Deals & People March 13, 2023

Advisory M&A

PCIA acquires Cornerstone; Creative Planning adds Telarray Advisors; Heffernan Network acquires Kettering Rose; and more.

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Prime Capital Investment Advisors Acquires Cornerstone Comprehensive Wealth Management 

Prime Capital Investment Advisors LLC has announced its acquisition of Cornerstone Comprehensive Wealth Management, bringing $400 million in assets under PCIA management. 

Cornerstone has 10 employees, including four advisers who will continue to serve approximately 575 households in partnership with PCIA. Cornerstone is based in Reno, Nevada, which will be the first location for PCIA in the state.  

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“I’m excited to expand into Nevada and welcome the team at Cornerstone to the PCIA family,” said Glenn Spencer, CEO of PCIA, in a statement. 

According to a statement, PCIA was impressed by Cornerstone President Christopher Abts’ expertise in marketing and generating leads via his TV show, “Redefining Retirement.” Abts is also a published author on the topic of retirement planning. 

“Partnering with PCIA will enhance our client service capabilities and expand our investment management solutions for our clients and their families,” Abts said in a statement. 

Creative Planning Acquires Telarray Advisors 

Creative Planning LLC has acquired Telarray LLC, also known as Telarray Advisors. Telarray has $1 billion in AUM and brings 18 new employees into the Creative Planning fold. 

Telarray specializes in retirement planning, estate planning, investing, tax management strategies and more. The firm has historically operated as a fee-only fiduciary.  

“We were looking for a firm that aligned with us in planning philosophy, culture, employee opportunities, and that provides an immediate expansion in our service offering for both our existing and future clients. Creative is that partner, and we are excited to be a part of the team,” said Richard Paessler, Telarray president and chief compliance officer, in a statement. 

With its latest acquisition, Creative Planning oversees more than $225 billion in assets across all 50 states and 65 countries. 

“Creative Planning is thrilled to bring on the Telarray team who will help us break deeper into the Tennessee market,” said Peter Mallouk, CEO of Creative Planning, in a statement.  

Heffernan Network Insurance Brokers Acquires Kettering Rose Insurance Services 

Heffernan Network Insurance Brokers announced that it acquired Kettering Rose Insurance Services in January. 

Robyn Kettering, founder and president of Kettering, and 10 of her team members joined Heffernan Network on January 1. The company will operate autonomously as a subsidiary agency of Heffernan Network. 

“We are so excited to join forces with Kettering Rose, bringing Heffernan Network a solid team of insurance professionals in a new region, with big opportunities for growth,” said John Prichard Jr., president of Walnut Creek, California-based Heffernan Network, in a statement. 

San Diego-based Kettering has been family-owned and operated since its founding in 2004. The firm focuses on commercial lines and personal lines clients with a specialty in the public auto sector.  

“This is an exciting announcement for us that will provide important benefits to our clients. We will continue to be run by the same experienced management team that is in place today and continue to provide the best products and level of service to our clients,” Kettering said in a statement. 

Hub International Acquires Glacier Insurance of Libby  

Hub International Limited announced today that it has acquired the assets of Glacier Insurance of Libby, Inc.  

Glacier Insurance of Libby is a full-service independent agency providing commercial and personal insurance to clients in Montana, Idaho and Washington. Owners Kevin and Kim Peck and the Glacier Insurance of Libby team, based in Libby, Montana, will join Hub’s Mountain States division. 

“We are excited to have Kevin, Kim and their team join Hub,” said Brent Irving, president and CEO of Hub Mountain States, in a statement. “They will offer first-rate knowledge and personalized service as we look to continue to grow and provide significant value for clients in the region.” 

“Joining Hub gives us access to additional resources and capabilities so that we can continue to provide the highest quality of service to our clients,” Kevin Peck said in a statement. “We believe the larger and diversity of experiences will provide a very attractive combination for our clients.” 

ARS Investment Partners, Piton Investment Management Join SMArtX Advisory Solutions’ UMA Platform 

SMArtX Advisory Solutions announced it has added 25 strategies to its UMA platform. 

ARS Investment Partners LLC and Piton Investment Management LP are new to the SMArtX platform. Existing platform firms Alpha Vee, Capital Research and Management Company and Principal Global Investors all added new strategies. 

ARS Investment Partners added its ETF- and equity-focused strategies, while Piton is now offering its fixed-income solutions to SMArtX clients for the first time.  

Alpha Vee and Principal Global Investors each deployed one additional strategy in March, but Capital Research was the largest contributor with 17 new strategies. The new American Funds strategies encompass their class F-2 shares, joining another 17 American Funds strategies featuring class F-3 shares. 

Compliance March 13, 2023

SEC’s Uyeda Expresses Concern about SEC Overreach

Republican commissioner specifically mentioned the new outsourcing rule, pay-to-play enforcement and compliance periods for SEC rules.

 

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Mark Uyeda

Securities and Exchange Commissioner Mark Uyeda shared his thoughts on recent SEC rules at the 2023 Investment Adviser Association Investment Adviser Compliance Conference in Washington, D.C., and expressed acute sympathy for small businesses affected by the rulemakings. He said it “frustrates me to no end that there aren’t more accommodations for small businesses.”

Specifically, Uyeda advocated for later compliance deadlines for smaller advisers in situations for which exemptions are inappropriate. Staggered implementation of rules not only allows smaller advisers more time to come into compliance, but it allows them to observe larger advisers already in compliance to see how the rule works in practice and identify policies that might work best for them.

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Uyeda said he also opposes placing the compliance dates of multiple rules around the same time as each other. If an adviser has several compliance dates in quick succession, that reduces the amount of time they can spend on each one.

Karen Barr, the president and CEO of IAA, asked Uyeda about SEC enforcement actions for “technical issues” or “footfalls” in which “there is no harm to investors” and if the SEC could explore other actions, such as notices. Uyeda responded favorably and said that he does not approve of a “gotcha mentality” to enforcing minor violations that did not harm any investors.

He provided “pay-to-play” rules governing financial advisers’ political donations as an example, saying that if someone gives $300 to a governor’s race and that governor appoints members to a pension board, “Really, is that a violation?” (The answer depends on if the adviser was entitled to vote for the candidate, since the rule exempts donations of $350 or less per candidate if the adviser could vote in the candidate’s election, and $150 if they cannot.)

Uyeda said that for smaller advisory firms, the only feasible way to comply with pay-to-play rules is to not permit political donations, even if the candidate in question does not seem to be involved in appointing financial professionals for a public body or awarding contracts to financial firms.

This sentiment echoes a statement from a fellow SEC commissioner, Hester Peirce, from September 2022 in which she questioned the utility of penalizing small, one-time donations and called the rule “an exceedingly blunt instrument.”

Uyeda continued that pay-to-play rules are most critical in smaller jurisdictions in which “a $500 donation can go a long way.” If a town has a municipal pension fund of a few million dollars, then that advisory business could be easily influenced of captured, since it is likely being monitored by fewer people.

Uyeda then turned to the new outsourcing rule, which requires advisers to do their due diligence in their selection of service providers and to continue monitoring their performance. He said this rule is “very, very broad” and he is concerned about the “who and why?”

As for the who, Uyeda explained that it is not clear which providers the adviser is responsible for monitoring. Since advisers sometimes have to mail notices to clients, are they responsible for monitoring the performance of the Post Office?

As to why, Uyeda suggested that this rule is redundant, because it falls under an adviser’s fiduciary duties. At another panel at the conference, William Birdthistle, the SEC’s director of investment management, responded to this criticism by saying that the SEC’s goal is to avoid the adviser and their providers “pointing at each other” or avoiding responsibility. Requiring contractual guarantees between advisers and their providers and explicitly saying that the advisers have a duty to monitor is how the SEC is able to assign responsibility if there is a failure.

Uyeda anticipated this response earlier in the conference. He said that if there is a concern about advisers “shirking their duties” and throwing their providers under the bus, the SEC should issue guidance explaining that outsourcing “does not absolve you of your responsibility” as a fiduciary without the need for a new rule.

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