Jason Gordo and his co-founders of Modern Wealth launched their firm in 2023 with a majority ownership stake from private equity investor Crestview Partners.
It’s no surprise, then, that Modern Wealth President Gordo speaks positively of private equity’s role in the registered investment advisor space, particularly as it has helped grow his firm to $10 billion in assets under management in short order.
But Gordo has taken the PE discussion to another level, laying out its pros in his and co-CEO Gary Roth’s podcast, the Modcast, and speaking about it at conferences and in the press.
At the Schwab Impact conference, WealthManagement.com asked Gordo why he’s so passionate about defending an industry that is, by its nature, capital in search of growth leading to an exit. Or, as some people see it, downright “evil.”
Read the full raw transcript below:
Alex Ortolani: Hello, I’m Alex Ortolani with Wealth Management.com and I’m here with Jason Gordo. He’s co-founder and president of Modern Wealth. Jason, welcome. We’re here at Schwab Impact today, and of course the big subject of conversation has been private equity and its role in the space.
There’s also that common refrain by some advisors that private equity is kind of the big bad wolf you gotta look out for it. Yeah, they’re evil. They’re evil. They’re evil. You’ve been out of the market pushing against that.
Question: What’s your take on private equity in the RIA space?
Jason Gordo: Well, you mentioned we’re at Schwab Impact, right? I mean, this is as big of an event as we have in our industry, right, for the independent advisor. And I believe you’re wealthier, I’m wealthier, everybody in this room has a bigger career opportunity, better career momentum because of private equity, right? We’re all wealthier today because of private equity.
I’ve been part of multiple private equity-backed enterprises, and for the most part, they do a tremendous amount of good for the industry, right? They’re professionalizing practices, they’re bringing new services, new platforms, new level of greater level of thinking. So I see nothing but positive. Now, some firms aren’t familiar with it.
AO: When you were with United Capital and when you created Modern Wealth, you actually started with private equity funding from Crestview Partners.
Question: What have they done for the firm? How have you worked with them?
JG: Well, the first 3 checks came from Mike, Gary, and myself, right? And we funded the startup of the business, and then we found a deal. We found an opportunity to invest in. And Crestview came alongside us. They backed the management team, they backed our business model. They made it possible for us to make that first trio of acquisitions, right?
And they help us – you know, I’d like to… a lot of advisors think private equity is gonna come and do evil things, or they’re gonna be in your shorts, or they’re gonna be in the business, in the factory making the sausage with you. And that’s just not our experience.
Our experience is, they found a management team in Modern that they wanted to back. They didn’t understand the day to day operation of the business, but they understood they wanted to fuel a business. And so there, it literally is growth capital for us to go out and acquire, right? We’ve made 19 transactions in 31 months. Couldn’t have done that with our own money, right? We needed outside investment from somebody.
And so they’ve just fueled that growth, and they’ve fueled career advancement for a number of people that worked in those firms that we acquired. They’ve been a fantastic partner.
AO: Well, one of the other things we talked about though is there is an endgame for private equity, right? There is an exit. That’s the nature of the business. I don’t know what the endgame’s gonna be, what’s gonna happen to me, the firm, etc.
Question: Where do you see the exits coming from? Where do you see some of this going in the long term, especially for the bigger firms?
JG: Well, some of the bigger firms in our industry, I mean, they’re massive, right? And private equity, if you just think of the industry as a bit of a pyramid, size pyramid, right? So you have really small firms, lots of people can invest in those. Some mid-sized firms, you’re starting to get a little higher in the pyramid, fewer private equity firms can fuel those businesses, and you get to the very top of our industry. Their next stop probably is a go public move, right? Or a group of private equity firms coming together to back that enterprise.
But that doesn’t worry me. I’m not scared about that. The private equity firms cycle in and out of investments regularly, right? It’s 2 years to 10 years, you know, 2 on the short end, 10 on the long end. And I look at it as the next round of investment or the recapitalization of it is energizing, right? It’s gonna give me more fuel to go do the next round of things with or the other firms in the industry that are going through some form of new investment or recapitalization or bringing another outside investor in.
AO: Well, very good. Well, something to watch, right?
JG: That’s right. Yeah, yeah.
AO: Thank you, and thanks for listening. I’m Alex Ortolani with Wealth Management.com.
