Merger of CAPTRUST Firms Highlights Industry Change

The advisory firms CAPTRUST and CapTrust have announced a merger after nearly 20 years of separate operations.

Longtime readers of PLANSPONSOR may recall the 1998 split: One portion of the original firm became “CAPTRUST” and began a new life as a Raleigh, North Carolina-based registered investment adviser (RIA), while the other parts of the business became “CapTrust Advisors,” and “planted a flag in Tampa, Florida.” The former group has specialized in wealth management as well as institutional asset management, growing to manage some $250 million in client assets. The “CapTrust” side has specialized in endowments and foundations and built a significant wealth management and 401(k) business, growing to $19 billion in assets under advisement. 

Jeb Graham, retirement plan consultant partner with CapTrust Advisors since 2005, was recognized as the 2013 PLANSPONSOR Retirement Plan Adviser of the Year. Graham says the mission statement of his organization in this merger remains to deliver “exceptional services in a user-friendly manner.”

Technically speaking the CapTrust firm is joining the CAPTRUST advisory network, which has grown substantially through mergers and acquisitions in recent years. Speaking about the merger into CAPTRUST, Graham tells PLANSPONSOR his group is eager to access expanded participant advice solutions and to take advantage of the “phenomenal depth, scale and leadership” of the larger organization. Graham further voiced confidence in the forward-looking growth vision of CAPTRUST, which includes both merger/acquisition activity and a focus on organic growth in new markets: “The organization is built as a solid, lasting business that will allow us to continue directly serving our clients.”

Reached for a separate interview, CAPTRUST’s Fielding Miller, CEO and co-founder, and Rick Shoff, adviser group managing director, echoed Graham’s optimism about the opportunity for synergy. They suggested the CapTrust acquisition fits the pattern of the 26 acquisitions the firm has conducted in the last decade.

“CAPTRUST has to compete against a lot of other buyers of advisory practices in todays’ market,” Miller observed. “Part of what helps us stand out is that we are entirely employee-owned and we have no outside capital invested in the business.” Oftentimes, the pair observed, this fact has served as an important differentiator in the eyes of potential independent advisory firm prospects, which can be somewhat wary of merging into venture capital ownership.

Another factor that has buoyed CAPTRUST’s acquisition efforts is the 18% annualized growth rate of firms that have been acquired in the last decade. As Shoff explained, generally speaking a firm joining the CAPTRUST network can expect to double its gross organic growth capacity, “and no small part of this is the fact that we target firms that have a compatible match with our culture and our beliefs about where the retirement plan and investment business is heading.”

It also helps, the fact that the Department of Labor (DOL) fiduciary rule is pressuring advisers to ramp up their already-significant compliance efforts, which can understandably be harder for smaller firms with less resources to spare. All in all it remains an appealing time for practices to think about how to boost scale. 

“The acquisitions get a lot of press and attention in the trade media,” Miller concluded, “but we continue to believe that it is the ability of the business to grow organically that is the true measure of where we stand. The real work is done when we are growing one client at a time, while keeping the existing clients happy. That has to remain our primary strategy, and the acquisitions we do in the future must be an accelerant for the organic growth.”