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Industry Spotlight > Mergers and Acquisitions

Creative Planning Buys Tax-Focused RIA in St. Louis Market

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What You Need to Know

  • Creative Planning intends to continue expanding in the St. Louis region, as well as Dallas and Denver.
  • It plans to hire more attorneys and CPAs to create a tax and estate planning hub in St. Louis.
  • The firm plans to announce more acquisitions in the coming months.

Overland Park, Kansas-based RIA Creative Planning acquired Des Peres, Missouri-based Paradigm Financial Advisors, an RIA in the St. Louis market with more than $600 million in assets under management, Creative Planning said Tuesday.

The announcement was made three weeks after Creative Planning said it acquired La Mesa, California-based Reilly Financial Advisors, with more than $2 billion in AUM in a deal that expanded its footprint in Southern California.

Paradigm has about 10 people overall, with seven of them either planners, wealth managers, accountants or attorneys, Creative Planning CEO Peter Mallouk told ThinkAdvisor in a phone interview.

“Creative Planning will leverage Paradigm’s advanced planning expertise to accelerate growth in the high net worth space” and plans to hire additional attorneys and CPAs to “create a new ‘hub’ in St. Louis that will provide estate planning, tax planning and tax preparation services for clients in the Midwest region,” it said in a news release announcing the deal.

‘Bulking Up’ in St. Louis

“We’ve had a significant number of clients in St. Louis for quite some time and we [had] a team of about half a dozen people there” already, Mallouk told ThinkAdvisor. But this transaction gives his company its first physical office in that market, he noted.

“We’re looking at bulking up our presence significantly in that market,” he said. “It was one of the first markets we entered. And Paradigm gets us a little closer to being a multi-billion dollar enterprise in St. Louis and allows us to double our team there. For us, this is just the beginning of what we’re planning on having in St. Louis.”

The first markets that Creative Planning “went after Kansas City, when we really got going, were St. Louis, Denver and Dallas,” he explained. “So those were our very, very first markets outside of Kansas City. And we’re making a much bigger push into all of them” now, he added.

Creative Planning is now managing over $100 billion in assets across all 50 states and 65 countries, it said.

A ‘Good Fit’

The Paradigm purchase was finalized Dec. 31, Mallouk said. Creative Planning declined to say how much it paid for Paradigm, which it said was one of the first fee-only fiduciary RIA firms in the greater St. Louis area.

The RIAs were in discussions for “only a month or two,” Mallouk told ThinkAdvisor, noting that, once the conversations started, “it was pretty clear it was a good fit pretty quickly and we got it done quickly.”

In the announcement, Creative Planning praised the Paradigm team’s “extensive experience in providing financial planning, investment management, tax planning and multigenerational estate planning for high-net-worth clients and their families.”

Paradigm’s Take

Jim Reding, Paradigm’s owner prior to the acquisition, has become an equity partner with Creative Planning and will serve as managing director of the St. Louis office.

“We talked to dozens of firms about merging over the past few years,” according to Reding, who echoed Mallouk by saying in a statement, “we feel blessed to have found the perfect fit.”

Creative Planning, after all, “has the same business model as we do, which includes a team of in-house Attorneys, CPAs and Wealth Managers that work as a team to provide a much broader range of value added services for clients than other firms in the industry,” Reding said in the announcement.

Echelon Partners acted as Paradigm’s investment banker in the transaction.

More M&A Announcements Coming

There are other transactions that have not yet been announced by Creative Planning, Mallouk told ThinkAdvisor. “We have signed deals from last year that aren’t announced, from this year that aren’t announced, and deals that are on the borderline of coming to a conclusion as well that are unannounced.”

Overall, since Creative Planning’s expansion started about three years ago, “we’ve probably announced about 18 deals and I think that, in the coming months, there will at least be seven to 10 more” announced by the end of 2022, he said.

Deal Activity Picked Up

Shifting to the overall sector, Mallouk told ThinkAdvisor, “it seemed like there might be a lull in firms coming to market at the beginning of the year.”

But he said: “That’s clearly changed. You can see the activity’s going to pick way, way back up again. You can start to see it percolating again here …. It seems like this trend is going to continue for quite some time.”

(Pictured: Peter Mallouk, CEO of Creative Planning)