Continuity Partners Group, the Cambridge Investment Research-affiliated company, has welcomed its first independent RIA, Gould Asset Management of Claremont, California, to its succession planning partnership.
Founded in 2010, CPG is a separate company within Cambridge Investment Group that has already attracted 168 former Cambridge reps as partners. Cambridge Chairman and CEO Eric Schwartz said Gould, which has $450 million in assets under management and is led by founder and President Don Gould, is only the first of a number of independent RIAs that are exploring joining CPG.
“We’re talking to about 10 other firms who’ve expressed interest,” he said in an interview Friday, and while he expects that “only a few” of those prospects will “likely join” the partnership, attracting the “huge, underserved” RIA community was a “logical step.”
Schwartz says that while “I built CPG for the senior partner” as a succession planning entity, ”the real beneficiary is the next generation.”
“Seven years ago I started thinking about succession planning” solutions for Cambridge reps who were contemplating retirement or slowing down, but Schwartz is quick to say that CPG is not for advisors who want a hasty exit, nor do they give up total ownership of their firms. RIAs who join “typically become” part owners of CPG, but retain their own RIA.
“We don’t require them to sell a controlling interest to us,” Schwartz says of CPG’s advisors. Instead, CPG provides capital to those advisors for both acquisition purposes and so that the next generation of advisors can eventually acquire control of the individual firms.
Unlike advisor rollup firms like United Capital or Focus Financial, CPG’s intent is “helping advisors grow their business; helping them transition it to the next generation,” Schwartz said. It does so not only by making loans to the firms for acquisitions and to the successors to the principals and founders, but also by supplying a number of business development and practice management services to the partners to help them to grow and increase the value of their firms.
“Our goal is very different” than the rollup firms’, Schwartz says. “The last thing we want is to run your practice from 2,000 miles away; we don’t want to tell you what to do.”
As for the rollup firms, “If you’re funded by venture capital or private equity, you’re driving to a five-year going-public” goal, and “the way they get there is by controlling things, lowering costs, making everybody use the same software package. There are demands on them to achieve certain returns. We’re not driving to a public offering.”
Preferred Succession Planning
Schwartz said that CPG learned that in contemplating a succession plan, most advisors do not want a quick exit with an immediate paycheck, but rather a “staged” process in which they sell a portion of their business over an 8- to 12-year time frame, which provides a number of benefits.