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Mallouk’s Creative Planning Hits Unplanned Milestone

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What You Need to Know

  • The firm reached $100 billion in AUM largely due to a huge increase in referrals, CEO Peter Mallouk tells ThinkAdvisor.
  • Expect more deal announcements from the firm soon, Mallouk says.
  • Creative Planning is remaining on the sidelines with crypto trading — for now.

Overland Park, Kansas-based Creative Planning achieved a major milestone, surpassing $100 billion in assets under management, it said Wednesday.

“Our referrals from clients [are] up over 500%” and “that’s been the biggest part” of what drove the company over the $100 billion mark, Creative Planning CEO Peter Mallouk told ThinkAdvisor in a phone interview Wednesday.

Meanwhile, “if you look at the acquisitions that we’ve done on the private wealth side, which is what we’re really focused on … the private client, they total about $11 billion in assets” so far this year, he noted. “So it’s significant but clearly not the story” behind reaching $100 billion, he said.

The $100 billion milestone was “never in a business plan, it was never part of our mission, we never worked towards [this] objective and it just happened — and it happened at a speed that surprised us,” he said. After all, “in 2020, we were $50 billion” and “two years before that, we were $25 [billon],” he pointed out.

It’s not like they were discussing a strategic plan during meetings to get to $100 billion, he noted. Rather, “100% of our in-house meetings are” discussions on “how do we make things better for our clients, and how do we make things better for our team, and how do we make it a better place to work to get the right people, and how do we make the offering better for the clients,” he explained.

But the “acceleration” in AUM that happened, “especially over the last couple of years, has caught even us off guard,” he said.

The milestone was also reached despite the fact that the firm is “short on physical space and we have 100 job openings and wait lists for some of our services,” he added.

The achievement is a “testament to what happens when it’s not about getting big; it’s more about serving the client,” he said.

Creative’s M&A Strategy

When it comes to mergers and acquisitions, the RIA has not been quite as active as similarly large RIAs and RIA aggregators. As of Wednesday, it had only announced three such transactions so far this year. However, we can expect to hear more announcements on that front in the near future, according to Mallouk.

More on this topic

Explaining the firm’s current M&A strategy, he said: “We’re already everywhere in America that’s considered a major market. So, for us, an acquisition has to make us stronger in that market and fit culturally with our team. That’s number one. Or it has to be very strategic. It has to help us do something much better than we were doing it before or in a space we were not in before.”

With the acquisitions it’s done so far, Creative Planning is “really not tapping our resources there,” he said, noting: “We have the ability to acquire $100 billion-plus more of assets if we wanted to with the dry powder that we have. We’re very under-leveraged compared to our peers.”

In 2004, Mallouk bought out Creative Planning, originally founded in 1983, and reregistered it as an independent wealth management firm and RIA.

Creative’s Crypto Criteria

Mallouk’s prediction on cryptocurrencies: “There will probably be a couple of winners and 99% of them will ultimately be worthless.”

While Creative Planning doesn’t get directly involved in crypto trading, if clients want to make a crypto investment, “we help them figure out how to do it directly or go through a third party,” he explained.

The main reason why Creative Planning is avoiding direct trading of crypto now is “we’re not big on speculative assets,” he said. They “aren’t bad [but] you don’t know what’s going to happen” with it, he explained. “I feel pretty confident about a bunch of real estate or a bunch of stocks … but with crypto you don’t have that confidence.”

However, “if there become some clear winners, it may be a different story,” he added, “but today it doesn’t fit the client portfolio.”

(Pictured: Peter Mallouk, CEO of Creative Planning)