Alera Group Wealth Services, a division of Deerfield, Ill.-based Alera Group, an independent insurance and wealth services firm, has made its first acquisition, acquiring Wharton Business Group (WBG), a registered investment advisor in Malvern, Pa., managing more than $3.5 billion in client assets.
“Wharton Business Group has more than 30 years of experience serving clients and is an exciting addition to our national wealth services platform,” Alan Levitz, CEO of Alera Group, said in a news release announcing the deal. “The team shares our fierce commitment to collaboration, and we look forward to leveraging its expertise to bolster our existing wealth management services and national presence.”
Terms of the transaction were not disclosed.
Founded in 1992, WBG specializes in custom investment advisory and business continuity services, including leadership succession and estate planning, which are typically performed in conjunction with other key advisors of business owner clients, the company said. WBG’s investment services include portfolio evaluation, investment policy development, manager selection, security selection, continuous active management, portfolio rebalancing and investment fee analysis.
“For more than three decades, we’ve provided clients with unbiased investment management and business succession advice,” B.J. Webster, managing director and founding partner of Wharton Business Group, said in the news release. “Now as part of Alera Group, we’ll continue providing these services, but can also offer to connect clients with a network of experts and advisors in other planning areas whose interests are aligned with theirs.”
Webster said in an email that he and his partners, ages 55, 59 and 62, decided to sell the practice to Alera in order to ensure its legacy.
“We have been getting questions from our clients about what happens if we have health problems,” he said. “The pandemic really prompted this thinking from clients as they have looked at their own situations as business owners. We want to be part of what Alera is building in wealth services.”
Webster said that he and his partners had worked for industry giants as Schwab, BlackRock and Vanguard, and that the newly merged firm would be able to leverage that experience to grow Alera’s wealth management division.
“We decided we would rather help build someone else’s practice than join someone else’s platform,” Webster said. “So many RIA buyers simply want to scale and use one-size-fits-all investment solutions. That doesn’t fit with our client base of business owners and ultra-high-net-worth families.”
Webster said that as part of their due diligence process, he and his partners worked with DeVoe & Co. last year to perform an analysis of their independent practice. In the fall, DeVoe & Co. helped WBG develop a profile and confidential information memorandum (CIM), and began marketing the business to potential buyers.
“We had conversations with 14 industry firms, each with name recognition, but none of them were a fit with the self-assessment/gap analysis we went through,” Webster said in the email. “Alera was different. It gave us the opportunity to continue offering our clients a similar experience, while providing for our succession and contingency planning needs, which were our primary goals.”
Based on his firm’s due diligence, Webster said he did not believe that bigger was necessarily better when it comes to partnering with another RIA business.
“You give up a lot in joining a much larger firm,” he said. “Your process, fee structure, and portfolio construction are called into questions and are likely to change. Alera gives us the ability to access the resources of a larger firm, while giving us the opportunity to help Alera shape what its wealth services offering ultimately looks like. We are encouraged by the possibilities, and while we like the idea of scale, this partnership still retains the core of what we do that differentiates us from the rest of the industry.”
Webster said that initially, his firm’s clients would not notice a change post-merger since most of the initial benefits of the acquisition will be back-office services, such as IT, compliance, legal, financial, marketing, human resouces, payroll and website management. However, clients will eventually benefit from the services he and his team help Alera to develop over time.
“For example, one-third of our individual clients are next generation descendants from our first generation client base,” he said in the email. “We believe we will need to develop services and platforms that appeal to clients age 25 to 40 years old to retain their business as they inherit the wealth we’ve helped their parents and grandparents build. Also, private equity and alternatives will become a bigger part of portfolio construction in their future. We look forward to working with Alera and the other RIAs it acquires to build a world-class private equity and alternatives platform in the future.”
Alera Group has more than 3,500 professionals in more than 130 offices nationwide, with more than $980 million in annual revenue.
