Raymond James has moved into retirement plan administration with its announcement Thursday that it is buying a consultant and record keeper that oversees $35 billion in plan assets.
The broker-dealer is acquiring Seattle-based NWPS Holdings and expects to close the deal before year-end.
The strategy runs counter to that of other broker-dealers. Very few have an associated plan administration business and some have offloaded such businesses that they had owned. Generally, retirement plan advisers have sought to build out their wealth businesses, rather than the other way around.
Wells Fargo, for example, last year sold its record-keeping business to Principal Financial. Another firm, MassMutual, is selling its business to Empower Retirement. Merrill Lynch, however, has an affiliated record keeper though its parent, Bank of America.
Raymond James’ acquisition appears in part to be about pooled employer plans. The coming year presents a new opportunity for plan providers, advisers, third-party administrators and others, with the first PEPs coming the market as soon as Jan. 1. Many see PEPs as a way to expand workplace retirement plan access or to attract existing plan sponsors that want to reduce their fiduciary liability.
“The addition of NWPS allows Raymond James to expand its retirement services offerings, including retirement plan administration services, to advisers and clients,” Raymond James said in its announcement of the deal. “The timing is opportune as the industry prepares for new solutions created by this year’s SECURE Act, such as pooled retirement arrangements, and increases the investable market for employer and employee small business solutions.”
Last month, the Department of Labor began allowing firms to register as pooled plan providers, with the ability to launch their first PEPs at the beginning of 2021. As of Thursday, neither NWPS nor Raymond James was listed among the two dozen firms in the DOL’s pooled plan provider registrant database.
Across the industry, retirement plans are increasingly being considered as a way to expand valuable wealth management relationships.
The purchase of NWPS by a broker-dealer is unusual, but similar deals could follow, Dick Darian, CEO of Wise Rhino Group, said in an email.
“This is another example of firms like Raymond James beginning to think more in terms of building a broader vertical operating company that can provide services beyond the typical broker-dealer solutions,” Darian said. “They have also begun to develop more creative advisory firm acquisition models. Others like Kestra and Cetera are doing the same.”
NWPS, which also does business under the name Northwest Plan Services, has an open-architecture record-keeping system, allowing advisers and plans to pick from a wide range of investment providers. The company has about 400,000 plan participants in its book of business, according to the announcement. NWPS also works with defined-benefit plans and consults on health and welfare plans.
“Adding this valuable retirement capability for our advisors and their clients while providing NWPS with Raymond James’ scale enables managing the end-to-end experience for plan sponsors and plan participants,” Raymond James CEO Paul Reilly said in the announcement.
NWPS has about 160 employees, all of whom will be retained after the acquisition, Raymond James said. The company will also continue to operate under the NWPS brand, though as part of the Raymond James Private Client Group, according to the announcement.
Terms of the deal were not disclosed. A spokesperson for Raymond James did not immediately respond to a request for comment.
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