Benton will be replaced by Holly Deem, the firm’s chief operating officer, but will remain as chairman, while also setting up a new consulting firm that will have WealthTrust as a client, the company announced yesterday.

The move did not surprise industry observers, who noted that WealthTrust, which has ten registered investment advisor affiliates managing around $8 billion in assets, has not made an acquisition since October 2008, and has had to scramble to pay back debt to its hedge fund and private-equity backers.

And turmoil at the firm surfaced last Friday, when Scott Roulston, longtime chief executive of Fairport Asset Management in Cleveland, one of WealthTrust’s oldest and biggest affiliates with about $813 million in assets, resigned over strategic differences.

“It’s a classic roll-up story,” said industry consultant Tim Welsh, president of Nexus Strategy, of Larkspur, California. "They bought at the top of the market, overpaid and leveraged to the hilt. After the market downturn revenues were down and their assumptions probably didn’t work, so it’s not unusual that they had to make some changes.”

Investment banker Dan Seivert, chief executive and managing partner for Echelon Partners, also said it was “natural” for a top executive to move on once the rationale for the company’s original “strategic objectives” went away.

But despite recent setbacks, the roll-up model is far from dead, Seivert added.

“You can’t judge the quality of roll-up methodology by initial models,” he said. “It’s still the early innings and there will be more to come. The best models have yet to be seen.”

WealthTrust recently renegotiated a payment schedule for more than $20 million in senior debt it owes to HBK Investments, a Dallas-based hedge fund. Falcon Investment Advisors has provided mezzanine debt and private-equity firm Circle Peak Capital has an equity stake in the firm.

Focus Financial Partners, another leading roll-up firm with 18 affiliates and $30 billion in assets, has also slowed its pace of acquisitions and is currently embroiled in a nasty lawsuit with David Brochu, the former head of Providence, Rhode Island-based StrategicPoint Investment Advisors, one of the first RIAs to partner with  Focus.

Deem, Wealth Trust’s new CEO, joined the firm in early 2008 from Amvescap, where she was chief risk officer. Earlier in her career, she was president of Bank of America Private Investments.

Citing the “economic recovery underway in the US” Deem said in a statement that “WealthTrust is well positioned for continued success as a leading wealth management firm.”

Benton’s new firm will specialize in “business strategy, internal ownership issues and merger and acquisition activities,” according to Wealth Trust’s statement.

Before founding WealthTrust, he spent 12 years as a founding partner of Barksdale & Associates, a Nashville-based investment management firm. In 2006, he led WealthTrust’s buyout from Morgan Keegan & Co, the Nashville-based broker-dealer that still holds a non-recourse seller's note on the firm.