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Smart Niche Model Leads to Succession Planning Success

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Milwaukee, Wis.-based Cleary Gull is one fine organization, according to Tiburon Strategic Advisors’ Chip Roame.

Roame routinely refers to the “genius” of the firm at his popular CEO summits held twice each year. The reason, he says, is the effective use of the niche market business model they employ; specifically airline pilots. Like physicians, senior pilots have a lot of money, quite a few outside business interests, and a desperate need for quality financial advice. By familiarizing itself with each airlines’ retirement planning offerings and policies, the firm has attracted a large following, as well as the assets under management that go with it.

Now two Dallas-based firms have taken it a step further, merging in the airline pilot-focused RIA space to ensure succession planning continuity.

Smith Anglin Financial, an RIA managing $357 million in AUM, announced Wednesday that it had merged with Rhoads Lucca Capital Management in a “succession planning-centric deal” that brings the combined AUM of the RIA to about $500M.

The transaction took over a year to complete due to the very specific criteria the selling firm, Rhoads Lucca, had in selecting a partner. 

“I cannot stress enough how important it was to us to find the right fit for our practice – important for our clients, for our employees and for ourselves, ” John Rhoads, partner at Rhoads Lucca, said in a statement. “We outlined a set of criteria that was challenging, to put it mildly, and frankly the choice we made in the end would have appealed to me even if I planned on remaining with the business for another 10 years.”

The criteria for the deal included finding a fit for Rhoads Lucca’s traditional RIA active and retired pilot clients as well as for the pilots’ 401(k) Autopilot accounts managed by the firm. Smith Anglin’s tax planning proficiencies were also a very appealing element for the seller. 

“We are proud to welcome John Rhoads, David Lucca and their team aboard as our partners, and we have a tremendous amount of respect for the business they’ve built serving commercial pilots,” added Steve Anglin, managing partner of Smith Anglin.  “The fact that we were the final choice for them among many well qualified competitors is a great honor.”

The combined firms help commercial pilots from Southwest, United, Delta, USAirways/American and FedEx, among others, to navigate their retirement and pre-retirement. While Dallas based, they serve clients in 45 states. Both firms claim to “deploy a defensively oriented investment strategy for clients,” another reason the union appealed to both.

Advice Dynamics Partners, which brokered the transaction, says it believes there are certain “core truths” about every independent advisory space transaction:

  • No deal is simple, and each side must be treated with great care
  • There must be a dedicated focus to find a match that is a strategic, financial, and cultural fit
  • No matter how specialized the firm, you can be marketable
  • There is a buyer for every seller–and accomplishing the right deal takes time

“What we learned in going through this process was that it is one thing to state that you are ready to acquire, or to execute a succession plan, thereby triggering a wave of potential unions, and quite another to have a true veteran guide you through it every step of the way – you don’t want to wing it when it comes to these things,” Anglin added.  

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