Retirement plan advisers turning to RIA aggregators to build practices

Interest in aggregator firms focused on 401(k) plans has grown, but advisers must weigh what they'd be sacrificing and gaining through such arrangements

May 21, 2017 @ 12:01 am

By Greg Iacurci

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Some retirement plan advisers are turning to so-called "RIA aggregators" that focus on the defined contribution market to help them build their practices, the primary allure being the scale and support afforded by a large, like-minded adviser network.

The definition of an RIA aggregator is a bit amorphous because there's a wide array of business models. But generally speaking, these are firms that actively gather a significant amount of plan assets through the outright acquisition of registered investment advisers or an affiliation model in which firms join an aggregator's RIA and/or broker-dealer.

"As advisers specialize, they need special resources, and they get those [resources] from these kind of groups," said Fred Barstein, founder and CEO of The Retirement Advisor University.

While the landscape is "growing and evolving," there are roughly 10 to 15 firms that are considered full-fledged RIA aggregators, said Dick Darian, a director in BlackRock Inc.'s U.S. and Canadian defined contribution group.

"Many of these aggregator firms' executives really began as advisers in the broker-dealer world but quickly specialized in defined contribution, went independent and began to scale their businesses," he said.


Captrust, an independent RIA, is the largest of them, with 85 DC-focused advisers overseeing $194 billion in plan assets. Similar to other aggregators such as NFP, SageView Advisory Group and Gallagher Benefit Services, Captrust's model is one of acquiring other advisory practices.

Number of RIA
aggregator firms

Pensionmark Financial Group, whose adviser network provides services to $47 billion in aggregate DC assets, is the largest aggregator whose primary model is affiliation. Some with this model, such as GRP Financial and Bukaty Companies Financial Services, allow firms to continue operating with an independent brand, whereas others such as Lockton Investment Advisors require advisers to do business under the Lockton name.

NFP and GRP also offer membership-type services, allowing advisers to access certain resources without affiliating or being acquired. For an annual fee, GRP Advisor Alliance provides access to financial wellness programs, custom-built collective investment trust funds and a proprietary suite of adviser tools, for example. Nearly 400 DC-focused advisers servicing $200 billion in assets belong to this network.


Aggregators do not fall into the same camp as the national consulting firms such as a Mercer or Aon Hewitt, but have grown to a point where they can move up-market and compete with such national consulting shops, Mr. Darian said.

"As an adviser, if you haven't become part of a bigger group, it becomes very hard to compete," said Troy Hammond, president and CEO of Pensionmark.

Advisers may gain a competitive advantage in meetings with prospective clients if they can use an aggregator's brand and reference the aggregate DC assets under the network's purview to promote a high level of competency, according to industry observers and firm executives.

Asset aggregation may also allow advisers to be more competitive from a pricing standpoint, they said.

Most aggregators have in-house services and staff to support advisers in activities such as lead generation, practice management, investment research and analytics, marketing and communications, client onboarding, adviser training, relationship management, compliance and technology.

"There's just too much to know, and there's no way you can be an expert" on everything, said Daniel Bryant, CEO of Sheridan Road Financial, which oversees $14 billion in DC assets.

Regulation such as the Labor Department's fiduciary rule has accelerated activity and interest in such aggregators, executives said. Of course, advisers have to weigh what they'd potentially be sacrificing as well as gaining as a result of shifting their business to such arrangements.

Top RIA aggregators focused on defined contribution plans
FirmTotal DC assets ($B) overseen by network advisers*Number of DC advisers**Primary contactBusiness model
Captrust***$19485Wilson Hoyle, managing director, head of the adviser groupRaleigh, N.C.(919) 870-6822wilson.hoyle@captrustadvisors.comAcquisition.RIA: Captrust Financial Advisors.Broker-dealer: CapFinancial Securities.
NFP$89100Nick Della Vedova, president, NFP RetirementAliso Viejo, Calif.(949) 460-9898, ext. 246nick.dellavedova@nfp.comAcquisition.RIA: NFP Retirement Inc. Broker-dealer: Kestra Investment Services.NFP also has a subscription model through its Retirement Plan Advisory Group, providing tools, resources and training for DC advisers. RPAG has $300 billion in DC assets and 1,000 advisers. It is RIA- and broker-dealer-agnostic.
SageView Advisory Group$7050Randy Long, managing principalIrvine, Calif.(949) 955-5787rlong@sageviewadvisory.comAcquisition.RIA: SageView Advisory Group.Broker-dealer: Cetera Advisor Networks.
Pensionmark Financial Group***$4762Troy Hammond, president and CEOSanta Barbara, Calif.(805) 456-6262troy.hammond@pensionmark.comAffiliation is the firm's primary model. Pensionmark also has acquired two practices and intends to make additional acquisitions.RIA: Pensionmark Financial Group.Broker-dealer: CapFinancial Securities****.
GRP Financial$46172Bill Chetney, founder and CEOCarlsbad, Calif.(949) 359-0221bill.chetney@grpaa.comAffiliation.RIA: Global Retirement Partners.Broker-dealer: LPL Financial.GRP also has a membership model through GRP Advisor Alliance, an invitation-only service ($9,600 annual fee) providing tools, resources and training for DC advisers. GRP Advisor Alliance has more than $200 billion in DC assets and nearly 400 advisers. It is RIA- and broker-dealer-agnostic.
Lockton Investment Advisors$44.752Pam Popp, presidentKansas City, Mo.(816) 960-9603ppopp@lockton.comAffiliation.RIA: Lockton Investment Advisors.Broker-dealer: Lockton Financial Advisors.
Gallagher Benefit Services Inc.$2735Bill Kline, national practice leader, retirement plan consultingRolling Meadows, Ill.(919) 830-7277bill_kline@ajg.comAcquisition.RIAs: Gallagher Fiduciary Advisors, Kestra Advisory Services.Broker-dealer: Kestra Investment Services.
Sheridan Road Financial$1415Daniel Bryant, CEONorthbrook, Ill.(312) 259-9097dbryant@sheridanroad.comAcquisition.RIA: Independent Financial Partners.Broker-dealer: LPL Financial.
Retirement Benefits Group$13.535Gary Josephs, head of the marketing and PRIrvine, Calif.(949) 786-4015, ext. 102gjosephs@rbgnrp.comAcquisition.RIAs: Retirement Benefits Group, LPL Financial's corporate RIA. Broker-dealer: LPL Financial.
USI Consulting Group$13.327Michael Welz, president and CIOGlastonbury, Conn.(860) 368-2908michael.welz@usi.comAcquisition.RIA: USI Advisors Inc.Broker-dealer: USI Securities Inc.
CBIZ Retirement Plan Services$1328Nicole Gaydos, marketing consultantCleveland, Ohio(216) 525-4697ngaydos@cbiz.comAcquisition.RIA: CBIZ Investment Advisory Services.Broker-dealer: CBIZ Financial Solutions Inc.
Bukaty Companies Financial Services$975Vincent Morris, presidentOverland Park, Kan.(913) 647-3968vmorris@bukaty.comAffiliation.RIA: Resources Investment Advisors Inc.Broker-dealer: Triad Advisors Inc.
Strategic Retirement Partners$617Jeff Cullen, managing partnerShorewood, Ill.(888) 202-3927jeffc@srpretire.comAffiliation. SRP is owned by its advisers. Advisers may sell their practices, in whole or in part, to SRP at a time of mutual choosing. RIAs: SRP Advisory Services, Kestra Advisory Services.Broker-dealer: Kestra Investment Services.
Cafaro Greenleaf$2.37Jamie Greenleaf, principal/lead consultantRed Bank, N.J.(800) 401-4830jgreenleaf@cafarogreenleaf.comAcquisition is the firm's primary model. Secondary models include: Partnership (The firm invests in another RIA's book of business. The plans move under the RIA and revenue is split proportionally. Advisers become IARs under Cafaro Greenleaf's RIA) and Solicitor (The firm takes over the plans completely and pays an ongoing solicitor fee to the outside adviser).RIA: Greenleaf Advisors.Broker-dealer: American Portfolios Financial Services Inc.
Note: Figures provided by companies. Firms included are actively recruiting advisers and new DC assets, having added at least four DC-focused advisers or any number of advisers with an aggregate $1 billion in new retirement plan assets from 2016 through Q1 2017. Growth can't have been solely through organic means.
*As of April 30; **Producing advisers, or those who are client-facing; ***Captrust is part owner of Pensionmark; ****Pensionmark is in the process of launching its own broker-dealer, Pensionmark Securities.


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