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PUBLISHED JANUARY 2024
“Your values become your destiny.” —Mahatma Gandhi
In the 20 years since he bought Creative Planning, Peter Mallouk has spearheaded a series of strategic, calculated enhancements to the wealth management firm’s service line, all designed to drive the organic growth of assets under management.
His two-part premise was straightforward but largely unheard of at the time: First, an adviser should not own the investment products they are recommending to clients, and, second, each client’s entire financial picture should be taken into account when providing wealth-management advice, including their investments, planning, legal and tax considerations.
It is hard to argue with the results: From roughly $33 million in AUM at the start, the growth strategy paid off—by 2019, the firm’s AUM had grown more than a thousandfold, surpassing $38 billion. One might consider that to be a torrent of growth, but the floodgates were only beginning to open. Creative Planning has seen explosive organic growth that has been further boosted by acquisitions of like-minded firms.
“At that time, we were the fastest-growing independent wealth management firm ever, so we didn’t need to do acquisitions,” he says. “Even at our scale, which is considered big in the independent space, we’re still very small compared to Fidelity, Goldman Sachs, Morgan Stanley or Merrill Lynch, which are all trillion-dollar institutions.”
But even the rapid organic growth nationally didn’t provide market-specific bandwidth when some cities had just a handful of advisors in an office, he says. “So we did our first acquisition, The Johnston Group in Minneapolis, almost by accident and found it to yield incredible results: all the clients stayed on board and referred at a higher rate as they engaged with the firm in multiple ways, the advisers that joined us had more success, and we were able to have a full team in the market available to work with the community in person. And we said if we can find firms that echo our investment philosophy, are financial planning led, want to deliver all these services to clients, and are very philosophically aligned, then we can get all these services to clients quicker. Ever since, we’ve supplemented our organic growth with acquisitions.”
Consider that last comment a testament to Mallouk’s gift for understatement.
In 2021, Creative Planning acquired the retirement planning functions of Lockton, roughly doubling its AUM from $110 billion to $220 billion. That deal drew a lot of attention in wealth-management circles nationwide, but there have been more since then. A lot more. Here’s a sampling of what Creative Planning added in 2023 alone:
• BerganKDV, a Midwest firm, with more than $2 billion in AUM and a large tax-oriented service for business owners.
• Mesirow in Chicago, with more than $1.6 billion in AUM.
• Kistler-Tiffany Advisors of Philadelphia, which brought $1.4 billion in AUM to the party.
• And, the biggest of the year, a former Goldman Sachs unit that added $20 billion in AUM with a single stroke.
Despite all this, acquisitions are a distant second when it comes to reasons for Creative Planning’s rapid growth. Organic growth—clients referring other clients—continues to be the No. 1 one reason for the firm’s meteoric rise. Of the thousands of firms in the independent space, Creative Planning appears to lead when it comes to client referrals, evidence that Mallouk’s team is doing something their clients truly value.
For his unmatched gift for growth, his industry-changing approach to client service, his vision and his team-building—although “team” might be the wrong word; today, it’s more along the lines of a military brigade—Peter Mallouk is Ingram’s choice for 2024 Executive of the Year in the chief executive officer category.
He has much to boast about, but he keeps his ego in check, giving credit for all the firm’s success to the people who make it happen every day. With more than 1,000 wealth managers, CPAs, attorneys and other specialists, it is a highly credentialed and experienced team effort, for sure. But there’s little doubt, he says, that once the growth jet hit the afterburners, momentum played a key role in raising national awareness of the firm—and opening pathways to new opportunities for expansion.
“I remember when Creative Planning passed the $50 billion threshold right before the pandemic,” he says from his office overlooking I-435 in Overland Park. “It had taken 15 years to accomplish that, and we all really paused and reflected on what a journey it had been. Now it’s not even five years later, and here we are knocking on the door of $300 billion. This growth has really given us the ability to negotiate so many different investment opportunities for our clients—we’ve been able to not only negotiate best pricing but also provide highly specialized services that allow us to meet our clients’ specific needs at any given moment in their lives.”
A big part of that, he says, is “as we became larger, more and more people sought us out, particularly very affluent households. Someone with $25 million or $100 million is far more likely to seek out a firm of our size, as it gives them a sense of security that there’s a real infrastructure, competence in-house and negotiating power. And all of that’s true. It had never occurred to me that our size would lead to more opportunities, but that has definitely been the case—and it has helped accelerate our growth. The growth has, in turn, made it easier for us to negotiate access to many of the top investments in the world, at the best pricing wherever possible.”
Twin Growth Tracks
While the firm continues to build client portfolios and add new clients to drive organic growth, there’s no doubt that the two-pronged growth strategy is here to stay. The birth of Creative Planning’s acquisition mode marked a profound change, the echoes of which reverberate through the nation’s wealth management sphere.
“Even at the clip we were growing, we couldn’t get localized enough,” Mallouk says of the Johnston deal. “We’re very much an in-person company: We see clients in person, and we spend a lot of time getting to know our clients on the front end. That type of relationship makes it easy for clients to get all the services of the firm. A client’s wealth manager can really make sure the client gets what’s needed. Whether a client needs help updating a will, requires asset protection planning, may benefit from a Medicare supplement, or needs help with their taxes, we can help them navigate all that.”
On a national level, Mallouk continues to leverage the trust factor as an advocate for client-focused financial services reform that, if recent legislative history is any indication, isn’t likely to come soon, if at all. In a 2018 RIA magazine profile, he argued the need for congressionally mandated fiduciary obligations. Did that help promote change?
“Not at all,” he says. “President Obama tried to pass a law that said everyone has to be a fiduciary, but a group got together to form a lobby in opposition. The bill failed. If you were Merrill Lynch, Morgan Stanley or Goldman Sachs and it had passed, in many cases, they wouldn’t be able to recommend their own products to clients, because they’re often not the best investment vehicles. These brokerage houses would lose their No. 1 product.”
As a result, millions of Americans who believe someone has their best wealth building interests at heart are positioned to be sadly disappointed. Looking at other professions, Mallouk says “you believe your doctor, lawyer or accountant is acting in your best interest, and indeed they have a legal obligation to do so—and so you think that responsibility will carry over into financial services,” he says. “It doesn’t. It’s very different over here. Finding an adviser that isn’t selling their own products is the exception, not the rule.”
America by Chance
You may have seen his backstory in Ingram’s over the years, or more recently in the national investment-focused magazines that have made him a cover boy during the most recent run-up: The first-generation American son of immigrants from Egypt, a University of Kansas quadruple-major who then secured a law degree and his MBA (more on that in a minute), and a financial adviser for five years at a boutique investment firm who saw a chance to flex his entrepreneurial muscle and transform the way registered investment advisories operate.
The keys to the firm’s early growth came from Mallouk’s understanding that investment advisers were but one piece of a comprehensive wealth-planning and wealth-management strategy that best serves clients with consolidated services, bringing together tax advising, legal services for wills and trusts, insurance and health care planning—if it involved a nickel of a client’s accumulated wealth, Mallouk sought to have a solution in place.
“That was the plan from day one,” he says. “When I started, from ’98 to ’04, I was giving advice to other advisers and clients, sometimes in the same room with an accountant, a lawyer, a financial planner and a wealth manager. So the light bulb goes off: People want all this organized. From that very first day, that’s what I was doing. I was the one giving the tax advice, building up the trust, building a financial plan, and advising the client on what investments to own. Now there are other people who do those things—some of them in big teams. But that was a day-one deliverable.”
Much of that comprehensive approach was grounded in establishing new levels of trust between adviser and client. The trust became stronger as clients woke up to what happens in the industry and started to notice most firms are simply selling their own investment products, often with funds carrying different brands. In an industry where financial advisers often promote their own products, he wanted to ensure that conflict didn’t exist with clients.
“From the very beginning, people said ‘I want this independent adviser not selling me their own products—someone who will customize a portfolio for me and solve these other problems.’ Obviously, back then we didn’t have the negotiation power, investment lineup, specialists or scale we have today, but that was the driving force from day one, and it hasn’t changed.”
KC by Choice
He’s now one of the region’s most prominent philanthropists, thanks to the considerable wealth the firm has generated not just for clients but for what he calls the 500 partners he now has in the ownership ranks. That financial muscle helped him earn a seat at the ownership table when former energy executive John Sherman was piecing together the deal to buy the Royals, a club Mallouk had worked for while in high school, from the Glass family in 2019.
Mallouk is deeply rooted here, not just through his work but also his family. He and his wife, Veronica, have three children who have begun following in their footsteps to KU in Lawrence. They won’t, however, get through the process as economically as their father did. Tuition being what it was 30 years ago, Mallouk was able to not only secure his undergraduate degrees but also work part time over the next three years while earning his law degree and MBA at the same time.
“It was a lot of work, but it was very enjoyable because I was still in Lawrence, which I was trying to stretch out for as long as possible. I had a great time. I went year-round and took extra classes,” he says. “I took more than the normal number of hours, went through summer school and got the whole thing done. Believe it or not, when I was there, one semester was about $800. It’s very different today for kids than when I was in college, and there’s a very, very big difference in terms of expenses. Tuition never cleared a thousand dollars, so I could do it working part time.”
His emergence as a philanthropist begins to answer the question many in the Kansas City circle of giving have been asking for a decade: Who might be the next Hall or Bloch family?
Mallouk started early, founding KC CAN! in 1998 with Veronica and a good friend, Kevin Mallot. He has since founded Pathway Education on 18th and Vine, which provides financial education to teenagers, adults and business owners in economically challenged communities, and Urban Market Institute, which provides loans, grants and mentorship to entrepreneurs in the urban core. The Mallouks are active supporters of—and often chair events for—charities in the Kansas City area, primarily charities that serve those in need.
“I’m well aware of how much luck goes into the equation of success, and I know how fortunate I’ve been in so many ways,” Mallouk says. “I grew up in a household that was heavily involved in the community, so it’s always been important to our family. KC is an amazing community, and there are so many needs. We’re interested in doing all we can to make a positive difference.”
Mallouk has banked some notable recognitions along the way, from Worth magazine’s Top 100 Influential People in the World to Barron’s No. 1 Advisor in America. Additionally, he and Veronica were recipients of the University of Kansas Distinguished Alumni Award, becoming the first couple to be inducted together and the youngest recipients to receive the honor. And Creative Planning has been named the No. 1 Wealth Management Firm in the country by Forbes, CNBC and Barron’s a total of six times over the last 12 years.
Bearing down on his 20th anniversary of ownership, Mallouk has run an incredible race. But at 53, he says that in many ways, he feels like Creative Planning is just approaching the starting line.
