Peter Mallouk’s two-year, $ 50 billion AUM increase in his Kansas RIA even exceeded his expectations, pushing him to the top – literally – in his shiny office complex.

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Creative Planning has grown from $ 50 billion in assets under management to $ 100 billion in assets under management and CEO and owner says company has added 350 people and is running low on space in its giant headquarters

Note from Brooke: Few large-scale RIA owners can come close to claiming to be organic like Peter Mallouk can. His Creative Planning was so organic until a few years ago that he could not only claim to never have bought any assets through M&A, but even not to have been tainted by outside capital. Mallouk himself had just owned this stuff. Since then, it has given symbolic non-resistance to inorganic influences, like the exchange of a minority stake for General Atlantic capital and the stacking of 16 RIAs, which has exploded its growth. Yet in some ways this growth through acquisition was a side show. The main event remains the references with a fresh wrinkle – more and more very high net worth investors.

Peter Mallouk had a vision of the “Field of Dreams”. If he built a shiny new head office nearly 40 times the size of its old offices, then the assets would come.

The money didn’t exactly come out of a cornfield, but it did come from unusual sources to take his company, Creative Planning, from $ 38 billion in 2018 to $ 100 billion in assets under management this year. this month, the company reported.

Tony Robbins was an integral part of marketing until he left the company in 2019.

“The Ithe biggest part [of growth] comes from referrals, then from market growth, then from acquisitions, ”he explains in an e-mail.

“The fastest growing segment is the ultra-rich. Note: The ultra-rich are not the most important part, it is just the part that is growing the fastest of the largest part.

“I have no idea why we attract them. They come primarily as referrals and I guess they’re more likely to call given our scale.”

Now he is afraid of running out of space.

“Even though we control the campus, we only have room for one more building. We will be able to occupy another 50,000 square foot space.

“Our inability to ever get our space is proof that what is happening was unexpected.”

Pandemic outbreak

Mallouk, 51, unveiled the first phase of his large headquarters in two adjacent buildings in 2018. The surge that followed caught him off guard, he says, but it was not without precedent.

Creative Planning Headquarters
The Creative Planning campus – a monument to optimism in 2018 (Click on the photo to enlarge).

The 2008-09 financial crisis pushed assets up at an even higher rate, a trend that reappeared during the 2019-20 COVID-19 pandemic.

“At the start of 2008, we had $ 500 million, and on the fast track until 2010, we were getting closer to $ 2 billion.

As of spring 2016, Creative Planning had $ 18 billion and reached $ 36 billion, a 100% increase over the next two years.

Creative Planning’s net inflow jumped 68% in 2017. At the time, Mallouk teamed up with author and motivational speaker Tony Robbins to write a book “Unshakeable: Your Financial Freedom Playbook” (Simon & Schuster 2017).

Then the 2020 pandemic struck. Creative Planning had $ 50 billion when the pandemic hit full force in March a year ago and has doubled thereafter.

The number of employees also increased from 600 to 950, with two-thirds staying at the Overland Park headquarters.

Creative Planning has just completed its third building and we will occupy 250,000 square feet when completed, compared to 175,000 square feet.

“You can put an end to our success with these two crises. They really converted our customers and made them stand up for us more, ”he says.

The referrals were mostly of the old-fashioned genre, but with a new wrinkle – a strong preponderance of very high net worth investors.

It helps that Mallouk himself is a lawyer specializing in estates and has a large staff to provide this high-end legal and tax work.

“We have a dedicated team working with this group and this (growing) team has been in place for over a decade,” he says.

Adding fuel

The S&P 500 Index also helped boost growth. It has grown by 28% in the past 12 months and Creative Planning’s portfolios have been allocated to grab a good chunk of it.

“We are a capital intensive business and customers are involved in it all,” Mallouk said.

Mallouk says the company gradually gained ground as a serial buyer of AIR after accepting its very first installment of outside the capital of General Atlantic.

It added $ 2 billion in assets under management this year from three acquisitions and signed a $ 5 billion deal to buy Sullivan Bruyette Speros & Blayney LLC in May. In total, he completed 16 transactions worth $ 11 billion in assets under management, The writings of Barron.

Creative Planning earns 120 basis points on the first $ 500,000, then 100 bps on assets of $ 500,001 to $ 2 million. Charges fall to 85 bps on assets of $ 2,000,001 to $ 5 million, then exceed 80 bps on assets of $ 5,000,001 to $ 10 million.

It only drops to a Vanguard-level wealth commission of 0.30bp on assets of $ 50,000,001 to $ 100 million, according to his. ADV2.

If Creative Planning earned an average of 1.0% or 100 basis points on assets, its revenue would be in the order of $ 1 billion. If its nearly 1,000 employees each cost an average of $ 150,000 per year in compensation, the labor costs would total about $ 150 million. Therefore, the annual profits can reach hundreds of millions of dollars.

Growth drivers

A small handful – Fisher Investments and Financial Engines – of the 13,880 RIAs have a roughly similar story to tell.

Fisher Investments reached $ 100 billion in 2019 and is expected to reach $ 200 billion soon. See: Fisher Investments surpassed $ 100 billion in assets under management in early 2019, contained the flames of a public relations crisis in late 2019, and has a legitimate chance of reaching $ 200 billion in ‘assets under management this year

Edelman Financial Engines is approaching $ 300 billion, but with only about 20% of its assets in retail. See: Ric Edelman removes a major obstacle to his company’s future growth – himself – the final act in a 36-year career that will leave Edelman Financial Engines to fend for itself

The $ 25 billion added in the past six months alone and declared $ 90 billion on June 30 in its ADV file. Creative Planning, founded in 1983, first hit the $ 25 billion mark in 2017.

Book offers

Mallouk declined to say what percentage of referrals came from clients and what percentage came from books he co-wrote with Robbins. But he acknowledged that the company is gaining references from the book.

Robbins had been Mallouk’s chief investor psychology officer and also drew referrals to the company, but after allegations of sexual misconduct against Robbins were reported by Buzzfeed in 2019, Mallouk and Robbins went their separate ways. See: Exclusive: Creative Planning’s split from Tony Robbins was in the works long before self-help guru’s sexual misconduct allegations, says Peter Mallouk

Mallouk and Robbins finalized their commercial divorce in 2019, but Mallouk nonetheless released another book written alongside Robbins in October 2020. The release was expected to generate a torrent of referrals.

Mallouk retained the rights to the book and negotiated a new deal with Post Hill Press, an independent publishing house founded in 2013. See: Peter Mallouk takes control of the last book he co-wrote with Tony Robbins. He can split the two chapters written by Robbins and choose another editor

“Customer referrals have broken all records. We have had the best six months. Customer referrals have by far the biggest part, ”he says.


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