New RIA aggregator enters 401(k) market

Hub International jumped in two months ago, and already has acquired a shop with $2.5 billion in plan assets

Nov 30, 2017 @ 4:11 pm

By Greg Iacurci

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 InvestmentNewsanalysis 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."

0
Comments

What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video

INTV

FPA's Shannon Pike: What's next for the financial advisory profession?

As we head toward 2019 and beyond, regulation and compensation will continue to dominate the headlines. Shannon Pike of the FPA explains.

Latest news & opinion

What millionaires look for in an adviser

A list of factors that high-net-worth individuals will pay more for in regards to an adviser.

LPL rolls back recruiting policy aimed at driving more assets to its corporate RIA

LPL erases $50 million hurdle for new advisers to join so-called hybrid firms.

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print