Advisory M&A News – 1/29/24

Bernstein Private Wealth Management expands ultra-high-net-worth platform; Cetera completes minority investment in Wilde Wealth Management Group; Wealth Enhancement Group announces addition of Shawn M. Scott team.

Bernstein Private Wealth Management Expands Ultrahigh-Net-Worth Platform

Bernstein Private Wealth Management, a unit of AllianceBernstein LP, announced the expansion of its ultra-high-net-worth platform. This initiative is supported by a new UHNW service team, which will be exclusively available to clients of the UHNW Platform.

Under the leadership of Aaron Bates, head of ultra-high-net-worth and growth strategies, the platform will fit into the firm’s existing UHNW, family offices and global families services. In coordination with the expansion, Bernstein has appointed three senior executives: Amanda Bohr, director of strategic partnerships; Jeremy Lam, director of credit; and Emily Neubert, national director of UHNW services. 

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“Clients today are increasingly looking for a unified wealth plan centered around legacy with the understanding that complexity is not always financial,” said Onur Erzan, head of global client group and private wealth at AllianceBernstein, in a statement. “That’s why our evolved UHNW Platform offers a more holistic approach to not only manage wealth but the anxieties that come with that wealth.”

Bernstein’s UHNW Platform currently serves more than 1,290 individuals and families with more than $37.9 billion in total assets and an average client tenure of 12 years.

Cetera Completes Minority Investment in Wilde Wealth Management Group

Cetera Financial Group announced it has completed a strategic, minority investment in Wilde Wealth Management, an independent wealth management firm based in Scottsdale, Arizona, managing more than $2.8 billion in assets under administration.

The firm serves as an Office of Supervisory Jurisdiction overseeing more than 42 advisers, with nine locations across the Southwest. Co-founder, CEO and Managing Principal Trevor Wilde leads the team, providing services such as legacy planning, tax planning and investment management services. Advisers with Wilde Wealth have been affiliated with Cetera Advisors since 2007.

Cetera offers advisers succession solutions, including adviser-to-adviser support, business continuity and full or partial sale options. Cetera has completed more than 12 such transactions in the past year. 

“I am thrilled about the transformative impact our enhanced partnership with Cetera will bring, propelling our growing platform to become the preferred destination for top-tier advisors and high-net-worth clients alike,” Wilde said in a statement. “We look forward to serving clients and strategically growing our business together with Cetera for years to come.”

Wealth Enhancement Group Announces Addition of Shawn M. Scott Team

Wealth Enhancement Group announced the acquisition of the Shawn M. Scott Team, an investment advisory team in Cincinnati. The team oversees more than $136 million in client assets and is led by Shawn M. Scott, senior vice president.

“I am very excited to join Wealth Enhancement Group and leverage the extensive resources to better help professionals and business owners in the Cincinnati community,” Scott said in a statement.

For 25 years, Scott has offered clients with financial planning, asset management, wealth management and qualified retirement plan support. The addition of the Shawn M. Scott Team marked Wealth Enhancement Group’s 18th announced or closed acquisition of 2023.

“Wealth Enhancement Group is pleased to welcome Shawn aboard. His considerable knowledge and experience will benefit the firm as we continue to focus on delivering comprehensive financial guidance to our clients,” Jeff Dekko, CEO of Wealth Enhancement Group, said in a statement. “We look forward to his contributions to client outcomes and company progress in the years ahead.”

Commenters Request Eased Enforcement on SECURE 2.0 Part-Time Eligibility

Many stakeholders expressed concern with the administrative hassle of tracking the service of long-term, part-time employees and said compliance would take a lot of time.

The IRS in November 2023 issued guidance on the eligibility rules for long-term, part-time employees to participate in retirement plans. During an open comment period that closed Friday, several commenters asked for a good-faith compliance standard for the vesting rules described in the guidance.

Section 125 of the SECURE 2.0 Act of 2022 requires defined contribution plans to let long-term, part-time employees enroll in an employer-sponsored retirement plan if the employee has completed two consecutive years working at least 500 hours for the plan sponsor. This was a reduction from the three-year requirement created by the law’s predecessor, the Setting Every Community Up for Retirement Enhancement Act of 2019. An employee who works for 1,000 or more hours in a year is typically considered full-time for the purposes of plan eligibility.

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SECURE 2.0’s requirement takes effect on January 1, 2025, meaning eligible part-time workers hired on January 1, 2023, must be made eligible to make elective contributions into the plan. Sponsors must therefore track part-time service to lawfully implement this requirement.

Vesting Changes

Facing questions about vesting schedules, the November IRS guidance specified that an employee accrues vesting credits for employer contributions if they work for at least 500 hours, but an employer may still decline to provide employer contributions to that part-timer. In practice, this means that if an employee starts off part-time and later becomes full-time, they will be granted vesting credits for their part-time work in years in which they worked at least 500 hours.

For example, an employer with a three-year cliff vesting schedule for employer contributions must make those contributions if an employee works part-time for two years and then becomes full-time for a full year after that. That same employee must also be made eligible to make elective contributions at the end of their second consecutive year working 500 hours or more.

As with service hours, sponsors are therefore required to track part-time service to lawfully implement this requirement.

Complicating Factors, Everywhere

The ERISA Industry Committee in its comment letter requested a good-faith compliance standard for this proposal. Though the proposal has not yet been finalized, sponsors may rely on its text as authoritative until a final rule is issued, according to the IRS. The U.S. Chamber of Commerce, a business advocacy group, also requested a good faith standard for no less than 12 months.

The American Retirement Association noted the technical difficulties in retroactively tracking service from part-timers hired in 2023 and vesting times for those not eligible for matching contributions. In light of this, the ARA asked for relief from enforcement action for all of 2024 until the first long-term, part-time employees actually become eligible under SECURE 2.0 in 2025.

The National Association of Government Defined Contribution Administrators requested a full exemption from the rule in its letter, asking alternatively for a two-year delay in the provision taking effect. The NAGDCA explained that “governmental plans encounter complexities in local law enabling requirements, payroll systems, and administration that most private sector employers do not face that justifies such a delay.”

As one complicating factor, the NAGDCA cited the fact that many governmental DC plans require eligibility for a governmental defined benefit plan first, and some of these DB plans exclude part-time employees altogether.

Since Section 125 of SECURE 2.0 does not speak to part-timers in DB plans, this would require government plans to dramatically change their structures, which often requires new state laws to be passed, explains Matt Peterson, the executive director of NAGDCA.

“Essentially, we are looking for a carve-out,” Peterson says, because of the unique designs of government plans and the potential need for new statutes.

According to an emailed statement from the IRS, “401(k) plan sponsors should review their employee census information to ensure they’ve identified all long-term part-time employees and provided them an opportunity to defer compensation to the 401(k) plan.”

The statement continued: “If any employees were not timely given the opportunity to make an elective deferral, the error may be corrected in accordance with the Employee Plans Compliance Resolution System.”

The IRS did not comment specifically on 403(b) plans, though they are also subject to Section 125. The IRS will be hosting a public hearing on the proposal on March 15.

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