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Creative Planning Offers Equity to Employees

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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.

The goal is to have an opening each year for a limited number of employees to receive equity as partners, he added.

“We have an incredibly dedicated team who have been instrumental in helping us grow our business over this past year,” Mallouk said in the announcement. “In many ways, we feel like we are just getting started, and I look forward to sharing the journey with my new partners.”

Creative Planning says it has “consistently advocated for its employees.”

For example, in March and April last year, when the market dropped at the onset of the COVID-19 pandemic, Creative Planning “was the only large RIA to publicly pledge both to retain all employees and not to make cuts in compensation, no matter how long the crisis lasted,” it said.

In addition to “weathering the initial downturn, Creative Planning has significantly expanded its business,” it said, noting that, in the past year, the firm has grown its assets under management from $50 billion to $75 billion.

The company has hired more than 100 people in the past 12 months, Mallouk also told ThinkAdvisor, noting it’s been “one of the biggest growth periods in our history.”

The company now has a total of about 350 advisors and financial planners, which is about a “few dozen” more than a year ago, he said.

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