Wealth Enhancement Group Nearing $5B in Retirement Plan Coverage

Wealth management firm Wealth Enhancement Group, founded in 1997, more than doubled its 401(k) plan clients in 2019 to about 160 with acquisitions. Now, about five years later, the firm is nearing more than 900 qualified retirement plan clients and approaching $5 billion in assets.

Brian Gregov, Wealth Enhancement Group’s director of retirement planning consulting, says the firm’s decision to commit to retirement plan advisement has opened up “great wealth management opportunities that we can grow from the business.”

Gregov, who came over in the AEPG deal, notes that some of the firm’s wealth advisers already know retirement plans well and engage with them on their own. Others, however, “don’t want to touch it with a pole,” in which case Gregov and his team are there to do the work.

Brian Gregov

Dan Stampf, the firm’s chief product officer, says that kind of thinking permeates across the business at Wealth Enhancement Group. If advisers get a retirement plan deferral, they can partner with Gregov. If they get a tax inquiry, they can partner with the tax side. If there’s an estate question or an issue with insurance, the company can advise there as well.

This holistic set of services, he says, is part of why Wealth Enhancement Group has been able to grow so rapidly in recent years, including July acquisitions of Rock House Financial, a Utah-based wealth manager with $272 million in client assets, and Peak Financial Services Inc., a registered investment adviser in Massachusetts with more than $123 million in client assets. Those deals brought Wealth Enhancement Group’s total client assets to more than $85.7 billion.

“If you think about advisers that are looking to be acquired, they are generally looking for something, whether new lead flow, more growth or to enhance the scale and depth of their practice,” says Stampf. “But one thing that most every adviser has is client intimacy, and the desire to meet all of their needs. … You really can’t be a jack of all trades to everyone at all times. By joining WEG, they can maintain the relationship and keep everything in house.”

Client Focused

Gregov emphasizes that the firm’s retirement plan consulting practice is focused not just on great service for the clients, but the participants in the plans.

He admits that, after working for decades in the industry, engaging participants can “be a struggle.” To work around that, his team provides group educational sessions and outreach at financial milestones. But what he has seen more of in recent years is participants asking about things beyond the 401(k), such as 529 college saving plans or tax advice, which can be a connection to the individual advisement side.

Dan Stampf

“We’re seeing the opportunities to connect with [participants] and work with them,” he says. “That is a huge area of focus for us.”

Gregov and Stampf both note that the firm does not push wealth services and does not lead with them in participant conversations. This comes from an ethos of putting the “client first,” Stampf says, whether that means the employer running a retirement plan or the individual running their portfolio.

“Our north star is to provide the greatest possible outcome for our clients,” he says. “That is in our DNA to its core—it’s not be the most profitable, not be the biggest, but to enhance our clients’ financial lives.”

Stampf, who joined Wealth Enhancement Group about one year ago, certainly has a direct connection between retirement plans and wealth management. He had been vice president of advisory solutions for wealth manager Personal Capital when it was acquired by Empower. He continued in that role, syncing the wealth solutions side to the country’s second largest recordkeeper by participants, until he says the chance to join a growing RIA that also had a strong retirement plan presence drew him over.

Private Equity Push

Some of Wealth Enhancement Group’s growth is being driven by private equity funding, including from Onex Partners and TA Associates. But it is certainly not alone, with many other PE-backed firms driving ahead with acquisitions in both the wealth and retirement plan space.

Anton Honikman, CEO at MyVest, a wealth management software provider owned by TIAA, says the draw for smaller independent RIAs to join larger organizations is only poised to increase.

“What you find at a larger organization is a division of labor,” he says. “Instead of having decentralized portfolio managers, you have centralized investment teams to select models and build asset allocations.”

That includes firms working to “bridge across retirement and retail assets outside of the plan,” Honikman says. “Most households that these advisers are serving are going to have accounts in both; having an enterprise-sized RIA firm that can serve both sides of the ledger is incredibly compelling.”

Meanwhile, for the acquiring firms, there will be increasing pressure to start showing results from the deals, Honikman says. But they have to strike a balance, he notes, to avoid upsetting the advisers who are bringing in the clients.

“As the rate of RIA M&A continues to increase in 2024, the acquiring firms, particularly the ones at the top of the market, are heading toward a tipping point of making these acquisitions work for the long term or seeing an adviser exodus that would undercut the value of the acquisitions in the first place,” says Honikman.

Stampf of Wealth Enhancement Group believes his firm, with its strong retirement plan practice and other services, is well positioned to make the model work. He anticipates more acquisitions for the firm in the near term, so long as they are a cultural and business fit. When these firms come on, he says, they will be given access to the suite of services available to them with the goal of creating “even more efficiency and scale.”