One retirement plan adviser that is clearly focused on building a bridge to future wealth management business is CAPTRUST, by far the largest RPA with $651 billion in institutional retirement and wealth advisory assets.
The firm has built a suite of participant services, which it sees as the linchpin to what it calls the "bridge strategy," code for the transition of retirement plan business to wealth management business as participant needs evolve over time.
"It's a very important part of our vision and strategy, and it has been for quite some time," said Rick Shoff, managing director of CAPTRUST's adviser group in Doylestown, Pa., referring to the firm's wellness and advice offering, which it launched in 2014.
The offering provides participants with a suite of services ranging from simple retirement plan investment advice to more complex services, such as how participants can use stock options in the event their employer gets acquired.
"It is a very scaled and meaningful business as far as the number of people who are delivering it and the number of our clients that have adopted it," Mr. Shoff said. About 1 in 3 plan sponsors use the service, with the surprising adoption of increasingly larger plans over time, he said.
CAPTRUST charges a flat fee per participant for the offering, which is paid by either the plan sponsor, the participants or both.
Mr. Shoff sees CAPTRUST's wellness and advice offering as having an edge on rival RPAs because the firm has been providing the services longer.
"We have hundreds of clients that are already using us to do this and are great references," Mr. Shoff said.
Still, despite its strength in providing advisory services to participants and its dominance among RPAs, CAPTRUST does not immediately see itself or other aggregators buying other aggregators.
"I think we are poised to be able to do that if that opportunity ever presented itself, but I don't think it's going to happen," he said, explaining that there are many more smaller acquisitions to be done.
When aggregators can't go out to continue to buy firms to get bigger, opportunities could present themselves, but "I just don't think we're there yet," Mr. Shoff said.
That's not to say that it won't happen in a year or two or five, he said, his thoughts trailing off in a sudden reversal as he considered Lockton Cos., the insurance brokerage and employee benefits firm that had built a scaled retirement plan business and decided to sell it to RIA firm Creative Planning LLC in 2021.
"Nobody was more agog in building a retirement business inside a benefits business than they were," Mr. Shoff said, referring to Lockton, which ultimately decided that the retirement business wasn't a core business anymore.
"If what happened at Lockton could play out at these other firms, then I do think that creates opportunities for us to acquire one of the acquirers," he said.
Mr. Shoff also considered the current high-interest-rate environment, which has increased the cost of capital for acquisitive RPAs.
"That's an added pressure on aggregators, and that could be an accelerant," he said, explaining that higher costs make it harder to buy firms.
"If the current environment continues, that could be an impetus for some of these aggregators to say 'Good try, it didn't work. Let's sell this thing to CAPTRUST,'" he said.