Deals & People October 30, 2023

Advisory M&A News – 10/30/23

CAPTRUST adds $1B wealth advisory in Indiana; NewEdge Advisers adds Florida-based adviser serving individuals and small businesses; Kestra builds up Georgia-based financial planning footprint.

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CAPTRUST Acquires $1.4B Wealth Advisory in Indianapolis

CAPTRUST Financial Advisors, the wealth management and retirement planning firm, announced an expansion in the Indianapolis region Monday with the acquisition of Column Capital Advisors LLC. The move, the terms of which were not disclosed, marks the seventh deal for CAPTRUST in 2023 and the 70th since 2006.

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Column Capital manages $1.4 billion in client assets and is led by president and managing director Brian Upchurch, along with executive directors Kevin Sweet and Jeffrey Yu. In total, 22 employees will join CAPTRUST in the transaction. Upchurch said in a statement the move to CAPTRUST signals the “next phase of our business” and is part of Column Capital’s long-term succession planning.

“Employee ownership is really important to us, and CAPTRUST provides expansive career opportunities for our team,” Upchurch said. “Not to mention the array of resources at CAPTRUST that will allow advisors to focus more time on our clients.”

Column Capital, founded in 2005, will bring to CAPTRUST capabilities in investment management, financial planning and tax services for high-net-worth individuals. The deal furthers CAPTRUST’s national expansion into wealth management, retirement planning and endowment and foundation advisement, with Column Capital bringing on “services like tax and investment management” in particular, according to the announcement.

The acquisition is CAPTRUST’s second location in Indiana, first in Indianapolis and brings the firm’s employee base to 50 in the region. Column Capital will take on the CAPTRUST brand, similar to the aggregator’s prior acquisitions.

NewEdge Advisors Adds Riverside Wealth Partners of Florida

NewEdge Advisors LLC, a New Orleans-based registered investment advisory supporting independent financial advisers nationally, announced that Bill Laird and his Riverside Wealth Partners of Jacksonville, Florida, have joined the firm.

Laird launched Riverside Wealth Partners after managing $500 million in assets at Forvis Wealth Advisors LLC. Riverside is focused on individuals, as well as small business clients, and includes Brooke Stanford, client experience director and senior financial adviser, and Michelle Laird, client service associate.

“We are thrilled that [Riverside Wealth Partners] will now have the tools and support to deliver the kinds of services they know their clients need moving into the future,” Alex Goss, co-CEO of NewEdge Advisors, said in a statement.

Laird began his career at Wachovia Bank before joining Raymond James Financial as a financial adviser. He also worked as chief investment officer and a financial adviser for DHG Wealth Advisors before becoming the Southeast regional leader at Forvis.

“Partnering with NewEdge provides me with the right set of resources, including top-of-the-line trading and reporting capabilities and an experienced investment staff to help our clients achieve their goals,” Bill Laird said in a statement.

Kestra Adds Adviser Previously with Edward Jones

Kestra Private Wealth Services, an RIA subsidiary of Kestra Financial Inc., announced adviser Bob McCullough of Perry, Georgia, will join the platform in partnership with Georgia-based Inspired Wealth Planning, which Kestra acquired in March 2023. He had previously been affiliated with Edward Jones.

McCullough will be joining Ricky Smith, president of Inspired Wealth Planning, to represent a combined $300 million in client assets. McCullough is also joined by registered associate Kathy Duke and client service associate Katherine Moore.

The Inspired Wealth Planning advisory specializes in customizing financial plans for clients in such areas as generational planning, liquidity events, legacy strategies and longevity preparation, according to the announcement.

“When considering the next phase of my career, partnering with an established firm with a track record of success was important to me, as it provides greater opportunities to offer a personalized experience to clients,” McCullough said in a statement. “After witnessing the success Ricky achieved with the full support of Kestra Private Wealth Services, I’m confident joining the firm is beneficial for my career goals, the continued success of Inspired Wealth Planning, and the clients we serve.”

Data & Research October 27, 2023

HSAs Still Have Room for Improvement, Morningstar Reports

Despite the rapid growth of HSAs in recent years, providers can still do more to encourage HSA participants to use their accounts as investment vehicles.

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Health savings accounts have grown at a furious pace, with total assets invested in HSAs rising by a factor of 21 since 2006 to roughly $116 billion, according to a report released Wednesday by Morningstar Inc.

But although the industry has matured over the years, analysts from the firm say there is room for improvement in areas that include user education, transparency, ease of use and cost. Beyond those adviser- and provider-led initiatives, the firm also noted the potential for legislation to allow HSAs as an option to receive automatic income deferral.

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Morningstar evaluated 10 of the largest HSA providers for individuals on two different use cases: as spending accounts to cover current medical costs and as investment accounts to save for the long term.

In a ranking of the providers by Morningstar, seven out of the 10 received “above average” or “high” for overall assessment as a spending account, with Associated Bank ranking as “average,” and Bank of America and Saturna ranking “below average.”

For using the HSA as an investing account, only four firms ranked as “high” or “above average,” with the other six coming in as “average.”

Only two providers earned assessments of either “high” or “above average” in both cases: Fidelity (“high” in both) and HealthEquity (“above average” in both.

Morningstar did not assess HSAs offered by employers, as details can vary depending on relationships and headcount. Each of the 10 providers responded to Morningstar’s survey with detailed information.

Improving Use

According to Morningstar, HSA providers and regulators should do more to encourage HSA participants to use their accounts as long-term investment vehicles.

“Advisers can address these issues by guiding clients to HSA plans that charge lower fees,” Greg Carlson, senior manager research analyst of equity strategies at Morningstar, says via email. “Advisers can also seek out plans that have better tools and educational materials and put up fewer hurdles to accessing HSAs’ full feature set, including investment options.”

One barrier to increased investing within HSAs is that participants are not always aware of the investment-account option, according to Morningstar. The firm’s report suggested that advisers can help providers o simplify the account-opening process and give participants more educational materials on how to use HSAs in coordination with retirement savings. Providers that offer better guidance and tools tend to have higher average investment account balances, according to the analysts.

“While HSAs have seen enhancements as the industry has matured, such as decreased fees and improved investment options, they still face challenges in terms of transparency, user-friendliness, and cost-effectiveness,” according to the report’s authors. “The process of exploring account details, enrolling in an HSA, and funding it remains intricate. Some leading providers still impose maintenance and investment fees, as well as requiring a minimum account balance before allowing participants to invest.”

In addition, according to Morningstar, many providers offer “meager” interest rates on account balances that fall below relatively high thresholds.

Long-Term Savings

While employers are allowed to automatically enroll employees in employer-sponsored retirement plans, the government has not ruled on whether they can do the same for HSAs. If HSAs were made part of automatic enrollment, the vehicles would see more use and, with that, potentially better services, Morningstar noted.

If the savings accounts grow more popular, especially if they become part of automatic deferrals, participants will need to consider factors that do not apply to retirement plan investment decisions, Morningstar’s analysts wrote. For example, because at least some HSA money may be needed to cover sudden medical expenses, it makes sense to avoid large allocations to aggressive investments.

Morningstar did find that participants using HSAs as investment vehicles endured market declines in 2022 well. Despite losses in both broad equity and bond indexes, “both the total and average assets in HSA investing accounts among the providers Morningstar surveyed rose from the end of 2021 to the end of 2022,” the firm wrote.

That same investment tracking has continued to grow in the first half of 2023.

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