One of the country’s biggest insurance brokers is expanding into the retirement plan market with one of the first major deal announcements of the year.
OneDigital has closed on a deal to buy Overland Park, Kan.-based Resources Investment Advisors, an RIA and adviser support firm with $45 billion in assets under management, the companies announced Tuesday.
The deal creates “the first employee benefits and retirement-only broker in the small and medium-sized business space” that will operate under a single brand, according to OneDigital.
The benefits broker is not only buying Resources, it is also acquiring numerous retirement plan adviser firms, some of which are affiliated with Resources. The list includes Bukaty Cos. Financial Services, 401k Advisors Intermountain, Cafaro Greenleaf, Capstone Advisory Group, Chepenik Financial, SHA Retirement Group, Strategic Retirement Group and Teros Advisors. It also includes the San Diego operation of Fulcrum Partners and three California operations of Retirement Benefits Group, according to OneDigital.
Terms of the deal were not disclosed.
The acquisition comes in the wake of the emerging demand from companies for comprehensive services that address their employees' physical and financial well-being, said Mike Sullivan, co-founder of OneDigital.
“Employers are finding it increasingly competitive to attract and retain talent. They are looking for vitality in a workforce,” Mr. Sullivan said. “Physical and financial well-being is so important for most of our clients.”
Although OneDigital recently had been piloting a retirement plan service, that does not represent a significant part of its business, he said.
The Resources deal represented “the perfect mix of leadership and infrastructure,” Mr. Sullivan said. “We were really diligent in this for the better part of 18 months.”
Some aspects of the integration had started before the sale closed, with advisers in some regions working with OneDigital, he said.
“The advisers that are coming on board are very much in the middle market,” he said, working with plans that have roughly 50 to 5,000 participants – similar to the client size served by OneDigital. “There’s very nice symmetry.”
The retirement adviser firms that are part of the acquisition will gradually transition to the OneDigital brand, according to the companies. Resources will also be rebranded, though the company will function as it currently does in supporting adviser affiliates that are not part of the acquisition. Currently, Resources supports 28 firms as an office of supervisory jurisdiction.
“Resources started aggregating through an affiliation model,” said company president Vince Morris, who is also a founder of Bukaty. “We’ve been really successful. We had three years of 50%-plus growth in that space.”
The deal will not require any repapering, Mr. Morris said.
Under the OneDigital brand, “we’ll be able to have both strategies deployed, where if you want to come to a competitive RIA in the wealth and retirement space, we can do that through an acquisition model or an affiliation model,” he said.
The acquisition follows other major deals for RIAs in recent years, including Hub’s 2018 purchase of Sheridan Road and agreement last year to pick up Global Retirement Partners.
“At some point, all the strategic buyers go away. The multiples are high and great today, but the landscape is changing,” Mr. Morris said. “It had to be the Goldilocks story. This company was just the right size, with just the right vision.”
The new arrangement allows the RIAs to add health-savings account consulting to their services, he said.
At OneDigital, Mr. Morris will become president of the Resources brand that is being incorporated, reporting to OneDigital CEO Adam Bruckman.
Resources currently has about 30 employees, all of whom will be retained, Mr. Morris said. “If anything, we will continue to add staff,” he said.
OneDigital, which bills itself as the 18th largest broker in the country, is backed by private equity firm New Mountain Capital. OneDigital has about 2,000 employees and serves about 50,000 employer clients.
Following the Resources deal, OneDigital is looking for more opportunities to scoop up retirement advisers that have “a certain scale of client base,” Mr. Sullivan said.
“We’re actively and aggressively in the marketplace today to find the best and the brightest who fit our culture,” he said. “This is the first inning in an aggressive expansion.”
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