A Captrust Deal For $154 Billion — And a Stark Message to All Retirement Plan Advisors

Cammack Retirement Group sells and a trend in wealth management gains momentum.

Captrust is headquarter in Raleigh, North Carolina (Bigstock photo)

Captrust is headquarter in Raleigh, North Carolina

(Bigstock photo)

Captrust, the Raleigh, N.C.-based company that manages $60 billion and advises on $448 billion, has struck a deal to acquire one of its biggest competitors, perpetuating a trend in the retirement plan advisory space.

The company said Tuesday it agreed to acquire Cammack Retirement Group, a 50-year-old firm advising on $154 billion belonging to nearly 1.3 million participants of 170 plan sponsors. Cammack’s 38 employees based in New York City, Wellesley, Mass., and Lexington, Ky. will all join Captrust. Terms of the deal were not disclosed.

The deal brings Captrust’s assets under advisement to more than $600 billion and makes one the largest retirement plan advisors even bigger.

Both companies count a significant number of colleges and universities as clients and their combination gives Captrust a larger geographic footprint — something it has sought to achieve as it continues to acquire other companies. Cammack will bring to Captrust more expertise in public-sector clients, including states, counties, utility companies, and others.

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“I think it’s really interesting news because of the size of each of these two firms,” said Alexander Assaley III, the managing principal at Bethesda, Md.-based AFS 401(k) Retirement Services, an advisor to the defined contribution plans of about 90 companies and $1.93 billion. Assaley is also the president-elect of the National Association of Plan Advisors, or NAPA, a nonprofit membership organization.

Historically, a company the size of Cammack has been the acquirer. The fact that it was the seller is a sign of the industry maturing, according to Assaley.

Even the largest firms have been subject to the evolving wants and needs of institutional clients and forced to make decisions to accommodate them, especially over the last three or so years. The trend is not new but it’s clearly continuing, said Shawn O’Brien, a senior analyst focused on retirement markets at Cerulli Associates, a Boston-based research and consulting firm.

Cammack was in that circumstance.

Every year, the company surveyed its clients and, among other things, asked what services they would like to see Cammack add. In recent years, clients have been asking for financial wellness and advice to extend to their employees. “There is certainly a demand,” Michael Volo, a senior partner at Cammack who will become a principal at Captrust, told RIA Intel.

Jeff Levy, a managing partner at Cammack who will also become a principal at Captrust, said Cammack has lost some new business opportunities to competitors offering services beyond advice on retirement plans, including the ability to manage an endowment’s assets.

The question was, should Cammack invest in itself and build those services from scratch, or seek to acquire or sell to a partner who has them already? Ultimately, the decision made was to sell to Captrust, which offered those services already.

Costs aside, building financial wellness tools, a private wealth management business, or an institutional investment team, takes considerable time. There is no guarantee that clients or prospects will wait around for those to be developed and refined. And no guarantee that the products and services will meet their expectations.

But the blurring of wealth management services — retirement plan advice, private wealth management and institutional investment management — will continue regardless of how prepared firms are, observers say. It’s an uncontrollable force driving firms to the marketplace and splitting some RIAs in half.

The deal with Captrust solves that conundrum for Cammack. “I think they just knew this was a way to accelerate their growth and break through those ceilings of complexity that every RIA runs into over time,” Rick Shoff, a managing director at Captrust, said.

Just like on the private wealth management side of the business, Shoff said bigger retirement plan advisory firms are now contemplating mergers, which is no reflection of their quality. Companies are exploring all opportunities to better themselves and both can come from positions of strength; a deal can be a win-win.

“Together we’re more powerful,” Levy said about Cammack’s deal with Captrust.

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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