Deals & People January 9, 2019

Sheridan Road Financial Sells Practice

The specialist retirement plan and private wealth advisory firm has been acquired by HUB International Limited.

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Sheridan Road, the Chicago-based advisory firm with more than $14 billion in assets under advisement, has been acquired by global insurance broker HUB International Limited (Hub).

Daniel Bryant, Sheridan Road founder and chief executive officer, and Jim O’Shaughnessy, managing partner, were recruited to Hub by David Reich, the national president of retirement services for HUB International Investment Services Inc.

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Reich had formerly led the retirement efforts at broker/dealer LPL and joined Hub with the mandate of retirement plan adviser acquisition (see LPL Retirement Leader Departure Reflects an Evolving Adviser Industry and LPL Names EVP of Retirement Platform Development).  Speaking to PLANADVISER about the transaction, Reich said this deal is “as good as it gets” in terms of recruiting such a prominent and well-known specialist team to Hub. Having known Bryant and O’Shaughnessy for close to a decade from his time in the industry and at LPL, Reich said he was thrilled to bring them on board, knowing that they had their pick of suitors.

Hub International has a massive presence in Chicago, being headquartered there, and the acquisition of Sheridan Road will let the firm more efficiently serve the market and build out retirement offerings. “Their capabilities add depth and breadth to our growing platform of holistic retirement services,” Reich said. In fact, Reich said that since the deal closed in early December, Sheridan Road has already received, and begun to work on, internal referrals.

In addition to its Chicago headquarters, Sheridan Road, the PLANSPONSOR 2015 Retirement Plan Adviser Multi-office Team of the Year, has eight additional offices throughout the U.S. that serve both institutions and private wealth management clients.

Formally, Bryant and O’Shaughnessy have joined Hub Midwest. Bryant assumes the role of president of national sales, retirement and private wealth.  O’Shaughnessy becomes president of retirement and private wealth for the central region. They report to Reich and Neil Hughes, central region president, and are tasked with collaborating closely with Lerone Sidberry, president and CEO of Hub Midwest.

Sheridan Road’s advisers will be part of subsidiary Hub International Investment Services Inc., while maintaining their broker/dealer affiliation with LPL.

While this is the most recognizable name and largest deal Reich has done since joining Hub, it’s not the first. He said that seven acquisitions have been completed in the last year, with more to come this year.  At the PLANADVISER National Conference in September, as part of a panel about industry M&A, he discussed what he was looking for in advisers when recruiting (see PANC 2018: The State of Adviser M&A).

The Markets January 8, 2019

Alight Solutions 401(k) Index Shows Busy Trading Year for 2018

On the one hand, participants were very active during the year, with 46 days of above-normal daily transfer activity; on the other hand, net trades in 2018 amounted to only 1.42% of total plan balances, making 2018 a record low year for trading volume.

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The Alight Solutions 401(k) Index shows the fourth quarter of 2018 brought 17 days with above-normal trading volumes within 401(k) plans; according to the firm, these days mostly concentrated around days when the stock market lost ground.

The firm notes that, since the inception of this index in 1997, there have been only seven quarters with more than 17 days of above-normal trading activity. Participants in Q4 2018 completed net transfers amounting to 0.55% of starting balances, which is the highest percentage since the third quarter of 2016. During the quarter, more than two-thirds of trading days showed net trading movement from equities to fixed income—representing ill-timed flights to safety amid stock market price dips.

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Indeed, according to the index, stable value funds received 70% of the quarterly inflows, while money market funds received 21% and bond funds received 7%. On the flip side, asset classes with the most trading outflows included target-date funds (54%), large U.S. equity funds and (16%) and mid-sized U.S. equity funds (13%).

Full Index Results for 2018

Alight Solutions has also published a full year-end update of the 401(k) Index, calling 2018 “an interesting year for trading activity among retirement plan investors.”

“On the one hand, participants were very active during the year, with 46 days of above-normal daily transfer activity—the highest number of above-normal days in the last five years,” the firm says. “This is much higher than the 13 days of above-normal trading in 2017. On the other hand, net trades in 2018 amounted to only 1.42% of total plan balances, making 2018 a record low year for trading activity in the over 20-year history of the index.”

According to Alight Solutions, the discrepancy can be attributed to the fact that many of the high trading activity days were concentrated around the beginning and end of the year—with trades more or less moving in similar volumes in opposite directions.

“Investors started the year in January with a rush to equities,” the firm says. “The first seven trading days of the year and 18 of the first 28 trading days were elevated with nearly universal movement from fixed-income investments to equity funds. However, investors reversed this trend in December when Wall Street plummeted.”

After reflecting contributions, trades and market activity, 401(k) investors ended 2018 with 66.6% in equities, down from 68.8% at the beginning of the year.

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