Modera acquires $3.75B RIA Parsec Monetary

Price-only registered funding advisory agency Modera Wealth Management‘s largest acquisition in its 40-year historical past highlights the agency’s “deliberate” development technique, its CEO stated.

The addition of Parsec Monetary, an Asheville, North Carolina-based RIA with 76 monetary advisors and different staff managing $3.75 billion in shopper property, pushed Westwood, New Jersey-based Modera’s dimension as much as $10.5 billion with a employees of 180 throughout 14 places of work, the firms said May 1. The events did not disclose monetary phrases. Earlier than buying Parsec on April 25, Modera’s largest deal had been for a agency with $1.4 billion in property — lower than half the dimensions of its newest acquisition, CEO Tom Orecchio stated.

“Our development could be very deliberate; it isn’t development for the sake of development. We do not anticipate we’ll discover one other associate like Parsec anytime quickly,” Orecchio stated in an interview. “We’re searching for fee-only, fiduciary RIAs that share our funding philosophy … The funding philosophy has to suit as a result of we simply do not feel snug telling a number of funding tales out of the identical store.”

Modera was the No. 30 agency final 12 months on Monetary Planning‘s RIA Leaders rankings of the most important fee-only RIAs. Different companies on the record have been making large offers over the previous month, too. On the identical day as Modera introduced it had bought Parsec, the No. 4 agency on the record, Pathstone, unveiled its acquisition of an RIA with $2 billion in shopper property. In early April, No. 9 agency E.P. Wealth Advisors picked up one other RIA with $1 billion in shopper property.

Business dealmakers say that whereas wealth administration transactions have modified amid inflation, greater rates of interest and considerations a couple of potential recession, they have not slowed down in a significant approach. At a panel final week held by funding banking agency Republic Capital Group, Hightower Government Director of M&A Marc Cabezas and Robertson Stephens Wealth Administration CEO Raj Bhattacharyya agreed that “a whole lot of underlying secular causes” for M&A stay in place within the shifting macroeconomic setting, as Bhattacharyya put it.

“There is a large profit to purchasers of getting extra assets. There is a large profit to advisors being half of a bigger entire with out actually essentially giving up autonomy and issues that they care about, however getting assets from a central operate that may delve into issues a lot deeper,” Bhattacharyya stated. “The secular causes will proceed, so I feel what you may see is folks will proceed to do offers.”

In every of the final three years, Hightower has spoken with about 400-600 potential sellers, entered into severe talks with roughly 40 and accomplished round 15 to twenty offers, in keeping with Cabezas. Different strategic acquirers have taken discover in these financial occasions, when it is not potential for them to be “indiscriminate consumers,” he stated.

“At this time, greater than ever, that is a reasonably common theme throughout the strategics on the market,” Cabezas stated. “Companies are being far more selective on the place they need to spend their time. Simply because capital is dearer, companies need to be far more disciplined in how they select to deploy.”

With Parsec, Modera added a agency that had simply 5 staff and fewer than $400 million in property underneath administration when CEO Rick Manske joined in 1996. Two dozen Parsec staff picked up Modera inventory as a part of the deal, and Manske has joined the agency’s board alongside former Parsec Chief Working Officer Harli Palme. 

She’s taken the identical title at Modera, whereas Manske has turn out to be the agency’s chief development officer. As a part of all of Parsec’s staff shifting to the brand new agency, Chief Funding Officer Invoice Hansen will share that title with Modera’s current chief funding officer as effectively. Park Sutton Advisors, a Waller Helms Firm, suggested Parsec on the deal.

Parsec’s management selected Modera primarily based on “seeing the advantage of the scalability” and “offering the very best alternative for our gifted employees,” Manske stated in an interview.

“There have been the financial causes of scalability, however we’re actually making an attempt to rework and create one thing particular that does not exist proper now,” he added.

At the very least 61 staff of Modera now have a stake within the RIA, which additionally receives minority backing from non-public funding agency Tria Capital Partners. The agency is in search of to take a distinct path than rivals which have brokerage or insurance coverage arms working on behalf of purchasers in a non-fiduciary capability, in keeping with Orecchio.

Regardless of its huge and quickly increasing dimension, the agency’s executives do not discover sustaining the fee-only, fiduciary mannequin tough, he stated.

“One of many questions that comes up each single time is, ‘How is that this good for the shopper?'” Orecchio stated. “So long as you retain that entrance and heart, it informs a whole lot of your decision-making going ahead.”