

The deals represent Captrust’s 55^th and 56^th acquisitions since 2006, and reflect the direction of things to come for the $600 billion aggregator.

While a majority of Captrust’s total assets are still institutional or retirement plan business, almost 60% of the company’s revenues are now coming from the more lucrative wealth management segment.

“The best measure of a firm is its revenue,” said Rush Benton, senior director of strategic growth at Captrust.

Of last year’s 11 deals, Benton said eight were wealth management firms, and “I would expect that ratio to continue.”

“It’s happening that way because there are a lot more wealth management firms than there are institutional firms,” he said.

As Captrust evolves beyond retirement plan assets, it has been making acquisitions in wealth management that are building out areas such as estate planning, tax compliance, advisory services, and family governance and trust management.

“While we have long had clients in Nashville and New Orleans, adding physical locations in these top strategic markets has been priority for Captrust,” Benton said.

Speaking generally about the record-level trend of consolidation in the RIA space, Benton doesn’t see any reason for a slowdown against the backdrop of the many reasons owners have to sell.

“The reasons these firms are selling are valid reasons, and they aren’t going away,” he said. “You have an expanding number of firms, and every year that goes by, the owners are a year older. Demographics and the need for succession is the leading factor.”

That target market of RIA firms is being pursued by increasingly deep-pocketed private equity investors that continue to gobble up shares of the aggregator space.

Captrust, which is minority-owned by PE, is still in the driver’s seat, Benton said, unlike some aggregators that have sold majority stakes to PE investors.

“We have private equity, but in a very specific way, we have a minority investor in the company that owns less than a third of the business,” he said. “Most of our competitors that have PE will have sold a majority, which means they control the clock. They are driven by one thing, which is their return on capital.”