Hartford Business Journal

HARTFORDBUSINESS.COM | August 15, 2022 25 FOCUS: BANKING & FINANCE Glastonbury-based investment advisory firm fuels growth through M&A deals By Matthew Broderick Hartford Business Journal Contributor Last month, Glastonbury financial advisory and wealth management firm Apella Capital LLC acquired NR Smith, a registered investment advisor (RIA) headquartered in Olympia, Washington. The deal — Apella's second acquisition of 2022 alone — brought an additional $82 million in assets under management and pushed the firm's total asset count to more than $2.7 billion. The latest move, Apella Capital co-founder and Partner David Connelly said, was designed to expand the firm's geographic foot- print for future growth in the Pacific Northwest, while enhancing Apella's tax-preparation and accounting capabilities through NR Smith's CPA practice. The firm now has 60 employees and 12 locations nation- wide, including offices in Atlanta, Dallas, Denver and San Francisco. Apella's growth reflects a broader trend of increased merger activity in the wealth management industry in general, and the growing appeal of registered investment advisors. Unlike financial advisors with broker-dealer firms and wire houses, registered investment advisors must be registered with the Securities & Exchange Commission (SEC) or a state agency, and have a fiduciary obligation to act in their clients' best interest. They don't sell financial products or receive commissions for investment vehicles like annuities. That's driven many investors to move their assets to RIA firms over the past 15 years. In fact, RIA market share — as measured by assets under management — has increased from 17% in 2007 to more than 29% in 2022, according to market data from LLR Partners. In 2021, Investment Advisor Association figures show that the more than 14,800 SEC-registered advisory firms collectively managed $128.4 trillion in aggregate assets. The number of RIA firms has grown in 19 of the past 21 years. As co-president of Apella Capital, Jim Scanlan, who joined the firm in 2019, has been heavily involved in the compa- ny's M&A activity over the past three years. "We don't strive for growth for growth's sake," Scanlan said. "It's the people and talent that drive our [acquisition strategy] and we're looking for experience and cultural alignment to [continually improve] how we serve our clients." M&A deal flow Apella Capital LLC offers its thousands of clients — which include individuals, families, nonprofits and businesses — an array of services, including college savings, retirement planning, business succession and estate planning. Rob Martin, Apella's other co-president, said the firm's increasing reach has been fueled by a mix of organic growth and acquisitions. He said the firm's digital assets including its national podcast, "Talking Real Money," have helped educate both current and prospective clients and driven referrals. "We teach clients early on to focus on the long term … and to focus on the things they can control and how markets perform over time, even during periods of volatility," he said. While the S&P 500 is down 13% year-to-date, Apella's average annual return over the past 10 years is 14.7%, which has also helped drive the firm's organic growth, Martin said. The employee-owned firm has also been aggressive in supplementing that growth through acquisition. Since its 2014 founding, Apella has inked 13 M&A deals. In October 2021, the firm began working with Wealth Partners Capital Group, a holding company and capital partner to help identify and facilitate acquisitions of other RIAs to accelerate its growth rate. Prior to that, Apella's M&A deals have been self-funded. And competition for acquisitions has been steadily growing in the RIA market. According to Echelon Partners 2021 RIA M&A Deal Report, the industry saw a nearly 50% jump in acquisition deals — from 205 in 2020 to 307 in 2021. It was the ninth consecutive year that the number of transactions grew. In 2021 alone, more than $576 billion in client assets changed hands Apella Capital LLC is headquartered in Glastonbury at 151 National Drive. PHOTO | CONTRIBUTED Jim Scanlan Robert Martin AT A GLANCE Company: Apella Capital LLC Industry: Investment advisory Top Executive: Joshua Pace, CEO HQ: 151 National Drive, Glastonbury Website: apellacapital.com Contact: 860-785-2260

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