The concept of convergence between wealth management, retirement planning, and workplace benefits is no longer seen as a passing trend, as indicated by a recent LinkedIn poll. Instead, the focus has shifted to how firms are executing this convergence and its influence on the advisor mergers and acquisitions (M&A) market. During a 401k Café session, Dick Darian highlighted the rapid growth of retirement plan advisor (RPA) M&A starting around 2017-2018, driven by factors such as the scaling of RPA firms, the influx of private equity (PE) money, and changing advisor demographics. This period saw significant consolidation, as exemplified by Sheridan Road’s sale to Hub, reaching higher-than-expected valuations.
Despite the market maturing, the challenge for many firms remains how to effectively engage participants in the retirement plans they manage. This engagement potential has attracted wealth management firms like Creative Planning and Mariner to enter the defined contribution (DC) space. However, executing on convergence is difficult, with few firms like Captrust finding success. Pricing pressure and growing valuations have led to more RPA firms acquiring wealth management firms, and vice versa. Advisors, whether RPAs or RIAs, face critical decisions about selling their practices, choosing the right buyer, and selecting the right banker, as convergence continues to reshape the M&A landscape.
Read more insights in Fred Barstein’s recent Wealth Management column, “How Convergence Is Changing the RPA, RIA M&A Markets.“
