Pat McClain

Co-founder and Co-CEO, Allworth Financial

When Pat McClain and partner Scott Hanson started their eponymous firm in Sacramento, California, in 1993, McClain said he had no greater ambition than “paying the mortgage.” Today, his goal is somewhat greater: Expanding the renamed Allworth Financial — which currently manages $10 billion with 250 people — into a national registered investment advisory firm.

“If you want to operate in every major city, you have to have processes that are repeatable and scalable in order to deliver a consistent client experience,” said McClain, who readily admits that neither he nor Hanson ever loved the operational aspects of the business.

“Measuring everything” the firm does is its three-person data science team, he said, which analyzes the information produced to help improve efficiency and enable Allworth to continue adding services — tax preparation, estate planning and insurance, for example —that attract and satisfy and the firm’s core clients. These “hard-working, middle-class millionaires,” as McClain calls them, are people not unlike many of the firm’s earliest clients, utility company workers who had questions about their pensions and retirement, and whom other wealth management firms largely ignored.

Backed by private equity money the founders tapped in 2017 to expand, McClain talks to advisers around the country who might be interested in selling and taking an ownership interest in a growing firm, giving up operational responsibilities and focusing exclusively on providing advice.

“The RIA business remains very fragmented, but over the next seven to 10 years, firms will have to become more like us to compete or will merge,” McClain said. “It’s what the marketplace wants.”

— Evan Cooper