New RIA aggregator enters 401(k) market

Hub International is a neophyte among so-called RIA aggregators focused on the retirement plan market, but it’s making a grand entrance that signals competitive heft and further hints at a growing consolidation trend among plan advisers.

Aggregators are firms actively gathering a significant amount of plan assets through outright acquisition of advisory firms or via those firms’ affiliation with the aggregator’s RIA and/or broker-dealer.

Hub, an insurance brokerage, is an acquirer and traditionally has bought groups specialized in employee benefits and property and casualty insurance. The firm hadn’t entered the retirement market in a big way until September, when it hired David Reich as its national president of retirement services.

Before taking the job at Hub, Mr. Reich had helmed the Retirement Partners group at LPL Financial, the nation’s largest independent broker-dealer.

Hub announced Monday it acquired Summit Financial Corp., a Burlington, Mass.-based advisory firm with eight producing advisers overseeing $2.5 billion in defined contribution plan assets, as well as an additional $200 million for wealth-management clients.

The acquisition was the firm’s largest of a retirement-focused shop to date. Hub also has several pending deals involving firms “of decent size,” Mr. Reich said, though he declined to elaborate.

“This place has never really gone after the business, and now we are,” Mr. Reich said. “There’s a significant opportunity to grow in this space.”

Interest among 401(k) advisers to join RIA aggregators has grown, which industry observers attribute to an increasingly challenging operating environment for independent advisers. Most shops offer in-house services and staff to support advisers through lead generation, investment research and analytics, marketing, compliance, training, and relationship management, for example. Through scale, they also may help advisers drive down costs for clients.

Hub has a lot of competition for business, though. A recent InvestmentNews​ analysis identified roughly 15 aggregators — massive firms such as Captrust, NFP and SageView Advisory Group — that are active in recruiting retirement plan advisory groups into their ranks.

Lockton Investment Advisors and Gallagher Benefit Services Inc. are similar to Hub, in that they are part of large insurance brokerages.

Fred Barstein, founder and CEO of The Retirement Advisor University, believes Hub has the DNA to be successful, since it’s already a prolific acquirer of insurance and employee-benefits groups, and has hired Mr. Reich, who knows the DC market well.

“I think they have all the ingredients, but it’s all about execution,” Mr. Barstein said. “And the market’s getting competitive. You [already] have established aggregators.”

Hub’s business model is unique in a way, when compared with its competitors. Although Hub has a broker-dealer and is in the process of setting up its own RIA, the firm allows advisers to stay with their current RIA and/or broker-dealer if they wish.

“If you look at the other firms doing acquisition, you have to join their B-D or RIA,” Mr. Barstein said. “Here, you’ll have to deal with multiple B-Ds.”