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Determined to out-Joe-Duran Duran's United Capital, Dave Welling moves his $12B roll-up's HQ to Denver

As Mercer's torrid growth accelerates, its new CEO will hyper-unify investments and operations, make deals, pit software vendors against each other and hire like crazy

Wednesday, February 14, 2018 – 6:18 PM by Brooke Southall
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Dave Welling: Joe [Duran] does a reasonable job but we're further out on the spectrum of integration.

Brooke's Note: One measure of how fast Mercer Advisors is moving: When I asked its new CEO Dave Welling about whether his family would soon join him in his move from Santa Barbara to Denver, he said yes -- but then reminded me that they'd be moving from Jacksonville, Fla., where Welling worked for Black Diamond until June. There are plenty of other measures by which to gauge Welling's warp speed in this story, including a new tech tack, a poaching mentality and some trash-talking about roll-up royalty -- with Joe Duran giving as good as he got. Eric Clarke, Charles Goldman, Dan Seivert and Dave Selig also got drawn into this expanding drama, all with a twinkle in their eyes.

In his first major move as CEO of a multibillion-dollar RIA roll-up, David Welling is moving Mercer Advisors Inc. from the tony duchy of Santa Barbara, Calif. to Denver, the better to keep the firm on its fast-track trajectory as it takes on a competitor with almost double its managed assets. See: Black Diamond loses serial white knight Dave Welling to a $10-billion RIA that uses Orion.

The charms of the Mile High city are manifest: it boasts the country's largest airport, 300 days of sunshine a year, thriving sports and cultural scenes -- not to mention the world's largest brewery.

But Welling was also attracted to its fertile poaching grounds provided by Nuveen, Charles Schwab Corp., Fidelity Investments, Personal Capital, Janus, Trust Company of America and Invesco, all of which have headquarters or outposts in the city. Schwab alone has about 4,000 employees stationed there; Fidelity, 2,000. See: Fidelity launches major division in Denver with an 'ETF quarterback' calling the shots.

The former head of SS&C Advent's Black Diamond software unit promises at least 40 employees will clock in daily at Mercer's new downtown digs by the end of March, to be joined by dozens of new employees in the coming months and years. 

Changing profile

Eric Clarke: It's been a battle that has been going on for a few years now. [Photo by FPPad.]

The new headquarters jibes with Mercer's efforts to change its identity as a Dimensional Fund Advisors shop. Mercer has reduced its assets with Austin, Texas-based DFA by about 33%, down to about $4 billion.  

Welling also plans to scale down Mercer's use of Orion Advisor Services LLC's systems in favor of Envestnet Inc.'s (specifically they the Chicago-based firm's unified managed accounts platform -- not Tamarac.)

Not if Orion has anything to says about it, says its CEO Eric Clarke.

"Mercer is using Envestnet for a portion of their business that is using their UMA offering, and we are hopeful that we can retain the portion of their business that does not move in this direction," he writes in an email. "It's been a battle that has been going on for a few years now, and was in large part the genesis of our ASTRO offering.  Eric Clarke makes seven big Orion hires that reflect the big check it wrote to Bain & Co. -- including a 'poach' from his brother, Todd

More change: Mercer has always been associated with TD Ameritrade and its referrals. It has now expanded relationships with Schwab Advisor Services and Fidelity Clearing & Custody Solutions.

Welling says these changes add up to one big takeaway: "This is us saying: What does it look like when we're two times or four times this size?" 

Dave Welling will ramp up his poaching efforts from Mercer's new headquarters in downtown Denver. [Photo credit: Geoff Livingston Photography.]

Winning streak

Denver also makes for a convenient destination for personnel in Mercer's 26 remote offices, not to mention a better spot from which to attract talent from around the country.Welling has visited each of those 26 offices in the last 60 days -- "I was all over the place" -- and says that David Barton, Mercer's founder and vice chairman, is on a similarly hectic travel schedule. It's also cheaper by far to live in Denver -- a city that has rejuvenated itself over the last decade -- than in California.

The move comes just nine months after Welling took the reins from Barton, 51, who is staying in Santa Barbara with a skeleton crew of about 20 and who now pours his energies into making acquisitions. See: The TD Ameritrade-Orion pairing again proves productive -- this time to wrest assets from a $3.6 billion Schwab RIA.

All these changes are meant to keep Mercer on its souped-up growth trajectory. Its assets now stand at $12 billion, up from $6 billion just three years ago. The company has made 10 acquisitions in the last two years, most recently the announced purchase GFS Private Wealth LLC of Clearwater, Fla., which manages approximately $364 million ($314 million according to its latest ADV filing last March.) 

Acquisitions account for 40% of Mercer's new assets with organic growth contributing 40% and market appreciation adding about 20%, Welling says.

Charles Goldman: [Mercer is] even more integrated than United Capital.


"Deal expertise and the right capital backing is a winning combination in today's marketplace, With private equity behind them, growth is priority number one," says David Selig, CEO of Advice Dynamics Partners in San Francisco. "This leads to aggressive deal-making and, as we've seen, a series of wins."

Welling vs. Duran

The fact that Mercer has grown as much in the last three years as it did in its first 30 comes down to an ability to provide a soft landing pad for firms, according to multiple sources, including Charles Goldman, president and CEO of AssetMark Inc. He's also CEO of Genstar Capital and advised Mercer when Genstar acquired a majority interest of the firm in 2015. See: Charles Goldman becomes board chairman for Genworth Financial Wealth Management after playing a mastermind role in its purchase by private-equity buyers.

"The acquisition capability is truly differentiated," he says. "It's even more integrated than United Capital."

Indeed, United Capital Financial Advisers, founded by Joe Duran and managing $21.5 billion of assets, has set itself apart from the other two or three top roll-ups in the field by bringing its acquisitions under one brand, one ADV and, largely, one system of doing business. See: Power Player: Joe Duran powers beyond old 'roll-up' labels even as his United Capital roll-up shifts into a higher gear.

Welling seconds the motion that Mercer has a more sophisticated business model than that of Newport Beach, Calif.-based United Capital even if it does have only half the AUM.

"Joe does a reasonable job but we're further out on the spectrum of integration," he says.

Joe Duran: I'm just happy we're the measuring stick of integration.

How integrated?

Duran picks up that gauntlet, saying he moved UC's center of operations from Newport Beach to Dallas four years ago and that the firm added nearly $3.5 billion of AUM in the past year, growing from $17 billion to $21.5 billion. (United Capitals last ADV, filed last August, shows $17.5 billion of managed assets.) See: United Capital's Joe Duran throttles back on deals as he opens an RIA version of Hamburger University.

"I'm just happy we're the measuring stick of integration," Duran says. "I think we were the original strategic integrator." 

Welling counters that Mercer has done more to centralize its investing process by having one chief investment officer and one investing strategy, while United Capital still has many of its offices operating autonomously.

In response, Duran points to United Capital's handful of $1-billion-plus practices that possess exceptional investing capabilities -- capabilities he leverages on behalf of the entire firm. For example, UC has firms in both Chicago and Bethesda, Md. with expertise in building high-net-worth portfolios that keep remnants of the legacy portfolios that arrive from other advisors. And in North Carolina, he has an office expert in managing consolidated positions. See: United Capital scoops up a $1.6 billion wealth manager from M&T.

Hustle and grow

The niceties of integrations aside, Dan Seivert, CEO of ECHELON Partners, a consultancy in Manhattan Beach, Calif., credits Mercer's growth surge to shoe leather and airports.

"My sense is that they're just out there hustling and making the deal structure a lot more simplistic," he says. "For example, Focus Financial is more of a black box [for advisors analyzing trying to evaluate future returns on common shares]. There's a confining structure and a credibility question mark." See: Focus Financial's 'extraordinary' purchase of $16B-AUM SCS Capital and what Stone Point -- both buyer and seller in the deal -- may do to juice its investment.

David Seivert: My sense is that they're just out there hustling and making the deal structure a lot more simplistic.

One thing obscuring New York-based Focus Financial Partners LLC's innards is lack of a single ADV, with the result that its AUM gets clocked at numbers ranging from $30 billion to $80 billion. See: Bypassing PR Newswire, Focus Financial reports purchase of $1.9B AUM RIA and it gets curiouser from there.

And yet, Seivert says, until Mercer has several more years of exceptional growth it will be mired on the rung of "next tier" roll-ups -- a spot from which few such companies escape. "That next tier has never had much staying power," he says. See: How United Capital's unconventional rolling up of a $2 billion RIA reveals how close the roll-up model is to extinction.

Keep culture alive

Mercer won't stagnate if Welling has anything to say about it. He points out that he oversaw the growth of Advent/Black Diamond from 20 employees to near 400 during his tenure. See: Black Diamond blows the lid off asset growth in Dave Welling's first year in charge.

"I think I bring a growth mindset," he says. "it's about keeping a culture alive as you are adding people."

Welling adds that the firm's culture should actually become stronger and more energized in a fast-growth company because career opportunities expand with size.

To assure growth doesn't collapse onto itself, Welling is making hires in all areas of accounting, finance, operations and marketing with specific attention to key trouble spots like client onboarding. One part of simplifying that process is recreating models using the pieces Envestnet provides and reconstituting them as portfolios -- a process that also minimizes tax ramifications of moving, Welling adds.

Clarke reminds that Orion isn't going down without a fight.

"We are hopeful that ASTRO will be able to help Orion retain firms [like Mercer] that are looking for these types of solutions in the future.  We pride ourselves in being quick learners, and when Mercer made a move in this direction it certainly grabbed our attention."

Related Moves

Noreen Beaman steps down as president of Orion Advisor Solutions after Brinker migrates to Orion software and enterprise deals 'prove out'

The former Brinker CEO oversaw an 18-month transition of her then $26-billion TAMP and will remain as vice chair of the company after 'mutual' decision on role changes.

February 10, 2022 – 2:22 AM

Brad Shepard unexpectedly resigns from Orion Advisor Services after 10 months, and his chief strategy officer position will remain vacant, the company says

The Nashville, Tenn. executive came aboard to create a 'go-to-marketing strategy' for Brinker, HiddenLevers and legacy units but gave his notice this week.

January 7, 2022 – 11:40 PM

Fresh off buying No. 9 and No. 10 women-led firms, Dave Welling now has Mercer's AUM up 220% in four years in part by addressing a women 'problem'

Both Genstar and Mercer female staff are singing the CEO's praises after he took a sleepy $10 billion AUM firm to $32-billion AUM, where 40% of client-facing staff and 33% of leaders are women.

October 13, 2021 – 1:10 AM

AssetMark suddenly parts ways with president/CEO Charles Goldman; protégé Natalie Wolfsen named CEO; Michael Kim president

AssetMark chairwoman Xiaoning Jiao provided no details, faint praise for Goldman amid his unexpected departure, but was effusive over Wolfsen appointment.

February 24, 2021 – 3:31 AM

See more related moves

Mentioned in this article:

United Capital Financial Advisers
RIA Welcoming Breakaways
Top Executive: Joe Duran

Mercer Global Advisors
Advisory Firm
Top Executive: David Barton

Jeff Spears

Jeff Spears

February 14, 2018 — 8:54 PM
Welling's growth mindset coupled with the capital and growth realized track of Genstar is a worthy combination.


March 9, 2018 — 4:04 AM
What happened to the FinLife Chief Business Officer? I am feeling hoodwinked

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