In Practice September 10, 2020

CAPTRUST Acquires Retirement Planning Practice From Plante Moran Financial Advisors

The ‘carve-out’ acquisition brings CAPTRUST’s assets under advisement to $400 billion and represents the continuation of an important retirement plan industry trend involving large, diversified financial services firms.

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CAPTRUST Financial Advisors has announced another 2020 acquisition, this one taking the form of a “carve-out” transaction that will see the retirement planning practice of Plante Moran Financial Advisors (PMFA) join the rapidly growing practice.

Prior to this acquisition, the PMFA practice was 100% owned by Plante Moran—one of the largest certified public accounting, tax, wealth management and consulting firms in the United States. PMFA retained ownership of the firm’s individual wealth management practice, and remains under the umbrella of the larger Plante Moran organization. According to CAPTRUST’s leadership, with the addition of the PMFA retirement plan advisory team, the firm has surpassed $400 billion in assets under advisement (AUA).

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The advisory team at PMFA is led by partners Dori Drayton and Susan Shoemaker, who will be joining CAPTRUST as senior vice presidents. Along with Drayton and Shoemaker, 11 additional team members will transition to CAPTRUST. The group joining CAPTRUST is based in Grand Rapids, Michigan, and Southfield, Michigan, and it advises on approximately 200 institutional clients and 240 retirement plans, representing more than $6 billion of institutional assets.

“Susan and Dori have built a phenomenal team; they made us better immediately and we believe they will benefit from the significant scale we have built in the retirement business at CAPTRUST,” says Rick Shoff, managing director of CAPTRUST’s adviser group. “Despite the volatile market conditions, CAPTRUST has continued on its growth trajectory, which has been further bolstered by the four teams we have added this year.”

This is the 42nd team to join CAPTRUST since 2006 and the fourth this year. Consistent with previous deals, the retirement plan advisory team from PMFA will take on CAPTRUST branding. At the same time, Plante Moran, through PMFA and affiliated entities, will retain its broader wealth management clients, meaning Plante Moran will be providing investment consulting, financial planning, trust, insurance consulting, estate planning, business succession and tax planning services.

“It was clear from the beginning that CAPTRUST was the ideal partner to take our team into the next chapter,” Drayton says. “Our clients will immediately be able to tap into CAPTRUST’s participant advice capabilities, a deep research team, and world-class customer support technology. We look forward to introducing our plan sponsor clients to our new colleagues at CAPTRUST.”

Those readers who have been tracking retirement industry merger and acquisition (M&A) action over the past several years will recognize this transaction as the latest in a series of deals that are slowly but surely reshaping the look and feel of established advisory practices. Simply put, well-established retirement plan advisory practices are being both purchased and offloaded by major diversified financial services companies such as Plante Moran.

In this case, it seems clear that the broader Plante Moran organization does not feel retirement planning is part of its core business, nor does it want to continue to make the significant technology and staffing investments needed to service this line of business. So it is seemingly capitalizing on the “sellers’ market,” i.e., the fact that retirement plan advisory firms targeted in acquisitions are seeing very generous offers. In this environment, serial acquirers such as CAPTRUST are not hesitating to pay premium prices to bring on board well-established practices that will immediately expand a firm’s geographic footprint.

On the other side of the spectrum stand firms such as OneDigital and HUB International. These firms are in a similar position to the Plante Morans of the world, but they are making the opposite move and are seeking to rapidly and significantly expand their capabilities in the retirement advice market. Their motivations appear to be the ability to cross-sell their many other products and services to the large client sets touched by the plan adviser community.

HUB International started its buying spree of established retirement plan advisory and wealth management firms in January 2019, when it announced the acquisition of Sheridan Road Financial. The buying streak continued last September, when HUB announced six acquisitions of firms that were part of Global Retirement Partners (GRP). This round of acquisitions brought on board EPIC Retirement Services, StoneStreet, Washington Financial, Perennial Pension & Wealth, WhartonHill and Inter-Mountain Retirement Partners (MRP).

OneDigital has been similarly active in the M&A market. The national health care and insurance benefits provider acquired Resources Investment Advisors LLC, an advisory network headquartered in Overland Park, Kansas, earlier this year. The acquisition represented the largest single assemblage of deals in OneDigital’s history, as it touched on 13 different advisory firm entities.

Deals & People September 9, 2020

MassMutual Cites Scale in Agreeing to Empower Deal

The recordkeeper also notes that fee compression is largely driving the ongoing industry consolidation.

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Empower Retirement and Massachusetts Mutual Life Insurance Co. (MassMutual) announced earlier this week that the companies have entered into a definitive agreement for Empower to acquire the MassMutual retirement plan business.

As to why Empower decided on the acquisition, Stephen Gawlik, vice president, corporate affairs at Empower, tells PLANADVISER, “Empower is taking the next step toward addressing the complex and evolving needs of millions of workers and retirees—through the combination of expertise, talent and business scale being created between both firms.

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“This acquisition is directly aligned with our long-term plans for growth and scale,” he continues. “Together, Empower and MassMutual bring a broad spectrum of strength and stability to this transaction with a shared focus on providing value. The expanding U.S. retirement services market serves an important role in helping to determine the current and future quality of life of working Americans. Through this acquisition, Empower is making a commitment to ongoing investment necessary to grow its retirement services footprint and ultimately drive improved retirement preparedness for millions of Americans.”

The MassMutual retirement plan business comprises 26,000 workplace savings plans through which approximately 2.5 million participants have saved $167 billion in assets. It also includes approximately 2,000 employees affiliated with MassMutual’s retirement plan business who provide a full range of support services for financial professionals, plan sponsors and participants.

The transaction, which is expected to close in the fourth quarter of this year, pending customary regulatory approvals, will increase Empower’s participant base to more than 12.2 million people and its retirement services recordkeeping assets to approximately $834 billion administered in approximately 67,000 workplace savings plans.

From MassMutual’s standpoint, Laura Crisco, head of media relations, strategic communications, at the firm, tells PLANADVISER that the company agreed to the deal “after considering a number of trends and factors.”

“We determined it made strategic sense to find a company that would be a better long-term home for MassMutual’s retirement plan business,” she says. “Now, more than ever, retirement services providers must have greater scale and make significant and sustained investments to meet future competitive and evolving customer needs.” Crisco adds that increasing fee compression is causing the ongoing industry consolidation.

Based on the terms of the agreement and subject to regulatory approvals, Empower will acquire the retirement plan business of MassMutual in a reinsurance transaction for a ceding commission of $2.35 billion.

Gawlik says MassMutual customers will be moved from MassMutual’s recordkeeping system to Empower’s. “We expect to move MassMutual plans to the Empower recordkeeping system over the next 18 months,” following the close of the deal, he says. “Upon close of the transaction, the entire enterprise will be branded Empower Retirement.”

MassMutual customers will benefit from Empower’s “state-of-the-art technology platform” and its “high-touch, segmentation-based, customer-focused service model,” Gawlik says. He also says MassMutual participants will be able to “retain their existing investments,” adding that Personal Capital, which Empower acquired earlier this year, has a “best-of-breed financial wellness offering that gives clients a full suite of tools, and the best digital and human advice, to plan for the future.”

Gawlik says “a vast majority of the MassMutual employees who are dedicated to the retirement plan business will be offered positions with Empower and transition at the time of close.”

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