Prime Capital Investment Advisors Recapitalizes as Adviser-Owned Partnership

October 6, 2021 Caitlin Dimmig

Overland Park-based Prime Capital Investment Advisors recapitalized itself by offering an ownership stake to its financial advisers, adding 88 new partners on Friday.

As a result of the recapitalization, advisers now own more than 65% of PCIA’s equity. Ninety-eight percent of advisers given a chance to buy equity accepted the offer. The company did not reveal the value of the investment. PCIA Chairman Scott Colangelo said it was always part of the company’s five-year plan to become an adviser-owned firm.

“Most advisory practices are majority owned by one or two people, but this gives us a unique structure where all of our advisers have ownership, which really allows for pure alignment from top to bottom,” Colangelo said. “I think it really differentiates us nationwide and especially in Kansas. There are some great firms here in Kansas City, but this is definitely a unique structure.”

The plan moving forward is to continue giving every new adviser at PCIA a path to ownership. It also will be a crucial tool for adviser recruiting as well as acquisitions of firms.

“In recruiting and mergers-and-acquisitions conversations, equity was always in the top three questions we’d get every time,” PCIA CEO Glenn Spencer said. “But we weren’t really prepared to offer equity because we had all these advisers who were here a long time and helped us build the business. We didn’t want to offer equity to outsiders over them. So once we figured out how to offer equity to our people in a fair way — we made sure the equity was split relative to performance — now going forward, every new adviser joining us can have equity, all acquisitions can include equity, and all new hires can have a path to ownership. We think this will be a huge differentiator moving forward.”

This is only the second time PCIA ownership has offered equity in the company since four advisers at the former Lawing Financial, led by Colangelo and Tim Hakes, bought out the company in 2017 and transformed it into PCIA. The firm sold a 20% stake to a Washington-based private equity firm called LNC Partners in 2019 for an undisclosed amount. Spencer said LNC was bought out and replaced by a private investor in the spring who now owns that 20% stake. Spencer is the only other non-adviser owner at PCIA.

PCIA had $12.48 billion in regulatory assets under management as of June 1, 2021, according to the Securities and Exchange Commission. It has 27 locations nationwide and 178 employees.