The registered investment advisor (RIA) sector continues to grapple with a pervasive challenge: succession planning. This fundamental issue, often overlooked in founder-led, client-centric businesses, has been highlighted in numerous industry reports. A recent benchmarking survey by Charles Schwab underscores the urgency, revealing that only 45% of firms managing less than $250 million in assets have a formal written succession plan. For larger firms exceeding $250 million, this figure rises to 65%, while Schwab’s top-performing firms, identified by a distinctive set of 15 success factors, report the highest adoption rate at 77%. Amidst this industry-wide concern, HB Wealth, an Atlanta-based RIA established in 1989, offers a compelling case study in successfully navigating leadership transitions and fostering long-term sustainability.
A Legacy Forged in Entrepreneurship and Foresight
HB Wealth’s origins trace back to 1989, when two former Certified Public Accountants (CPAs) embarked on a pioneering journey to establish an independent wealth management firm. In an era when the RIA model was nascent, founders David Homrich and Andy Berg were ahead of their time, laying the groundwork for what would become a significant player in the industry. Their initial venture was funded by a modest loan from one of the founders’ fathers. Fast forward 37 years, and HB Wealth has evolved into a substantial enterprise, managing approximately $32 billion in assets, employing 350 individuals, and serving thousands of clients. While its headquarters remain in Atlanta, the firm has strategically expanded its geographic footprint in recent years.
The firm’s trajectory, however, was not without its critical junctures. A significant disruption occurred in 2001 when co-founder and CEO David Homrich departed to lead AMB Group, a wealth management firm catering to Arthur Blank, co-founder of Home Depot. This event presented a pivotal moment for the firm, highlighting the inherent vulnerabilities of founder-dependent leadership. It was during this period that the remaining co-founder, Andy Berg, recognized the imperative for proactive and structured succession planning.
The Twelve-Year Blueprint for Transition
In the wake of Homrich’s departure, Berg assumed leadership and began to formulate a long-term strategy. Having witnessed firsthand the impact of leadership changes, he meticulously crafted a 12-year succession plan. This comprehensive blueprint was designed not only to outline his eventual exit from the day-to-day operational leadership but also to embed a philosophy of equity-sharing among partner advisors. This forward-thinking approach aimed to cultivate a culture of ownership and shared success, ensuring the firm’s stability and continued growth.
This meticulously planned transition culminated in the appointment of Thomas Carroll as CEO in January 2024. Carroll’s tenure has already been marked by significant strategic maneuvers, including the firm’s sale of a second minority stake to TPG Growth and its substantial acquisition of a $6.4 billion multi-family office based in Tyson, Maryland. These developments underscore HB Wealth’s ambition and its capacity for strategic expansion under new leadership.
In 2023, the firm officially rebranded from Homrich Berg Wealth Management to HB Wealth, signaling a new chapter and a streamlined identity. Concurrently, HB Wealth has been actively broadening its service offerings. Most recently, the firm announced the establishment of a new division dedicated to institutional advisory services and an outsourced chief investment office (OCIO) offering. This expansion into new service areas reflects the firm’s commitment to meeting the evolving needs of a diverse client base.
A Deliberate Path to CEO: Thomas Carroll’s Journey
Thomas Carroll joined HB Wealth around 2020, a period when the firm was actively implementing its succession and leadership transition strategy. Carroll’s recruitment was not happenstance; he was identified as a potential successor by Andy Berg. The two had developed a personal connection through their shared community involvement, including their church and children’s schools. This established rapport facilitated a more organic and trust-based approach to the leadership transition.
Berg brought Carroll into the firm as his presumptive successor, a role that initially saw Carroll serve as President while Berg remained CEO. Over the subsequent four years, Carroll progressively assumed greater responsibilities across the organization. He played a key role in spearheading growth initiatives and began building his personal equity stake in the firm. This period of mentorship and shared leadership allowed for a seamless transfer of knowledge and operational understanding, culminating in the formal CEO transition in January 2024, with Berg transitioning to the role of Chair of the Board.
Carroll elaborated on the precision of Berg’s plan: "Andy developed a 12-year succession plan. The first four years were to find the successor, the next four to work closely with the successor, and the last four to serve as chair of the board before he retires. We’re in the very last stages of that plan now. It’s nice when a plan works out as designed." This structured approach exemplifies a proactive commitment to organizational longevity.
Navigating Ownership: Balancing Employee Equity with External Investment
A crucial aspect of HB Wealth’s strategic evolution has been its approach to ownership structure. At a time when private equity firms are actively seeking majority stakes in RIAs, HB Wealth has maintained a strong commitment to employee ownership. Carroll emphasized the firm’s long-standing tenet of broad equity distribution, stating, "When I started, we did have a belief in broad equity distribution—that’s been a tenet of the firm going back well before I started. We’ve always believed we should equitize leaders and advisors broadly across the firm."
However, the firm also recognized the need to de-risk the equity concentration held by its initial shareholder (G1 shareholder) and to accommodate its rapid growth trajectory. This led to a strategic decision to pursue external minority, non-control transactions. Carroll explained the rationale: "Ultimately, we decided it would be hard to sustain that internal transition given our growth rate and the amount of equity that needed to be recycled. We thought an external minority, non-control transaction was appropriate for us at our size and scale. Looking back, it was certainly the right path for us."
The firm’s first significant external investment came in September 2021 from New Mountain Capital, marking the beginning of a partnership that has now spanned approximately five years. Carroll described this collaboration as highly beneficial, stating, "It’s been a really good thing for our firm and has helped us in many respects." He further elaborated on the practical challenges of internal transitions: "It was also getting harder to facilitate internal transitions in a traditional buying and purchasing way—they got harder and harder to finance. We were faced with the challenge of needing to distribute earnings to help younger shareholders satisfy shareholder loans versus reinvesting cash flow in the business to support growth."
This strategic partnership was further augmented in the fall of 2024 with a second minority, non-control investment from TPG Growth. This move solidified the firm’s capital structure, positioning the largest shareholder groups as HB employees (with 86 individuals holding significant equity), followed by TPG, and then New Mountain Capital.
Core Principles: Fee-Only and Control Preservation
In its engagement with minority investors, HB Wealth established clear non-negotiables that underpin its operational philosophy and client relationships. First and foremost is an unwavering commitment to a fee-only approach to wealth management. Carroll articulated this principle as the firm’s "North Star," a founding tenet from 1989 that remains highly relevant. The condition for considering investment was that firms align with this fee-only model, precluding any future pressure to introduce commission-based products such as insurance or establish broker-dealer operations. This focus on fee-only advisory is seen as a critical differentiator, inherently mitigating conflicts of interest and resonating with an increasing number of clients who gravitate towards transparent business models.
Secondly, HB Wealth prioritized maintaining control over its strategic direction and operational autonomy. The firm sought "control valuation with non-control governance," a proposition that required finding partners receptive to this governance structure. Carroll expressed satisfaction in finding such partners who support this approach.
Finally, HB Wealth sought investors who would actively contribute to the firm’s enhancement. The firm has found significant value in its sponsors’ expertise across various functions, including capital markets, marketing, finance, and human resources. Furthermore, executives from these sponsoring firms have become clients, demonstrating a deep integration and mutual benefit within these partnerships.
Empowering Employees Through Equity: A Continuous Cycle
HB Wealth continues to champion broad equity distribution as a cornerstone of its long-term success. In January, eight new employees were promoted to shareholder status, reflecting the firm’s ongoing commitment to this philosophy. The mechanism for equity distribution has evolved. While previously equity was exchanged through private transactions, the firm now has the capacity to grant equity. This capability was a key component of TPG’s investment, enabling the establishment of an equity program that facilitates annual grants. This process ensures continuous equity recycling, a vital element for the firm’s sustained prosperity.
An operating agreement outlines the maximum annual equity issuance. Carroll, in conjunction with the executive team, requests and manages the allocation of this equity. Carroll highlighted the profound impact of this equity program: "This is a key driver of people wanting to come to HB and people staying at HB. Our equity is very valuable. I’ve worked in financial services a long time and have seen the value in other equity instruments in my career, and the value of HB equity is real. We have the track record to show it. It’s a very important part of why advisors want to come to HB, and frankly, why advisors stay at HB."
The "One HB" Integration Model: A Foundation for Growth
With an expanding footprint across six states and a 100% W-2 employee model, HB Wealth has cultivated a distinct approach to integration. This model is founded on three core principles: the fee-only approach, broad equity distribution, and a strong emphasis on integrating businesses rather than merely aggregating assets. This contrasts with models that treat acquired firm advisors as independent contractors.
HB Wealth is transparent with potential merger candidates about its integration philosophy. This typically involves a unified compensation model, a singular technology stack, and a centralized investment department. While investment delivery is tailored to client needs, the overarching approach is "one HB" across these critical business functions. Carroll stated, "If a potential candidate or firm doesn’t want to align around that, then that’s okay—we’re just not the right fit. It’s better to figure that out before we get into the deal rather than later." This clarity, while narrowing the pool of potential merger partners, ensures a strong cultural and operational alignment, contributing to the firm’s sustained success.
Charting the Future: Client Retention, Organic Growth, and Strategic M&A
Looking ahead, HB Wealth’s primary objective remains the expert service of its existing client base. The firm prioritizes client retention, targeting and often exceeding 98.5% retention rates, with current figures hovering above 99%. Carroll emphasized, "Take care of your existing clients, and generally, they will take care of you." This client-centric approach is the bedrock of organic growth, with approximately 60% of new business stemming from satisfied client referrals.
While sustaining this organic growth remains paramount, HB Wealth is also enhancing its lead generation capabilities. Investments in digital marketing and the expansion of its marketing team are aimed at bolstering firm-level lead generation efforts, complementing its historically best-in-class organic growth driven by client referrals.
The firm is also strategically engaging in mergers and acquisitions (M&A). While not pursuing a serial acquirer model, HB Wealth actively seeks firms in markets that align with its strategic objectives. Continued expansion is a key focus, particularly across the Southeast, Mid-Atlantic, and Sun Belt regions. These areas present significant opportunities for HB Wealth to broaden its presence and client base.
Regarding capital requirements, Carroll acknowledged the dynamic nature of the industry. While HB Wealth is currently well-capitalized, the firm remains vigilant about future capital needs. The rapid pace of industry evolution necessitates ongoing assessment to ensure sufficient capital is available to support continued growth and strategic initiatives. This forward-looking financial planning is integral to HB Wealth’s long-term vision for sustained success and market leadership.
