Deals & People January 30, 2023

Advisory M&A

Charles Schwab acquires resource provider to family wealth firms; Voya completes acquisition of benefits administrator Benefitfocus; Franklin Templeton partners with fixed-annuity index provider to build out product offering; and more.

 

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Charles Schwab Expands Family Office Business Through Acquisition

The Charles Schwab Corporation announced it has expanded its family office practice by acquiring The Family Wealth Alliance, a provider of resources to family wealth firms serving ultra-high-net-worth clients.

FWA services multifamily advisory firms, single-family offices, registered investment advisers, professional services firms and specialty providers. The Chicago-based firm’s members receive access to research and educational content, leader roundtables and curated connections, according to the announcement.

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Schwab Advisor Services and FWA announced they will combine their relationships, resources and technology to drive growth for professionals and organizations focused on ultra-high-net-worth clients. FWA Founder and CEO Tom Livergood, President Rachel Hyman and other members of FWA have joined Schwab in the acquisition. The Westlake, Texas-based Charles Schwab did not disclose terms of the transaction.

Voya Financial Completes Acquisition of Benefitfocus

Voya Financial Inc. announced that it has completed its acquisition of Benefitfocus Inc., a benefits administration technology company that serves employers, health plans and brokers.

Including the acquisition, which Voya first announced in November 2022, the New York-based financial firm now serves the workplace benefits and savings needs of about 38 million individuals.

“The acquisition of Benefitfocus accelerates Voya’s strategy in health and wealth solutions, adding broad-based benefits administration capabilities that extend our reach across workplace benefits and savings,” Heather Lavallee, Voya CEO, said in a statement.

Under the terms of the agreement, Voya acquired all outstanding shares of Benefitfocus common stock for $10.50 per share in an all-cash transaction valued at approximately $570 million, inclusive of Benefitfocus debt and outstanding preferred shares, Voya stated in the initial announcement.

Franklin Templeton Partners With Salt Financial on Risk-Controlled Fixed Annuity Index

The investment management firm Franklin Templeton has partnered with index solutions provider Salt Financial LLC to create a strategy for a volatility-controlled fixed index annuity, according to an announcement.

Greenwich, Connecticut-based Salt Financial’s truVol Risk Control Engine will be paired with Franklin Templeton’s portfolio management capabilities, according to the firms. The pairing will create a fixed-income annuity index using Salt Financial’s patent-pending risk control technology to further build the market for the long-term, tax-deferred investments, they said.

“Our partnership with Salt Financial allows for additional co-designed index opportunities that will bring together Franklin Templeton’s proprietary equity investment capabilities with the specialized volatility control and risk management strategies developed by Salt,” Doug Sue, head of insurance solutions for Franklin Templeton, said in a statement.

Franklin Templeton is based in San Mateo, California.

Retirement Strategies Group Joins Private Equity-Backed Strongpoint Partners

Third-party administrator Retirement Strategies Group has joined with private equity-backed retirement, payroll and benefits provider Strongpoint Partners, the firms announced.

Chicago-based Strongpoint will bring RSG into its small- and medium-business platform providing third-party retirement administration, payroll, human resources and recordkeeping, the firms announced.

Strongpoint is backed by Chicago-based private equity firm Shore Capital Partners LLC, which is fueling firm expansion through partnerships and business development, as well as Strongpoint’s products and infrastructure, according to the announcement.

“We are excited about investing in the [New Orleans-based] RSG brand to increase the breadth of products and services they can deliver to their clients across the southeastern United States,” Danny Hest, Strongpoint CEO, said in a statement.

Bison Wealth Acquires New Advisory Team

Financial advisory Bison Wealth LLC announced the acquisition of  new advisory Capital Defender Advisors, overseeing $500 million in assets, with some of its focus on first responders as clients.

Atlanta-based Bison Wealth said the new advisory will include Brian McGinnis, founder of Serve & Protect Financial, an advisory he founded and leads, along with Elio Chiarelli and Ray Hansen, formerly of Kidder Advisers, where Hansen was president and Chiarelli was vice president. The advisers will operate Capital Defender Advisors under Bison Wealth.

McGinnis was a deputy sheriff in Florida before founding Serve & Protect, which focuses on providing financial planning and portfolio offerings for the first-responder community.

“We’re proud to partner with a team who works so closely with first responders, who historically have been underserved in the wealth planning industry,” Brad Ball, founder of Bison Holdings LLC, said in a statement.

Bison Wealth, a subsidiary of Bison Holdings, is a boutique of investment advisers that provides resources to advisers seeking to grow through acquisition or monetize their business, while transitioning clients to the next generation of advisers, according to the firm.

Compliance January 30, 2023

SECURE 2.0 Makes a Few Changes to Annuities

While not the focus of the bill, annuities gained increased flexibility and availability.

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The SECURE 2.0 Act of 2022, the retirement reform legislation that passed in December 2022, aimed to increase retirement access and security for Americans, primarily by reforming defined contribution plans.

SECURE 2.0 contains few reforms related to annuities, despite research showing both their popularity among workers and that Americans lack knowledge about their own life expectancy. Though the reforms made to policies addressing annuities in SECURE 2.0 are few in comparison to the changes made to defined contribution retirement plans, or even defined benefit plans, the legislation still has some impact on annuities.

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Section 201 of SECURE 2.0 removes availability barriers to some life annuities in tax-advantaged retirement accounts. Previously, required minimum distribution tests limited the availability of some lifetime annuities which had large benefit increases from year to year. SECURE 2.0 allows these annuities to increase at a constant percentage, no more than 5% per year.

Section 202 seeks to make Qualified Longevity Annuity Contracts easier to invest in. The section raises to $200,000 the cap on how much money a participant can use from their retirement account to purchase a QLAC. It used to be either 25% of the account’s value or $125,000, whichever was greater. The new figure of $200,000 is also indexed to inflation, whereas the previous $125,000 maximum was not.

Additionally, according to Elizabeth Dold, a tax attorney and executive committee member at the Groom Law Group, Section 204 allows a retiree with a partially annuitized plan to combine the payments from both the annuity and the plan for the purposes of calculating their required minimum distribution. Previously, the two accounts had to be separated, each with their own RMD calculation, which could result in higher RMD payments than if they were counted together.

This allows the assets in the plan to potentially continue to grow, giving the retiree more flexibility in their retirement planning going forward.

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