Deals & People June 6, 2023

Cetera Holdings Acquires Retirement Planning Group

The parent of the Cetera Financial broker/dealer network adds $1.4B RIA; meanwhile, another PE-backed advisory, Mercer Advisors, gets new backing from Altas.

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Private equity-owned Cetera Holdings, the parent company of broker/dealer network Cetera Financial Group, announced Tuesday the purchase of $1.4 billion registered investment advisory The Retirement Planning Group LLC. In separate news, Mercer Advisory, also backed by PE investors, welcomed a new strategic investor, Altas Partners LP.

Cetera Holdings is acquiring the Leawood, Kansas-based RIA focused on high-net-worth individuals, families and retirees while overseeing about $1.4 billion in assets under management. Los Angeles-based Cetera did not disclose the amount of the deal, but it announced it will be bringing on 40 employees—including 14 advisers—and 1,825 client accounts.

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The deal comes less than a month after the parent company announced that former Fidelity Investments executive Mike Durbin was taking a new role as CEO. The firm said at the time it was bringing on Durbin to expand into “new markets and adjacencies to fuel continued growth and provide more options for advisors.” Durbin had previously been president of Fidelity Institutional, which provided advisers and institutions with third-party product and asset management services.

“This acquisition is synergistic on many levels and represents our commitment to constantly identify and deliver multiple options that give advisors a depth of choice and flexibility to affiliate their business with Cetera as they see fit,” Durbin said in a statement. “To that end, we anticipate close collaboration as we continue to define a new affiliation model through our Wealth Hub that marries the principles of independence with the support and resources of employee services.”

Cetera Holdings, owned by San Francisco-based PE firm Genstar Capital Partners, has been a steady acquirer of independent advisories since its 2018 acquisition. In January, Cetera Holdings acquired the retail wealth business of Securian Financial Group Inc., adding 1,000 financial professionals to its network across 30 independent firms. In April, it announced the addition of Minneapolis-based Rohlik Financial Group.

The Retirement Planning Group is led by CEO Kevin Conard and, in addition to its Kansas headquarters, has offices in St. Louis and Denver. The firm specializes in retirement planning, portfolio management, tax planning, estate planning and wealth management.

“This partnership sets us up for a bright future as we continue to attract advisers seeking to focus more on taking care of their clients and less on the operational aspects of running a business,” Conard said in a statement.

Mercer Gains PE Investor

In separate news, Mercer Advisors, which also has PE funding from Genstar, announced a new strategic investor group that includes Toronto-based Altas Partners.

Denver-based Mercer has about $48 billion in AUM and now has backing from Altas, Genstar, Oak Hill Capital and more than 300 advisers who own equity in the firm. The funding from Altas will go toward continued investment in the firm’s adviser platforms, it announced Tuesday. The transaction is slated to be completed by the third quarter of 2023.

Mercer, which has close to 900 employees overall, is focusing its business on families ranging from mass affluent to ultra-high-net-worth, as well as companies, endowments and foundations.

“We have had an outstanding partnership with Genstar and Oak Hill for many years and chose Altas as our newest strategic investor because they believe in our mission, purpose, and strategy and are committed to support continued investment in capabilities that will allow us to enhance the way we serve our clients,” Dave Welling, CEO of Mercer Advisors, said in a statement.

 

Data & Research June 6, 2023

Young Employees Pulling Back on Retirement Contributions

Morgan Stanley at Work study reveals retirement saving erosion, as retirement head Bunnell notes the ‘central role’ of retirement plan advisers in times of volatility.

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Employees have pulled back on retirement contributions, particularly younger workers, according to a financial benefits study from Morgan Stanley at Work, “State of the Workplace III.”

Based on this year’s survey, the third conducted, 66% of employees reduced contributions to retirement accounts, compared with 62% in 2022. Individuals cited inflation and concerns of a recession as reasons for the reduction. One-third of workers (33%) contributed less to their 401(k) plans, while 28% scaled back on emergency, long-term and short-term savings.

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Younger cohorts were particularly likely to hold back on contributions, according to the workplace division of the New York-based investment firm. Seventy-eight percent of Generation Z and 80% of Millennials made cuts, while only 58% of Generation X and 40% of Baby Boomers did the same.

Yet access to financial advisers remains important to employees when choosing where to work, according to the survey. Nearly three in five employees ranked retirement planning assistance from financial professionals as a high priority, including 25% who identified it as their top priority.

Adding Value

Times of upheaval can also be times of great innovation, and retirement plan advisers can “play a central role in reshaping how the workplace interacts with retirement planning,” Anthony Bunnell, head of retirement solutions and deferred compensation at Morgan Stanley at Work, wrote in an email.

“As a fiduciary, an adviser can add tremendous value to the plan, whether it’s finding the right recordkeeper and administrator; investment selection and monitoring; or helping employees understand the value in their workplace benefit to achieve their retirement and financial goals,” he said.

Bunnell also stressed that retirement plan advisers can add deeper value by working with plan sponsors to provide more personalized financial advice and retirement education to employees.

“While it’s an understandable impulse to reduce savings while navigating uncertain economic times, employees may need help to better understand how their choices today can have a ripple effect on their future financial outcomes,” Bunnell said in an emailed response, “whether it’s around the possible tax implications of any early retirement withdrawals, the opportunity cost of leaving an employer match on the table, or how compounding interest can help even small contributions build up over a lifetime.”

He said advisers able to tap into deep knowledge bases through emerging technologies like artificial intelligence will have an advantage in plan education, engagement and planning.

Bunnell noted Morgan Stanley’s push into personalized financial education to retirement savers. The firm recently launched a Corporate Retirement Portal to give financial education to participants via an AI-based engine that also links to human advisers. He also highlighted a forthcoming OpenAI product using technology and Morgan Stanley intellectual capital to deliver content to financial advisers “in seconds, which will free up their time, and in turn, serve their clients even more efficiently.” 

Still a Benefit

Meanwhile, even if contributions have dipped slightly, employers believe a strong retirement plan still matters. Among HR leaders surveyed, 99% said offering retirement planning assistance is a priority for their retention of current employees. Likewise, 92% of employees viewed retirement planning assistance as a priority when choosing where to work.

“An adviser’s holistic, measured financial leadership can help both businesses and their employees keep focused on their goals when it comes to sensible retirement planning,” Bunnell wrote. “We have seen that the combination of an adviser, coupled with digital tools and in-person education, is a recipe for success. Offering webinars, resources, 1:1 coaching sessions and personalized financial education tools for employees are all great avenues.”

The study drew responses from 1,000 U.S. employed adults and 600 HR executives surveyed digitally between March 16 to 22 and April 6 to 12. The report is from a series of research reports from the Morgan Stanley at Work division.

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