For RPAs thinking about selling, there may be no time like the present

For successful retirement plan advisers who are experiencing rapid growth, selling the business might be the last thing on their minds but that could be a mistake, said guests at Wednesday’s RPA Valuation Workshop.

Over the past several years, the pace of dealmaking has accelerated, and valuations for desirable RPAs have climbed to earnings multiples that not long ago would have stunned buyers and sellers.

That makes the present a very good time to consider becoming part of a larger firm, and the best small RPAs have been doing just that, speakers at the event noted.

“It’s prudent business practice to look in the marketplace and understand the value of your firm and what the landscape looks like,” said Vince Morris, who early last year sold his then-$45 billion RIA and adviser support firm Resources to OneDigital.

Before the deal, Morris said he “had blinders on” and was busy tending to the growing pains his firm was experiencing, such as by dedicating more time and effort to human resources and IT.

“We had 72% [annual] growth, and we were an affiliated model only. We weren’t really doing M&A,” he said. “I saw a lot of my best friends selling in the marketplace, and I wondered, ‘What am I missing?’”


Last year, there were 33 acquisitions of retirement-focused registered investment advisory firms, more than five times the number seen in 2017, according to data from Wise Rhino. In 2019, there were 27 such deals, up from 16 in 2018.

In the first quarter of 2021 alone, there have been 19 acquisitions, Dick Darian, CEO of Wise Rhino Group, said at the valuation event. The firm projects a total of about 55 deals by the end of the year.

“The historic deal volume is a function of the change that’s going on, and there are firms that are forming or getting bigger that are quite remarkable,” Darian said. “There are more professional buyers and a lot of money entering the space.”

Deals among RIAs in general have been occurring at a record pace, a report last month from Fidelity Investments noted. In February, there were seven mergers or acquisitions, representing a total of $13.7 billion in assets under management. But in the first two months of the year, there were 31 deals involving RIAs, compared with just 20 transactions during that timeframe in 2020, according to Fidelity.

On Monday, SageView announced that it had acquired the retirement practice of Arnerich Massena. That followed news at the beginning of the year that SageView sold a majority stake to private-equity firm Aquiline Capital Partners.

“We didn’t want to be acquired. We wanted to be the acquirer so that was part of the motivation,” SageView founder and managing principal Randy Long said at the InvestmentNews workshop. “I’m still the second-largest shareholder in the organization and super motivated to grow the business … We’ve been able to help advisers grow their practices and create efficiencies and a great experience for the [retirement plan] participants.”

Today, Captrust disclosed its recent purchase of Pacific Investment Consultants, a California-based RIA managing $700 million in assets.


The decision to join a larger firm was not a difficult one for several retirement plan advisers who spoke at Wednesday’s workshop, as doing so gave them more resources and allowed them to provide their clients with a better complement of services.

In 2019, Jamie Hayes and Don Faller sold their business, Fiduciary First, to NFP.

“We just made the decision let’s open ourselves up and see what’s out there,” Hayes said. “It just seemed like we needed somebody bigger and better than us who had something more to offer our clients.”

A major concern was how her staff and clients would react to the news, and she initially had some misgivings about saying goodbye to the brand name she had built up, she said.

Her advice to other retirement plan advisers: “Relax. There is nothing to worry about,” Hayes said. “Your clients love and respect you you are their trusted adviser.”

Her former firm “was a one-trick pony,” she said. Today, she readily tells clients that she is not a jack-of-all-trades, but the master of one who can direct people to other experts in group benefits, wealth management, property and casualty, or other areas that are not her specialty.

“When you’re growing fast, that’s the time you want to sell,” Hayes said. “The partner that you pick should be able to throw fuel on that fire. That’s what’s going to make a happy marriage, is when you can help each other.”

James Hageney, who several years ago sold his firm to Marsh & McLennan and is now retirement practice leader at the company, said the ongoing challenges of running a growing business led to the sale.

“We had 12 consecutive years of growth. With the growth came extra challenges,” he said. “Next thing you know, I was spending more time managing the business.”

Retirement plan advisers who are interested in the idea of selling should do their homework about buyers, making sure that the firms are a cultural fit and can collaborate, said Craig Reid, national practice leader of retirement and wealth at Marsh & McLennan.

“We are really looking at companies that are interested in taking care of their employees,” Reid said. “This is probably the last transaction of your career … You want to find a partner you can see yourself with for the long haul.”

The post For RPAs thinking about selling, there may be no time like the present appeared first on InvestmentNews.

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