Carson Group launches equity program for W-2 advisors and staff

Carson Group, a mega-RIA with more than $60 billion in assets under management, has launched Carson Equity Program for top-performing W-2 advisors and support staff. 

A press release from Carson Group says the equity will be for “high growth” W-2 employee advisors who are in “the final year of their acquisition-related growth incentives” and will also be offered to “next-generation advisors and exceptional operational team members who previously had no path to equity.” 

Historically, Carson Group says its W-2 channel has limited equity distribution to being primarily available to founding advisors as part of their sale terms to join Carson. Carson Group is majority owned by founder Omani Carson and the firm was valued at $1 billion in 2021 when private equity giant Bain Capital acquired a minority stake. 

"Our business is built by exceptional people, and this new equity program reflects our belief that the advisors and team members creating long-term value for Carson should have the opportunity to share in that success,” Burt White, CEO of Carson Group, said in a statement.  

Other large-scale RIAs that have rolled out employee equity programs over the past year include Edelman Financial Engines, EP Wealth, Ritholtz Wealth Management,  and Bogart Wealth. Industry recruiter Philip Waxelbaum of Masada Consulting says advisors should be skeptical of equity offers and to at best view them as “lottery tickets” because they often have vague details around valuation methods, vesting periods, share class distribution, and liquidity event triggers. 

“Let's say with whichever private stock you've accepted, you have a vesting of five years,” Waxelbaum told InvestmentNews. “Well, it doesn't mean anything. It means that you own something for which there is no established value in year five. There's no one to sell it to unless the contract specifically states that the organization will buy back the shares using some valuation methodology in year five.” 

If an advisor is being offered equity, Waxelbaum says he’d want to know what the equity is valued at today and how that valuation was determined before further evaluation. He adds that a change in firm control through sale to a third party is the most likely liquidity event tied to equity offers he sees for financial advisors.   

“My premise is established that this is substantially an unknown, and in the absence of operating history and consistent models of valuation, you're buying a lottery ticket,” Waxelbaum said, speaking generally on advisor equity offers. “It could be the winning lottery ticket, and the odds are way better than a lottery ticket, but not enough better to give up cash value.”