Midwest megamerger creates $6.5 billion RIA

The combination of FormulaFolios and Brookstone brings together approximately 800 advisers operating in all 50 states, with more than 500 offices

Two Midwest-based advisory firms have merged to create a $6.5 billion RIA that will operate as Brookstone Capital Management.

The deal, which is expected to be announced this afternoon, brings together two relatively young, but fast-growing registered investment advisers.

FormulaFolios, a $3.5 billion RIA based in Grand Rapids, Michigan founded in 2011, is pairing up with Chicago-based Brookstone, a $3 billion RIA launched in 2006.

“We certainly have a lot of synergies, and by combining forces we are taking the best of what each company has,” said Dean Zayed, Brookstone founder and CEO, and president of AmeriLife’s Investment Advisory Services division.

The combined firm brings together approximately 800 advisers operating in all 50 states, with more than 500 offices.

“We think scale matters,” he said. “It’s not just about a higher assets under management number. Larger firms can deliver more to their advisers and to their clients.”

Mark Bruno, managing director at Echelon Partners, said larger deals have become the trend in the age of COVID-19 when many of the smaller RIAs have had to refocus their resources on managing their businesses and clients. According to Echelon’s most recent deal report, 16 of the 35 firms acquired during the second quarter had more than $1 billion under management.

“A growing portion of the deals in the RIA industry have involved some of the largest, most established firms in the market,” Bruno said. “They tend to have some of the most strategic leadership, and they have also made investments in their people, technology and other programs that can be scaled through a merger.”

Terms of the deal were not disclosed, but Zayed emphasized that it is a merger.

In July of 2019, Brookstone partnered with AmeriLife Group, which is now backed by the private equity firm Thomas H. Lee Partners. AmeriLife is a marketer and distributor of life and health insurance, annuities and retirement plans that partners with insurance carriers through a national distribution network of over 150,000 insurance agents and advisers.

Brookstone will maintain both companies’ headquarters in Chicago and Grand Rapids.

The five key executives between both firms will be retained, serving in the following capacities: Zayed as CEO; Darryl Ronconi as president and chief operating officer; Jason Wenk as executive director; Jason Crump as a vice president of relationship management; and Joel VanWoerkom as a vice president of operations.

“This is a unique opportunity for both firms and our affiliated advisers,” said Wenk. “Both companies have spent significant resources in building out the platform and programs they consider to be their competitive advantages. Now, we can leverage each other’s strengths to deliver a more robust experience to our adviser clients.”