CEO slips RIA into top gear

CEO slips RIA into top gear
On your mark. Get set. Go! Private Advisor Group's Frank Smith sprints into a new year.
DEC 16, 2024

Not too long ago, Frank Smith took the CEO baton at Private Advisor Group and proved he could run fast – and far – with it.

The only question now is whether he can keep the pace he’s set for himself.

Smith ascended to the top spot of the wealth management firm in January 2023. At the time, Private Advisor Group listed $29 billion in assets under management and was deep into a growth phase begun two years prior by outgoing CEO Robert “RJ” Moore.

It was Moore who joined the blitz of RIAs opening their doors to outside investors by partnering in 2021 with Merchant Investment Management and using the fresh capital to expand and to buy competitors. New Jersey-based Private Advisor Group, an OSJ and affiliate of LPL Financial, was established as an independent RIA in 2011. The firm was launched by Pat Sullivan and John Hyland, who founded Morristown Financial Group in 1997.

In 2022, for example, Private Advisor Group acquired two sizable wealth management firms, Minneapolis-based Investors Financial Group, which had close to $1.9 billion in advisory assets, and AK Financial Group of Irvine, California, with $1 billion in assets.

Once Smith took charge a year later, he did not take his foot off the gas.

Among other additions, Smith welcomed Ethan Campbell, a $90 million wealth advisor at Stones River Wealth Management, to Private Advisor Group in May 2024. Based in Tennessee, Campbell had been in the industry for nearly a decade, including a four-year tenure at Edward Jones.

And then, in June 2024, Smith announced the purchase of $155 million Rochester, New York-based Delisanti Wealth Management. Delisanti Wealth was previously with Angelo Planning Group, but owner Robb Delisanti decided to move to Private Advisor Group for its “compliance burden relief, ease of doing business, and efficiency.”

At the time of the Delisanti Wealth deal this summer, Private Advisor Group listed $31.5 billion in AUM. At last check, near the close of 2024, the firm has run that tally up to $35.2 billion, with more than 800 advisors under its banner.

In the meantime, Smith plans on sprinting through the tape and into the new year.

“We pursue meaningful, sustainable growth, expanding our advisor base nationwide while maintaining a focus on quality service and support. Like this year, we’ll expect to close 2025 having expanded our presence with two new corporate offices in Morristown, NJ and Rock Hill, SC, a talented team of over 60 employees, and a strong balance sheet.”

Added Smith, “Attracting independent advisors nationwide who align with our mission remains central to our vision of changing the lives of everyday investors.”

PAYING THE PRICE FOR GROWTH

The global economy is forecast to grow solidly in 2025, which bodes well for long-term investors and businesses alike. Smith says he remains optimistic about the resilience of markets and the opportunities for advisors to guide clients toward their goals amid steady economic momentum.

“The independent RIA space remains in demand, and we remain bullish on this entering 2025. Advisors continue to recognize the advantages of partnering with a firm like Private Advisor Group to handle compliance, operations, vendor selection, and custodian contracts. This allows advisors to focus on serving their clients without the burden of managing their own regulated entity,” said Smith.

True enough, but while rising regulatory demands and increasing time commitments are leading many smaller financial advisors to reconsider running their own firms, those same players are well aware of the heated competition for their businesses. And they, too, have lofty numbers dancing in their heads.

That’s not scaring off Smith, however. At least not yet.  

“Valuations are elevated, but quality firms with strong leadership and sound business models will merit a premium. Seller expectations should be managed here, though, especially when you add the higher cost of capital to the equation,” said Smith.

The key to the M&A process is discipline, according to Smith – or, in other words, paying fair prices for practices that align with long-term growth, retention, and cultural fit.

“We are certainly opportunistic, but also not afraid to say no when we apply the necessary filters to ensure any M&A is aligned with our long-term growth strategy,” said Smith.  

Adding fuel to the M&A fire, of course, is spiraling private equity involvement in the RIA field. Merchant Investment Partners operates as a minority, non-controlling partner in Private Advisor Group, helping to guide its valuation and deal structure work. In fact, Merchant helped architect Private Advisor Group’s advisor Alignment & Equity Program, which launched in 2022.

In addition to Merchant’s insights, Smith says he collaborates with top investment banks and industry partners to ensure he’s not overpaying for deals.

MORE THAN JUST MONEY

As to how Private Advisor Group differentiates itself from the rest of the competition – outside of pure financial compensation – when competing for a deal, Smith says the recent recruits generally cite similar reasons for joining up, starting with the “scale” of a $35.2 billion asset manager and the “community” that comes with it.

“The idea of community is tough to quantify, but holds tremendous value, so advisors don’t become isolated. We do this by keeping advisors connected through ongoing engagement, virtual and in-person events, councils, our digital community for real-time networking, and crowdsourcing ideas,” said Smith. “In other words, the benefits of scale with the power of community.” 

On the topic of community, it’s worth noting that Private Advisor Group’s commitment to charitable programs long predates Smith’s arrival. The firm’s co-founders, Sullivan and Hyland, made philanthropy a core value that remains to this day.

“In 2025, we’ll continue supporting nonprofits like Invest in Others, Defend the Fatherless, and Covenant House, where our team serves on the board. We’ll also maintain our monthly volunteer day for employees, and our nonprofit matching program,” says Smith.

Elsewhere, Smith says the firm’s Alignment & Equity Program is a sought-after differentiator for advisors seeking to finance growth, take advantage of investing in the direct economic interest in the overall Private Advisor Group community, and align in growth.

Finally, Smith believes that helping advisors preserve their legacies by solving for succession and continuity is another reason why RIAs cast their lots with Private Advisor Group rather than its rivals.

Private Advisor group is concerned with “curating solutions for practices at all stages of their business and creating opportunities within our respective community for succession and continuity,” said Smith. “We’re especially excited to do this by supporting the next generation of advisors as part of a practice’s legacy.”

INDEPENDENCE AND THE LPL WAY

LPL’s broker/dealer platform, custodian platform, and other core resources are embedded in Private Advisor Group’s operations. As a result, most of its affiliated advisors leverage LPL in some way. Still, Smith maintains that they operate as an independent firm, so “our decisions are always rooted in what is best for our advisors, the independent financial profession, and, ultimately, the end investor.”

“I believe that LPL shares that belief, which makes them a good partner,” said Smith.

Smith also wants to be a good partner to the independent advisors currently in his network, and he does not want to lose touch with them even as he races to add more.

“The most rewarding part of my job is working alongside really quality people in our support of independent advisors and this profession, including our employees and key partners. The work we do is mission-oriented, and it’s rewarding when you approach it with a mindset of ‘We get to do this,’ not ‘We have to do this,’” said Smith.

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