Deals & People September 5, 2023

Advisory M&A

Pensionmark adds RIA Financial Solutions; First Trust acquires Gyroscope; Atria announces purchase of Grove Point; and more.

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Financial Solutions Joins Pensionmark as World Insurance Associates LLC Company

World Insurance Associates LLC, the parent company of Pensionmark Financial Group, announced it has entered into an agreement to purchase Financial Solutions Group, an independent registered investment adviser based in Waukesha, Wisconsin.

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The firm will join Pensionmark with more than $950 million in assets under management and offices in New Berlin, Wisconsin, and North Barrington, Illinois. Financial Solutions’ leadership team includes managing partner Tim McGrath and partners William Kenton, Kenneth Stuckert and Horace Seely-Brown IV.

“This is a very strategic acquisition for us since we are expanding Pensionmark/World’s presence in the Midwest and we have a strategic focus nationally to expand within the wealth management space in general,” Troy Hammond, Pensionmark’s CEO, said in a statement.

Established in 1993, Financial Solutions specializes in retirement planning, tax and estate planning, investment management and risk management services for individual investors and corporations.

First Trust Announces Acquisition of Gyroscope

First Trust Investment Solutions LP announced the acquisition of Gyroscope Capital Management Group LLC, an investment adviser providing options-based investment strategies focused on tax-advantaged, active equity income and custom hedging solutions.

“FTIS combines the extensive investment management experience and robust distribution of First Trust with Gyroscope’s options expertise, creating customizable investment strategies to enhance yield, manage risk, and tax-efficiently transition low basis stock positions,” Robert Hughes, CEO and managing director of FTIS, said in a statement.

“Gyroscope has a long history of providing essential portfolio management solutions that allow for portfolio customization, tax management, and income potential,” Kevin Erndl, who will transition from CEO of Gyroscope to CIO of FTIS, said in a statement. “Our goal since day one has been to design highly customized portfolios for each client’s investment objectives as well as turn-key solutions researched and professionally managed by highly skilled portfolio management teams.”

Atria Wealth Solutions Acquires of Grove Point Financial

Atria Wealth Solutions Inc., a leading multi-channel wealth management holding company, announced the acquisition of Grove Point Financial LLC.

Grove Point brings approximately 400 independent financial professionals with $15 billion of assets under administration to Atria. Grove Point joins CUSO Financial Services, Sorrento Pacific Financial, Cadaret Grant, NEXT Financial Group, Western International Securities and SCF Securities as Atria subsidiaries.

Grove Point’s custody and clearing platforms are already woven into the multi-clearing and multi-custodial infrastructure Atria built for its subsidiary firms, according to the announcement. Through its alignment with Atria, Grove Point financial professionals will benefit from enhanced support and a broader set of solutions.

“It is very exciting to provide our financial professionals with a broader set of tools, solutions and peers so they can best serve their clients’ needs,” Michelle Barry, president of Grove Point, said in a statement.

After the deal, Atria now serves close to 2,700 financial professionals with nearly $120 billion of assets under administration.

Advisors from Morgan Stanley, UBS Raymond James Launch EverPar Advisors

EverPar Advisors announced its launch as an independent SEC-registered investment advisory firm.

Based in Tulsa, Oklahoma, EverPar was founded by five partners, who left three different firms to start the business. The partners include Michael Christian, Tim Koski and Craig Silberg from Morgan Stanley, David Ellis from UBS and Courtney Hoffman from Raymond James. They collectively managed approximately $750 million at their former firms.

“We are launching EverPar because the needs of clients have outgrown the wirehouse model,” Christian said in a statement. “To genuinely meet these needs, we are building a culture grounded in service and focused on the growth of long-term relationships.”

The name EverPar is short for “Forever Partners,” and the company mantra is “Planning for Generations.” The partners will be joined by Kerri Musgrove and Lorri Ann Henry as client service administrators.

Prewette Joins Cetera Advisor Networks

Cetera Financial Group announced that D. Kent Prewette has joined Cetera Advisor Networks. His firm, D. Kent Prewette & Associates, will rebrand to form a new Cetera Advisor Networks regional office, Convergent Financial Partners, based in Charlotte, North Carolina. Prewette had approximately $34 million in assets under administration as of May 22, 2023.

Previously affiliated with Center Street Securities, Prewette will be a partner in Convergent Financial Partners along with managing partner Scott Smith, according to the announcement. Smith was previously a regional director with Prudential Advisors and has 20 years of experience working with clients to plan for retirement.

Compliance September 5, 2023

Employee Fiduciary LLC Calls On DOL to Improve 401(k) Fee Transparency

The small business retirement plan advisory provided three recommendations to improve participant fee awareness.

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Retirement plan advisory Employee Fiduciary LLC called on the Department of Labor, via public comment, to make fees in 401(k) plans “as transparent as possible” by making changes to the design and content requirements of annual fee disclosures.

Sections 340 and 341 of the Secure 2.0 Act of 2022 call on the DOL and the Department of the Treasury to review defined contribution plan fee disclosures and plan notices provided to participants, giving Congress three years to amend fee disclosure rules and two years to consolidate required plan notices. The DOL posted a request for public feedback on these sections and other provisions of SECURE 2.0 on August 11.

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Eric Droblyen

Employee Fiduciary, which provides recordkeeping and third-party administration to small businesses, argued in its response that fee and reporting disclosures, as currently addressed by the Employee Retirement Income Security Act, are not standardized, allow for “hidden” fees within investment funds and do not properly explain the aggregate effect of fees over time in retirement saving plans.

“Given the cumulative effect of 401(k) fees, we think their dollar amount should be as transparent as possible,” Eric Droblyen, president and CEO of Employee Fiduciary, wrote in the letter. “We also think that the cumulative effect of fees explanation must be more prominent and compelling.”

The advisory recommended three areas for improvement in defined contribution fee disclosures:

  • Standardize plan-related information: Employee Fiduciary suggested the introduction of a model chart for administrative and individual expenses so participants can benchmark their total fees paid against other plans.

    “Administrative expenses tend to be flat (based on the number of plan participants) or asset-based (based on a percentage of plan assets), while individual expenses usually relate to distributions and loans,” Employee Fiduciary wrote. “Given the small number of expense types, we recommend the Department develop a model for plan-related information to help participants total and benchmark their fees.”

  • Make “hidden” fees more transparent: The firm recommended requiring the breakout of indirect administration fees from fund operating expenses to provide a clear view of charges that participants are paying for being invested in specific funds.

    “Without a doubt, ‘hidden’ fees are the top reason why Americans are confused about their 401(k) fees today,” the firm wrote.
  • Highlight the cumulative effect of fees: Finally, the firm recommended shifting the focus of annual fee disclosures to a more comprehensive view of how fees, compounded over time, will impact participants’ retirement savings.

    “In our experience, most 401(k) participants have no idea how dramatically the cumulative effect of fees can impact their retirement savings over time,” Employee Fiduciary wrote. “We think two changes to the annual fee disclosure can help. First, move the cumulative effect of fees explanation from the comparative chart to the opening. Second, add a graphic illustration to the cumulative effect of fees.”

In the letter, Employee Fiduciary referenced a 2021 study by the Government Accountability Office, which found that almost 40% of 401(k) plan participants have difficulty understanding plan fee information disclosures. The government office also found that 45% of participants are not able to use the information given in disclosures to determine the cost of their investment fees, while 41% incorrectly believe they do not pay any 401(k) plan fees.

The DOL did not immediately respond to a request for comment on the proposal.

The comment period for SECURE 2.0 provisions runs through October 10, according to a notice in the Federal Register.

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