A lot of sports fans watch games and worry that their team looks too relaxed. Not many think that it might be their fault.
But that’s exactly how Captrust Financial Advisors CIO Kevin Barry felt during none other than Super Bowl LII.
‘I’m watching the Eagles in the Super Bowl and during a crucial moment in the game, the camera lingers on a player on the sidelines looking very relaxed. He’s one of our clients,’ Barry says.
‘I think to myself, maybe he looks so relaxed because, win or lose, he knows his financial future is secure. But as an Eagles fan, I wished he had looked more fired up.’
The good news for Barry and the player was that Philadelphia went on to defeat the New England Patriots to claim their first ever Super Bowl victory.
That easy-going Eagle is far from the only star athlete on Captrust’s roster, as the firm represents around 85 NFL players, according to chief executive and co-founder J. Fielding Miller.
‘We probably have more first-round NFL players from the past 10 years than any other financial advisors,’ Miller says. ‘We deal with some entertainers, some coaches and others in similar areas. It’s a good type of niche business that we’ve been pretty blessed with.’ So what is it that attracts high-profile names to Captrust?
Miller believes that the answer lies in the firm’s ability to meet these clients’ needs, thanks to its deep bench of resources and conflict-free advice. He adds that the firm has made it a focus to accommodate the unique needs of that clientele.
Raleigh, North Carolina-based Captrust certainly has plenty of resources. An aggressive acquisition spree means that it now has 159 advisors across 37 different locations in 20 states. As a result, it has $16.5 billion in assets under management (AUM) and $278 billion in assets under advisement.
But it wasn’t always the giant it is today. The firm was founded in 1997 by Miller and David Perkins, along with 11 others. Perkins is no longer with the firm, but Miller is still around to steer the business’s growth strategy, primarily by acquiring like-minded independent advisors and advice firms.
However, Miller’s own journey to this position was not straightforward. After graduating from East Carolina University with a business degree, he was not sure what to do. He ultimately found inspiration – in an unlikely way – from his brother, who was a stockbroker at the time.
‘He was very successful and he didn’t work that hard,’ he says. ‘I like to work, so I thought if I worked twice as hard as him and made half as much money as he did, then I’d be in great shape.’
But it wasn’t quite as easy as that. ‘The problem was, nobody wanted to hire a 23-year old stockbroker,’ Miller explains. ‘So I ended up becoming the branch manager of a bank, which I did for about two and half years before getting into the brokerage business.’
Miller would go on to join a regional brokerage firm in 1986, where he met the other future Captrust founders. The rest, as they say, is history.
Barry is a much more recent addition to the Captrust line-up, having only joined last year. After majoring in finance at college, he has enjoyed a long career at a number of portfolio management firms, including TimesSquare Capital Management, Brevan Howard Hedge Fund and Third Law Capital Management.
Last year, he left the world of alternative management behind to join an RIA in Raleigh, North Carolina. Why?
‘I had some of the same priorities in my career that Captrust has, which is putting the client first, employee ownership and the firm reinvesting in the business,’ Barry says.
‘Having had a background in the high-net-worth and institutional spaces, I went to see if I could buy into an RIA. That’s when I heard of Captrust for the first time, and then I got a call from a recruiter. I said, “If it’s a publicly traded firm, then I don’t care.”’
Luckily for both parties, Captrust is a private business that encourages long-term investing.
Today, Barry leads the firm’s 19-person investment management team, which includes a dedicated manager research and due diligence team. That’s in addition to the firm’s six-person portfolio management team, which is responsible for portfolio construction and asset allocation changes. He also leads the investment committee, which makes the capital market assumptions and has the final say on all portfolio decisions.
The investment management team covers 2,500 strategies from 250 firms. Of all of those strategies, about 110 make it onto the fund’s recommended list, which is made up of strategies that are then used in the firm’s model and custom portfolios.
Captrust offers a range of five risk-based model portfolios, running from capital preservation to aggressive growth. It also has other variations, including portfolios for alternatives, fixed income and tax-aware offerings. Portfolios typically hold a mixture of mutual funds and ETFs.
Having been a manager himself, Barry says that he knows what to look for when deciding whether to back or sack a recommended strategy. In some cases, these warning signs can seem innocuous at first.
‘There was a very strong active manager of equities a few years ago. This manager was getting ready to retire and there were two co-PMs who were going to take over from him. We were meeting with the three and then the two co-PMs left the room. Our analyst asked, “Where are we going for lunch?”’ Barry recalls.
‘The retiring PM said, “We should find a place because those two can’t agree on anything.” So we came back and took our money out. The following year someone put it all on red and lost.’
Getting on the offense
This keen eye for firm culture also plays a role in Captrust’s acquisition strategy.
For the past 11 years, Captrust has averaged roughly three acquisitions per year. In 2017, it made seven. Its most recent buy was in September, when it struck a deal for Morton Wealth Management, a Greensboro, North Carolina-based RIA with AUM of $400 million. This took the firm to 30 acquistions in total.
‘We place a high premium on the culture here and how you fit in at Captrust,’ Miller says. When smaller independent shops fold their businesses into the firm, they become shareholders and employees.
‘We have the best acquisition model for those that want a fully integrated experience, and the benefit for the advisors that join us is that we have enough scale that we can provide resources to help them grow. The average advisor who joins us grows at 15% per year after the deal, including the year they join,’ Miller says.
He sees the trend of advisors wanting to join an independent RIA – instead of being part of a broker-dealer or a wirehouse – as one that will continue. ‘There’s a long list of reasons why advisors want to get out of wirehouses,’ he says. ‘There’s conflict everywhere, and the compliance burden is enormous because they have 15,000 brokers out there doing different things, so that just makes it hard on everybody.
‘There’s also the pull factor, in that you can actually create your own wealth when you start a business, build it up and ultimately sell it. There’s also a lot to be said for being able to frame your own way of dealing with clients, as opposed to the lack of freedom and flexibility at a big organization.’
Miller believes that Captrust is in a good position to capitalize on this trend, facilitating breakaways and providing advisors with the freedom and scale to help them focus on their clients.
‘A lot goes into running a business, from HR to technology, compliance, legal and finance... You name it, there’s just stuff you have to do no matter what your business is,’ he says.
‘What happens is they get bogged down in running the business as opposed to being advisors, but when we fold in a firm, we take all of that off them so they don’t have to worry about administration anymore. Then they can just focus on providing great client service.’