Captrust Review 2022 - MagnifyMoney
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Captrust Review 2022

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Captrust is an independent registered investment advisory firm headquartered in Raleigh, North Carolina, with other offices nationwide. The firm manages the portfolios of wealthy and middle-income individuals and families, including business owners, professional athletes and certain retirement plan participants. The team also offers financial planning to those clients.

The bottom line: Captrust is a portfolio management and financial planning firm that works with individuals and institutions, particularly pension plans.

  • Majority of clients are non-high net worth individuals
  • Risk- and outcome-based portfolio planning offered
  • Maximum fees are above industry average rates

All information included in this profile is accurate as of August 26, 2021. For more information, please consult Captrust’s website.

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Overview of Captrust

The idea of Captrust, legally known as CapFinancial Partners, LLC, initially brewed in the late 1980s when co-founder J. Fielding Miller grew dissatisfied with what he viewed as conflicts of interest in parts of the financial services industry.

Miller and his partner, David Perkins, teamed up to build a fee-only advisory firm, where clients typically pay a transparent percentage of assets under management. Miller and Perkins, along with a team of 11 former employees from the brokerage firm Interstate/Johnson Lane (later acquired by Wachovia), opened their shop in 1997. Captrust registered as an investment advisor with the SEC in 2003.

The firm has completed around 50 acquisitions since 2006, with plans to grow further. The CapFinancial Group LLC owns just under 100% of Captrust. CapFinancial Holdings Inc. owns close to half of The CapFinancial Group, and Miller owns around 40% of CapFinancial Holdings. He remains CEO of the firm.

Today, Captrust manages more than $450 billion in assets, mostly from retirement plans. The firm’s team of close to 800 includes nearly 400 employees who are in investment advisory and research roles.

Captrust’s pros

  • Customized portfolios: Advisors at Captrust create custom portfolios that are specifically tailored to each client. The firm does not take a one-size-fits-all approach.
  • Relatively low account minimums: Unlike many firms that require six- or even seven-figure investments, Captrust’s advisors generally require only $50,000 to establish an account, which can be waived under certain circumstances. That said, there are also firms with much lower, or even no, minimums.
  • Industry recognition: Several Captrust advisors or teams have landed on the Barron’s Top 50 Institutional Consulting Teams ranking. In 2021, the firm was named the largest RIA by Financial Advisor magazine for the sixth consecutive year. This ranking includes over 600 firms and is based on assets under management at the end of the previous year.

Captrust’s cons

  • Potentially high fees that aren’t published upfront: Clients negotiate fees with each individual advisor, so it’s difficult to compare prices without shopping for each advisor. Clients who end up paying fees close to the maximums allowed are paying fees higher than compared with the national industry average. While financial advisory rates on average range from 0.50% to 1.25% of assets under management, the maximum rate for most accounts up to $500,000 at Captrust is 2.25%.
  • Conflicts of interest related to certain commission revenue: Advisors at Captrust can earn commission revenue on certain products, such as life insurance and variable annuities. That income creates a potential conflict of interest, since advisors have a financial incentive to recommend one product or investment over another.
  • Pays for referrals: Captrust pays certain third parties for referrals. Anytime someone recommends Captrust, investors should always ask what specifically is driving the recommendation, and what that person stands to gain from it.

What types of clients does Captrust serve?

The bulk of the Captrust’s clients are individuals without a high net worth (for reference, a high net worth individual is defined by the SEC as at least $750,000 under management or a net worth of at least $1.5 million). Institutional investors, such as pension and profit-sharing plans, account for the largest amount of the firm’s assets under management. Business executives and owners as well as professional athletes will find specific resources for their needs through Captrust, such as succession or benefits planning.

Generally, the firm requires individuals to invest at least $50,000 to open an account, although other accounts, such as the firm’s Charles Schwab managed account programs, may have higher minimums. Advisors can waive that requirement under certain circumstances, and the firm states in its brochure that there is no minimum maintenance requirement if balances fluctuate.

Services offered by Captrust

For individuals and families, Captrust’s team manages their portfolios and helps them plan for their financial futures.

The financial planning process typically starts with determining financial goals, then modeling income, expenses and savings scenarios to determine the likelihood of reaching those goals, and finally providing the necessary actions to make sure clients prove successful. Topics addressed can include education planning, retirement planning, estate and legacy planning, charitable giving and insurance needs. Financial plans or other insight is offered on an a-la-carte consultation basis.

As for investment management, Captrust can help clients build and manage a suitable portfolio by conducting an asset allocation analysis and identifying appropriate managers and mutual funds. Clients can choose to give Captrust discretionary control over their account, meaning clients do not sign off on each trading decision, or they can listen to investment advice from Captrust but make the final decisions themselves, known as a non-discretionary arrangement. The majority of the firm’s assets under management are overseen on a non-discretionary basis.

Here is a list of services that Captrust offers:

  • Investment advisory services
    • Establishment of investment objectives and guidelines
    • Asset allocation analysis
    • Investment manager selection/mutual fund evaluation
    • Ongoing investment management/mutual fund due diligence
    • Ongoing quarterly performance measurement
  • Financial planning services
    • Retirement planning
    • Estate and legacy planning
    • Charitable gift planning
    • Education planning
    • Tax planning and review
    • Business succession planning
    • Corporate benefits planning
    • Cash flow planning and projection
    • Insurance planning and review
  • Employee benefit plan services
  • Selection of other advisors
  • Publications of periodicals or newsletters

Over 270 of Captrust’s advisors are also separately licensed as broker-dealers, meaning they can buy and sell investments for clients outside of any advisory relationship and earn commissions. The firm’s affiliated broker-dealer is CapFinancial Securities. Additionally, over 140 advisors can also sell insurance products, such as life insurance and variable annuities.

How Captrust invests your money

Captrust clients can expect to receive custom portfolio recommendations tailored to their specific needs, based on factors such as client goals, objectives and risk tolerance. Strategies used by the firm include both long- and short-term purchases of stock portfolios, mutual funds and fixed income securities, and may also include margin transactions and options.

The firm’s approach to asset allocation can be both risk-based and outcome-based, meaning it will determine how to invest clients’ assets based on either their desired outcomes or their risk tolerance level. Portfolio recommendations may include a mix of the following asset classes:

  • U.S. and international stocks
  • Bonds
  • Commodities
  • Options strategies
  • Margin transactions
  • Real estate

Captrust’s investment committee makes many of the investment decisions for clients. In the firm’s separately managed account program, the advisor can recommend appropriate third-party portfolio managers who will have discretionary authority over the account.

Fees Captrust charges for its services

Generally, clients pay a fee calculated as a percentage of assets under management. Each fee is negotiated directly with the individual financial advisor, and thus can vary by advisor.

Clients can bundle their advisory fee with transaction and custodian costs, known as a wrap fee account. Alternatively, clients can choose to pay a standalone advisory fee to Captrust and pay transaction and custodian costs separately, known as a non-wrap account.

Captrust does set maximum fees, which are outlined in the table below:

Captrust Maximum Rates for Most Investment Advisory Accounts*
Assets under management Maximum annual fee
$0 to $500,000 2.25%
Over $500,000 to $1 million 2.00%
Over $1 million to $2 million 1.75%
Over $2 million to $5 million 1.50%
Over $5 million 1.25%
*Excludes separately managed wrap accounts.

For separately managed wrap accounts, the maximum advisory fee to Captrust is as follows:

Captrust Maximum Rates for Wrap-Fee Advisory Services
Assets under management Maximum annual fee
First $1 million Up to 2.25%
Next $4 million Up to 1.75%
Over $5 million Up to 1.25%

On top of the advisory fee, clients may also owe an additional third-party manager and platform fee. Clients may also be responsible for internal mutual fund and ETF fees.

For consultations on specific issues, fees vary by service and are negotiable. Generally, clients pay flat fees ranging from $10,000 to $250,000 on an annual basis. Separately, a limited number of investors in three private funds pay performance-based fees that Captrust shares in.

Captrust disciplinary disclosures

Captrust has no disciplinary events to disclose. The SEC requires registered investment advisors to disclose on their Form ADV any civil, regulatory or criminal issues related to the firm, its employees or its affiliates within the last 10 years that would be material to clients when evaluating the firm or the integrity of the management team.

However, the firm adds that each individual financial advisor who acts as a portfolio manager has their own Form ADV, so clients should refer to those forms to learn more about any events against a specific advisor. For more information on Captrust, you can go to the firm’s IAPD page.

Captrust onboarding process

  1. Get in touch with the firm: To learn if a Captrust advisor is located near you, use the Find an Advisor tab on the firm’s website. Potential clients can also contact the firm by calling their toll free number at 800-216-0645, or by filling out the form on the Contact Us page. The form requests your name, contact information and a brief message.
  2. Receive a written agreement: Before a relationship formally begins, Captrust provides clients with a written agreement that details fees and services.
  3. Notify the firm of any changes: Once on board, it is the client’s responsibility to notify Captrust in writing of any changes to their goals or financial situation.
  4. Get regular reviews and reports: Clients should expect periodic reviews from their advisor. Quarterly performance reports are prepared for Wealth Client accounts, which they can access through the client portal on the firm’s website.

Where Captrust is located

Captrust has offices throughout the U.S., with more than 30 in total. Specifically, the firm has office locations in the following states:

  • Alabama
  • Arizona
  • California
  • Florida
  • Indiana
  • Iowa
  • Massachusetts
  • Michigan
  • Minnesota
  • New York
  • North Carolina
  • Ohio
  • Pennsylvania
  • South Carolina
  • Texas
  • Utah
  • Virginia

Is Captrust right for you?

If you are looking for a financial advisory firm that works with modest-income investors in addition to the wealthy, and that offers financial planning around topics such as retirement, education and stock compensation in addition to portfolio management, Captrust may be the right firm for you. Similarly, business executives and owners as well as professional athletes may want to consider Captrust since specific resources are dedicated to investors like them.

That said, it’s up to you to negotiate a reasonable fee with Captrust that does not approach the maximum allowed, as those maximums can climb far higher than the industry average. If you have less than $50,000 to invest, you may also want to look elsewhere (although many firms do have higher investment minimums than Captrust).

Before you make your decision, take the time to research multiple firms to ensure you find a financial advisor who is right for you.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.