Publications

Profile: Dave Welling, CEO of Mercer Advisors
- May 1, 2022: Vol. 9, Number 5

Profile: Dave Welling, CEO of Mercer Advisors

by Mike Consol

Dave Welling’s career didn’t exactly get off to a ballistic start. His first position — the job of Welling’s dreams at the time — landed him at Bain & Co., a noted management consulting firm still under the direction of founder Bill Bain. Alas, no sooner did Welling arrive than the firm ran aground from a combination of bad economic times and a poorly executed employee buyout plan.

The upshot: Eight weeks after joining Bain, Welling, and nearly all of the firm’s new recruits in Boston, was back on the street searching for employment. (It was around that time that former Utah governor, senator and ex-presidential candidate Mitt Romney took over and resuscitated the business.)

“It was a real wake-up call to join the work world and that be my first experience after doing quite well in college,” recalls Welling.

It was the kind of experience that can dent a young man’s confidence and dim his professional prospects. Welling certainly couldn’t have laid in bed that evening with images of himself one day becoming the chief executive of a financial services firm sporting $37.9 billion in assets under management and other Star Wars numbers to its credit. Yet, that is precisely what happened for the CEO of Mercer Advisors.

Interestingly, you will still find Bain & Co. on Welling’s resume. He opted to rejoin the organization (this time its San Francisco office and with the firm operating under much better circumstances) after getting his MBA from the Stanford Graduate School of Business — in a sense, erasing the bad memory experienced years prior at the firm’s Boston headquarters.

Take that.

A DISTASTE FOR ‘DEALS’

Welling joined Mercer Advisors in June 2017, headquartered in Santa Barbara, Calif., at the time, but this proved impractical for a firm rapidly expanding into a national organization. Denver was selected as the organization’s new central hub, with its greater availability of air travel, though Santa Barbara is still home to one of Mercer Advisors’ largest and most successful offices. That is no small feat considering the firm now numbers 66 offices and 678 employees, with the aforementioned $38.4 billion AUM (as of March 31, 2022).

The firm’s growth is due largely to its success in adding new clients through the pandemic and its aggressive acquisition of other RIAs, having completed 25 mergers in the past 24 months alone. In some cases, Mercer Advisors finds target firms; in other cases, RIAs come to Mercer hoping to be acquired.

“The more mergers you do, the more your name gets out there,” says Welling. “If we do a good job and those go well, the people who have chosen to become part of Mercer Advisors and to continue their careers with Mercer tell other people, so that turns the flywheel.”

And what is the message imparted by Welling (and Dave Barton, who leads the M&A team) when meeting with the staff of a newly acquired RIA?

Says Welling: “I always talk to them about how I look at this as a merging of relationships, not a deal or transaction. I have tremendous distaste for industry players that talk about it as transactions, because these are relationship businesses, there are a bunch of clients who aren’t involved in a decision like this, which means we need to get it right. I want the principals of the firm to look back at this decision five years from now and tell me it is the best decision they ever made.”

Having officiated over such unions about 50 times during his nearly five-year tenure at the firm, Welling says it takes about 12 months to fully assimilate an acquired RIA into the Mercer Advisors culture, though it sometimes is accomplished in shorter order.

It helps that Mercer Advisors seeks to embed itself into the communities it serves. One example is the firm’s decision — after acquiring Hart Capital, a Spokane, Wash., RIA — to continue to sponsor the Gonzaga University men’s and women’s basketball teams, both Division I programs that are coming off 2022 NCAA tournament bids. The men’s team has emerged as a powerhouse, with the winningest record over the past 10 years, despite sporting a modest enrollment of 7,500 undergraduate students.

“Gonzaga reminds me of what Mercer is trying to do — achieve a standard of excellence, despite our humble roots. We are both great underdog stories,” adds Welling. “Hart Capital was very involved in the local community, as many of our offices are, and they were involved with the college and other things in the community, and we have carried those forward,” says Welling. “It is a great way to invest back in the communities that we are part of.”

Qualitatively speaking, Mercer Advisors assesses the suitability of a merger partner based on its values, principles and culture, hoping to join forces with like-minded advisers and financial planners. Culturally, the firm stresses collaboration, as the business is loosely modeled after the Mayo Clinic, bringing a team of experts to bear in dealing with factors that include tax considerations, estate planning, insurance, financial planning and investment management.

Geographically speaking? “Interestingly, the places we have done exceedingly well with acquisitions are markets where we were already present,” he says. “We are very dense in California and the Pacific Northwest, and we are in every major city in Texas, and across the Midwest and around New York. Just because we have an office in a city doesn’t mean we won’t acquire more in that city. Those are the places where integration and cultural assimilation are easier.”

One example is a large office the firm has maintained in Atlanta since the late ’90s, and it has since established three other offices in the city. In total, the Atlanta-based teams control roughly $4 billion in AUM in Atlanta alone. Welling says the firm’s goal is to become the No. 1 wealth management firm in Georgia.

“The best way to do that is to put all those teams together and get them working as one team,” he says. “That has been our strategy, and it has been quite effective.”

FISCAL COMPATIBILITY

Welling came of age in Dover, Mass., an affluent suburb of Boston. Though their household income was modest, his father planted the family in Dover to give his children access to the town’s exceptional public schools. Family activities included skiing and sailing.

“We didn’t always communicate so well,” Welling says of his fellow family members, “but we had a lot of fun together, and always had the outdoors and activities to align us.”

During high school, he was a multi-sport athlete, participating in baseball, soccer, track and skiing, though he was admittedly less than stellar at each. But that is a bit hard to believe, as he was a key member of the ski team that won the state championship his senior year and a varsity soccer team that only lost 3 games in two years during his time as a starter. College years were spent in Vermont at Middlebury College, where he majored in economics with concentrations in physics and creative writing. The logic of economics and physics was a lot of math and analysis, though Welling always had a passion for writing as well, an activity he pursues to this day.

“I wanted to pursue a career in business, was the blunt notion, and I felt like knowing how to communicate was a critical part of being in business,” he explains.

His graduate studies took him to Stanford University, where he met his wife, Josie. Among other ways, they connected in terms of financial responsibility, with both displaying an orientation toward saving and self-sufficiency. Frugality was something Welling learned early, having to pay for his own skis, lift tickets and other recreational accoutrements. His parents footed the bill for his undergraduate degree, while their son paid his own way through Stanford, as did his future wife, who also underwrote her own undergraduate tuition.

“I think my dad wanted me to learn the value of money and wanted me to earn things on my own, rather than have things be handed to me,” says Welling. “I painted houses, I snow-plowed driveways, mowed lawns, and did a lot of things kids do to earn some money.”

Post-graduation they would spend 15 years in the San Francisco Bay Area, with Welling working at Bain & Co., followed by 12 years at Charles Schwab Corp., before moving to northern Florida to join Black Diamond, a wealth technology firm, and eventually to Denver.

“I was never one to jump at the first thing, and when I made a change, I always made sure I was going toward something,” says Welling. “A phrase one of my mentors used was, ‘Every now and then a plant needs to be repotted.’ I found that has been cathartic and stimulating to the growth of my career and professional development.”

That repotting process was sometimes imposed on Welling, as when, after only 18 months at Black Diamond, the firm was acquired by Advent, which was subsequently acquired by SS&C Technologies, where Welling stayed until 2017 when he joined Mercer Advisors. This time, Welling wasn’t a casualty of the change; he was the key executive looked at to lead the union of the firms and to drive future growth. Those experiences have had a major impact on how Mercer acts as an acquirer. “I have empathy and a very clear understanding of the unique combination of excitement and uncertainty that acquired employees feel at that time,” added Welling. “Our invitation is to ask them to turn that uncertainty into curiosity.”

IN THE BUBBLE

It was Welling’s relationship with Genstar Capital portfolio company executive and Mercer Advisors board member Charles Goldman (who he also worked with at Schwab) that brought Mercer to his attention.

“Charles introduced me to the team at Genstar, and I had a conversation for almost a year with them about various companies in Genstar’s portfolio, and the discussion kept coming back to Mercer Advisors,” Welling recollects. “My point of entry at Mercer was a leap of faith in a way. I had relationships with the board and Dave Barton, who was CEO at the time, but had not met any other members of the team before my first day as CEO. I kind of parachuted in overnight. Thankfully, the team welcomed me, and I’m very happy about the choice that I made and how well it has worked out.”

Welling spends significant time on the road and listening to advisors to stay connected to their experience and to clients. But, Welling balances that time with what he dubs “bubble days,” when the phone and email are shut off and he devotes his full attention to solving a problem, writing, preparing a presentation, or the like.

“My job is to clear the path so our advisors can do their best work. That means solving barriers or challenges they are facing. Bubble days are meant for deep thinking and problem-solving. It could be anything where I need focused work time,” he says. “But you have to create the environment to do that.”

Bubble days were often time Welling spent on planes during pre-pandemic times, when air travel was more prevalent, but are now more often scheduled on his calendar every couple of weeks and communicated to fellow members of the 27-person senior leadership team. That time is invariably spent at Welling’s home office, considering he has not had a personal office since 2009. In Mercer’s Denver hub, Welling’s has a standing desk that is exactly like all the other team members. “Some people say they have an open-door policy. I like to say I don’t have a door.”

Quiet, isolated time comes naturally to Welling, who identifies himself as 100 percent introvert.

“Like a lot of introverts, I love the interaction with the team, with folks in the community, but it does consume energy, and that energy needs to be replenished,” he says.

GOLDEN AGE OF FINANCIAL PLANNING

Going forward, Welling expects Mercer Advisors’ growth to be roughly evenly split between growth through acquisitions and organic development — which, by his telling, has been the firm’s trajectory for the past five years, despite its aggressive merger activity.

Still, Welling says he is keenly aware that his industry is in the throes of significant change, dubbing the current environment the “golden age of financial planning,” as consumers are literally and figuratively coming of age, as they get older and begin embracing the value of financial planning. It is the most dramatic trend Welling says he has seen in his more than 25 years in the business. What’s more, the pandemic has accelerated Mercer clients’ adoption of technologies by a factor of 10 years.

Then there is the role of the adviser, which is “changing under our feet” in ways that require less technical and analytical skills and a higher level of communication skills, relationship building and a temperament capable of adjusting to complex family dynamics.

“There is technical work involved in what we do, but the face-to-face relationships with clients and dealing with the very human side of our profession has taken a position of primacy.”

Welling would no doubt reason that Mercer Advisors is especially well positioned to deliver the velvet touches critical those soft skills, given the firm’s client advisory staff is more than 50 percent women, as well as 30-plus percent of the leadership group — the fruits of the organization’s InvestHERs program. InvestHERs was formally launched in 2018, at a time when no more than 25 percent of the client advisory staff were women, and none of the firm’s leadership.

“It’s one of the things I’m most proud of,” he says. “Everybody knows the facts on women in wealth and living longer, and inheritance, and their increasing role as head of households, so I think it’s exciting to see us and a handful of other firms really making a dent in changing the complexion of our industry.”

ONLY THE BEGINNING

Welling’s false start at Bain & Co. might have stung especially hard after graduating Phi Beta Kappa (the nation’s oldest academic honor society) and in the top 10 percent of his graduating class. Many years and professional successes later, it speaks to Welling’s resilience, as well as serving as a cautionary lesson that a career can gain altitude even after an aborted takeoff.

 

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter (@mikeconsol) and LinkedIn (linkedIn.com/in/mikeconsol) to read his latest postings.

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