PLANADVISER - March/April 2022 - 23

" There's more cross-pollination
happening and an intriguing
opportunity for wealth managers to
say, 'This is another growth channel for
us, to be part of this larger ecosystem.' "
wealth managers to say, 'This is another growth channel for
us, to be part of this larger ecosystem.' "
The combination of a wealth manager and a retirement
planning firm creates a more comprehensive financial
service provider, Seivert says. " Bringing together businesses
via M&A and strategic partnership, which allow for more
holistic servicing of clients' 'financial wellness,' has been
a huge emphasis within the financial services industry of
late, " he says. " And these types of combinations are prime
examples of that thesis in play. "
Retirement plan services and wealth management
services are no longer seen as the silos they once were
by some. " The two have started to converge very closely, "
DeNoyior says. " Employers more and more realize that
their employees are counting on them for help with their
total well-being. As advisers, we always ask, 'Can we help
employers to become an employer of choice?' Part of that is
access to help with employees' well-being, and part of wellbeing
is their overall financial security. "
Kawal says the recent influx of institutional capital, such
as private equity firms looking to invest in these businesses,
plays a significant role in the removal of the silos. " With
much institutional capital coming in-and trying to figure
out a differentiated strategy-that is influencing the drive
to add services to offer. There is becoming a competitive
pressure to offer more services and to capture a greater
'share of wallet,' " he says. " The competitive bar is rising, and
advisory firms are saying, 'We have to keep up, and now we
can offer a broader tool kit to our clients.' "
For the advisers being acquired, DeNoyior says, it boils
down to whether it is the right long-term strategic move.
" A firm with a 'For sale' sign up is generally not the most
attractive acquisition, " he says. " Most of the acquisitions Hub
makes start with advisers just exploring it, to see if a deal
might make sense. Then they realize it's a better strategic
fit for them, their clients and their employees. I think you're
going to see more of this in the next couple of years. "
Many smaller and midsize advisory practices that work
with retirement plans also have long had some wealth
management clients. " In the retirement plan world, among
us retirement nerds, we always thought of retirement
plan work and wealth management as being very siloed, "
DeNoyior says, observing that a relationship has long
existed. " My firm has always been 50-50 between wealth
work and retirement plan work, " he says, referring to
Washington Financial Group, where he served as CEO prior
to its 2019 acquisition by Hub. " In my firm, we saw the need
for both from the start, 25 years ago. "
Since many wealth management firms already have
some retirement plan advisory clients, it is easier to explain
to them why getting purchased by a retirement plan
specialist makes sense, Kawal says. " So now they might say[,
regarding a potential acquirer], 'Here is a fully integrated
offering. Now we can address the retirement plan side of our
clients' lives better.' "
A Long Runway of Acquisitions
The increase in M&A activity comes amid a trend in private
equity firms making minority investments in the wealth
management industry's largest strategic acquirers, Seivert
says. These financial investors' interest is driven by their
desire for business models with a high degree of recurring
revenue, their attraction to a business with high " friction "
costs for clients to switch advisers, and the ability to conduct
an M&A strategy that lends itself to ongoing growth as more
advisory firms get acquired.
Recent key deals include Warburg Pincus' purchase of
a minority interest in Edelman Financial Engines, a year
ago March, and Leonard Green & Partners' acquisition of
a minority stake in Mariner Wealth Advisors the following
month.
" Due to the minority investments private equity firms
have made in many strategic acquirers in the wealth
management industry, 69.7% of 2021 total deals involved
either a private equity firm or a strategic acquirer backed by a
private equity firm, " Seivert says, citing an Echelon statistic.
" Private equity interest
in the U.S. wealth management
industry is so high that some American private equity firms
are turning their attention to wealth managers in the U.K.,
in search of a less competitive M&A environment. "
As institutional investors such as private equity
firms invest more heavily in wealth management firms,
consolidation has intensified. " We're seeing the biggest
wealth management firms get bigger, faster, " Kawal says.
" The larger firms now disproportionately control wealth
management assets compared with smaller firms. The total
number of wealth management RIAs [registered investment
advisers] is still going up, because the barriers to entry aren't
that high. But because of M&A and larger firms' organic
growth capabilities, the big are getting bigger. " -Judy Ward
planadviser.com March-April 2022 | 23
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PLANADVISER - March/April 2022

Table of Contents for the Digital Edition of PLANADVISER - March/April 2022

A Digital Divide
Staying Power
The Prospects of Staying Virtual
Another Retention Tool
Is It Time to Let Go?
The Evolving Use of RFPs
Best Interest Reasons For a Rollover
Guaranteed Lifetime Income
PLANADVISER - March/April 2022 - C1
PLANADVISER - March/April 2022 - FC1
PLANADVISER - March/April 2022 - FC2
PLANADVISER - March/April 2022 - C2
PLANADVISER - March/April 2022 - 1
PLANADVISER - March/April 2022 - 2
PLANADVISER - March/April 2022 - 3
PLANADVISER - March/April 2022 - 4
PLANADVISER - March/April 2022 - 5
PLANADVISER - March/April 2022 - 6
PLANADVISER - March/April 2022 - 7
PLANADVISER - March/April 2022 - 8
PLANADVISER - March/April 2022 - 9
PLANADVISER - March/April 2022 - 10
PLANADVISER - March/April 2022 - 11
PLANADVISER - March/April 2022 - 12
PLANADVISER - March/April 2022 - 13
PLANADVISER - March/April 2022 - 14
PLANADVISER - March/April 2022 - 15
PLANADVISER - March/April 2022 - 16
PLANADVISER - March/April 2022 - 17
PLANADVISER - March/April 2022 - A Digital Divide
PLANADVISER - March/April 2022 - 19
PLANADVISER - March/April 2022 - 20
PLANADVISER - March/April 2022 - 21
PLANADVISER - March/April 2022 - 22
PLANADVISER - March/April 2022 - 23
PLANADVISER - March/April 2022 - Staying Power
PLANADVISER - March/April 2022 - 25
PLANADVISER - March/April 2022 - 26
PLANADVISER - March/April 2022 - 27
PLANADVISER - March/April 2022 - 28
PLANADVISER - March/April 2022 - 29
PLANADVISER - March/April 2022 - The Prospects of Staying Virtual
PLANADVISER - March/April 2022 - 31
PLANADVISER - March/April 2022 - Another Retention Tool
PLANADVISER - March/April 2022 - 33
PLANADVISER - March/April 2022 - Is It Time to Let Go?
PLANADVISER - March/April 2022 - 35
PLANADVISER - March/April 2022 - The Evolving Use of RFPs
PLANADVISER - March/April 2022 - 37
PLANADVISER - March/April 2022 - 38
PLANADVISER - March/April 2022 - Best Interest Reasons For a Rollover
PLANADVISER - March/April 2022 - Guaranteed Lifetime Income
PLANADVISER - March/April 2022 - C3
PLANADVISER - March/April 2022 - C4
https://www.planadviserdigital.com/planadviser/industry_leader_awards_2022
https://www.planadviserdigital.com/planadviser/march_april_2022
https://www.planadviserdigital.com/planadviser/january_february_2022
https://www.planadviserdigital.com/planadviser/november_december_2021
https://www.planadviserdigital.com/planadviser/september_october_2021
https://www.planadviserdigital.com/planadviser/july_august_2021
https://www.planadviserdigital.com/planadviser/may_june_2021
https://www.planadviserdigital.com/planadviser/march_april_2021
https://www.planadviserdigital.com/planadviser/january_february_2021
https://www.planadviserdigital.com/planadviser/november_december_2020
https://www.planadviserdigital.com/planadviser/september_october_2020
https://www.planadviserdigital.com/planadviser/july_august_2020
https://www.planadviserdigital.com/planadviser/may_june_2020
https://www.planadviserdigital.com/planadviser/march_april_2020
https://www.planadviserdigital.com/planadviser/january_february_2020
https://www.planadviserdigital.com/planadviser/november_december_2019
https://www.planadviserdigital.com/planadviser/september_october_2019
https://www.planadviserdigital.com/planadviser/july_august_2019
https://www.planadviserdigital.com/planadviser/may_june_2019
https://www.planadviserdigital.com/planadviser/march_april_2019
https://www.planadviserdigital.com/planadviser/january_february_2019
https://www.planadviserdigital.com/planadviser/november_december_2018
https://www.planadviserdigital.com/planadviser/september_october_2018
https://www.planadviserdigital.com/planadviser/july_august_2018
https://www.planadviserdigital.com/planadviser/may_june_2018
https://www.planadviserdigital.com/planadviser/march_april_2018
https://www.planadviserdigital.com/planadviser/january_february_2018
https://www.planadviserdigital.com/planadviser/november_december_2017
https://www.planadviserdigital.com/planadviser/september_october_2017
https://www.planadviserdigital.com/planadviser/july_august_2017
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