One could say Waverly Advisors LLC, a fee-only, registered investment adviser (RIA) based in Birmingham, is undergoing a growth spurt. An inorganic growth spurt that is. The company is rapidly expanding its business through an aggressive acquisition strategy.
This year Waverly Advisors wrapped up its 16th acquisition of financial and wealth management firms in less than four years. In fact, Financial Advisor Magazine’s RIA Survey and Ranking for 2024 listed Waverly Advisors at No. 16 on its Top 50 Fastest Growing Firms list.
“Growing organically is still a high priority for us,” says Waverly Advisor’s President Justin Russell. “Healthy things grow, in our mind. We added the inorganic component, but we’re certainly still committed to growing organically as well.”
Just this year alone, Waverly Advisors snapped up several of what are now partner firms: StrategiQ Financial Group in Merrillville, Indiana; EFP Advisors in Jackson, Mississippi; McShane Partners in Charlotte, North Carolina; Derbend Asset Management in Peachtree City, Georgia; and River Capital Advisors L.C. based in Jacksonville, Florida.
The River Capital acquisition brought Waverly Advisor’s assets under management (AUM) — the market value of assets managed on behalf of clients — to $12.5 billion as of July 19.
Led by CEO Josh Reidinger, Waverly Advisors serves high-net-worth individuals and families as well as corporate retirement plans, institutions, endowments and trusts.
And as of last year, Waverly Advisors is the second-largest financial planning and investment advisory firm in Alabama, just behind Captrust of Birmingham. Waverly operates 21 offices in nine states across the United States and employs more than 170 professionals.
Russell says Waverly’s commitment to growth through acquisitions is driven by three pillars of thought within the company.
“The first pillar was, how do we offer more depth of expertise to clients?” says Russell. “When you become a bigger organization, you’re able to start investing in talent that specializes in certain things, whether it be Social Security and Medicare planning and estate planning, or different investment structures.”
The second point was to create outsized opportunities for people within the organization to take leadership roles on the integration team and work with the partner firms.
“The third, and most important to us, is: How do we maintain or strengthen the culture that we’ve worked so hard to build?
“So, anytime we’re having a conversation with a potential partner firm, we lead with culture 100% of the time, and we’re not trying to change people to our culture. We’re trying to find someone on the front end that matches 90% with our culture already, and can jump in and hit the ground running,” Russell says.
Russell says Waverly Advisors is particularly attracted to CPA-oriented firms and those that have a legacy in a CPA firm.
“We think we’re uniquely positioned to understand the challenges and the benefits of those relationships, so, we think we make a good partner there,” says Russell.
“And we started looking in the Southeast because of cultural alignment, but we’ve found that the story resonates nationwide. So, we’re certainly not limiting ourselves to those geographies,” he says.
Waverly Advisors is the former Warren Averett Asset Management.
But after splitting from its parent company, Warren Averett CPAs & Advisors, WAAM in 2021 announced a new agreement with Wealth Partners Capital Group, an RIA investor, and HGGC, a private equity firm, to fund WAAM’s growth, both organic and through mergers and acquisitions. WAAM said Warren Averett CPAs & Advisors would maintain a minority stake in WAAM.
“The thinking was, we wanted to maintain strong ties with the CPA firm, which we have. We still serve a lot of joint clients, but we wanted to add a component, inorganic growth, meaning mergers and acquisitions, to our business, and we needed a capital partner to help us do that,” Russell says.
“So, we were able to keep the best things about the accounting firm, the relationship and the referral network that we had, while taking on a great capital partner and wealth partners, Capital Group and HGGC. That helped us pour gasoline on the fire to keep growing the company and creating opportunities for people within the company,” he says.
Then in 2022, WAAM rebranded itself as Waverly Advisors.
Professor Patrick Murphy, Ph.D., the Goodrich Endowed Chair for Innovation and Entrepreneurship at the UAB Collat School of Business, says several factors in the market can make acquisitions an attractive business strategy.
One is declining interest rates. But even the anticipation of lower interest rates can make borrowing and fundraising cheaper, and therefore, the cost of financing and acquisitions cheaper as well, he says.
“Second, when you have these various financial advisory firms, there’s going to be diversities across them. They’re each going to have different client bases. They’re each going to have different focuses, and those diversities, when you roll them all up into one larger pool, you can make a larger organization that can serve a broader range of clients in different demographic communities,” Murphy says.
Russell says the reasons why smaller financial advisers agree to sell varies.
“Number one, there’s a lot of baby boomers that built these businesses and are looking for a great succession plan to take care of their people and their clients, and we serve that role,” Russell says.
“And then number two, you’ve got more growth-oriented advisers that maybe are in their mid-40s, and they’ve got a lot of career ahead of them and are looking for more resources to have at their disposal to serve their clients better and get more clients,” he says.
“We’ve got our IT team that’s in-house,” he says. “We’ve got in-house human resources and recruiting that helps staff these firms and centralized marketing — where small businesses that have four or five people can’t invest in that kind of infrastructure.”
But some factors could make a firm a poor fit for acquisition, Russell says.
“We’re a fee-only fiduciary in this space. Someone who has a substantial amount of commission business or brokerage business, not saying that’s better, worse or indifferent, just that it doesn’t fit very well in our system,” he says.
Russell says that meanwhile, Waverly Advisors plans to continue on its acquisition path with more coming later this year.
“What’s next is we’re continuing on the path of acquisitions. I’m having the time of my life professionally, It’s rewarding to see what we’re building and the opportunities that we’re creating,” he says.
And while Waverly offers its clients financial advice and counsel, Russell says he has one piece of advice for everyone: “Find an adviser that you really trust and take their advice.”
“Oftentimes when things are bad in the market, that’s when you should be making moves to get more aggressive, and when things are seemingly good, you should be making moves to get more conservative. It can be counterintuitive, so, finding someone that you trust, who can strip the emotion out of it and make decisions that are best for you and your family, is paramount.”
Gail Allyn Short is a Birmingham-based freelance contributor to Business Alabama.
This article appears in the October 2024 issue of Business Alabama.
