What You Need to Know
- Creative Planning, one of the largest RIAs, has grown significantly in the past year.
- Providing equity in the firm is “a way to reward key employees,” CEO Peter Mallouk says.
- It plans to make equity available to a limited number of others at the firm each year.
Creative Planning has opened up equity in the company to its employees, starting with 86 people, or about 10% of its workforce, it said Tuesday.
The company, one of the nation’s largest RIAs, recently extended its 2020 buying spree to strike its biggest deal to date — buying the $6 billion retirement division of Iron Financial, which is based in Northbrook, Illinois, and has 15 employees.
Creative Planning intends to continue to offer equity in the firm to eligible employees and as part of future acquisitions, it noted Tuesday.
Prior to this, only Peter Mallouk, Creative Planning’s CEO and its majority owner, and General Atlantic, which owns 18% of the firm, owned equity in the company, Mallouk told ThinkAdvisor.
“Creative Planning used to be structured as several different entities and I have partners in a lot of those entities,” he pointed out. Offering equity to others “combines a lot of the key entities together in one parent company and brings in people across all those entities as partners,” he explained. “So we have wealth managers, lawyers, CPAs” and other professionals “as part of the ownership group” now.
The move was “a way to reward key employees and a way to align the top talent with our mission going forward,” he said, adding: “I think we’re really looking to do some pretty great things here over the next decade and this was really getting us all aligned as we begin to do that.”
Creative Planning had started looking into this initiative before the pandemic, he told ThinkAdvisor.
The criteria that determined which 86 employees qualified to receive equity was a “combination of time at Creative Planning” and their roles and contributions to the company, with the criteria varying by department, he explained.