Deals & People September 5, 2024

Alera Group Acquires $24B Advanced Capital Group

The acquisition is the largest for Alera’s retirement plan services division and more than doubles its total assets.

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The Alera Group Inc., located in Deerfield, Illinois, announced the acquisition of Minnesota-based Advanced Capital Group Inc., an institutional investment consultant specializing in employer-sponsored retirement plans.

The acquisition is the largest yet for Alera Group’s retirement plan services division and brings $24 billion in retirement plan and wealth assets, increasing the division’s total assets to $45 billion.

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ACG provides consulting services for employer-sponsored retirement plans, endowments and foundations, as well as Native American tribal trusts. The firm also manages fixed-income portfolios for defined benefits plans and other institutional clients.

The move aligns with Alera Group’s ongoing strategy to expand its retirement plan services offerings. Over the past two years, the firm has been implementing a growth plan designed to serve retirement plans of all sizes, bolstering both its mid-market and large-market capabilities. The addition of ACG adds to Alera Group’s ability to offer more asset management solutions, particularly on the defined benefit side, according to the announcement.

Under the leadership of Christian Mango, executive vice president and national practice leader of retirement plan services, Alera has made six acquisitions in the last two years. These include Arista Consulting, Ascent Group (Summit Group of Virginia), Brio and Fraser Group.

Advanced Capital Group is led by Charles Langowski, principal and CEO; Patrick Larson, principal and director of institutional investment management; Dan Schroeder, principal and director of retirement plan consulting; and Justin Dorsey, a partner.

“Charles and the ACG team have built an incredible practice by delivering genuine expertise to both defined-contribution and defined-benefit clients,” Mango said in a statement. “Their addition brings new capabilities to our platform, enhances our investment depth and expertise, expands our geographic reach and adds a new distribution channel.”

Wise Rhino Group, an M&A advisory practice, advised ACG in the deal.

“The partners at Advanced Capital Group lead one of the most dynamic retirement and wealth advisory firms in the Midwest,” Peter Campagna, Wise Rhino’s managing partner, said in a statement.

Established in 1998, ACG created one of the industry’s first custom qualified default investment alternative options, as well as a liability-driven-investment platform, according to Campagna.

“The Alera Group has thoughtfully been building their financial services operations the last four years, and ACG is a perfect complement to their current capabilities,” he continued. “This exciting new partnership will help both firms continue to grow and thrive in the future.”   

Alera Group also works in property and casualty insurance and employee benefits, with about 4,400 employees nationally.

Data & Research September 5, 2024

More Participants Plan IRA Rollovers in 2024

Cogent Syndicated by Escalent finds a jump in rollover intent among respondents interested in an IRA; a Human Interest survey, meanwhile, shows the need for care in retirement planning among participants.

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More people plan to roll over money from their 401(k) accounts into individual retirement accounts in 2024 than did last year, according to an annual study by Escalent Inc.’s Cogent Syndicated division.

Almost nine out of every 10 (89%) defined contribution plan holders interested in an individual retirement account are likely to roll over this year, up from 82% in 2023, according to annual data released Wednesday in Cogent Syndicated’s ”DC Participant Planscape” report, which drew from a survey of 3,452 DC plan participants.

Sonia Davis, the report’s lead author and a senior product director for Cogent Syndicated, notes that IRA-curious Millennials are leading the charge toward rolling out defined contribution funds, showing an intent rate of 94% this year, as compared with 82% in 2023.

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“Millennials are hungry for information and want to know what their options are, and that is lending themselves to this market,” she says.

According to the survey, the reasons for the interest include job changes, a desire to consolidate accounts and a quest for lower fees. But former plan provider outreach and financial adviser recommendations are also playing significant roles, according to the researchers.

Rollovers and market returns have fueled IRA asset growth, with IRAs holding some $13 trillion in assets as of mid-2023, up from $11.7 trillion in the same period the year prior, according to the most recent data from the Investment Company Institute.

Adviser Effect

When it comes to advisers, Davis notes that nearly six out of every 10 people likely to roll over say they would work with a traditional adviser—up from 44% last year. That presents an opportunity for advisers, she says, but it is important for them to also see that participants tend to roll over into IRAs that have brand recognition and can show a track record of putting the investor’s interests first.

“We know that acting in a customer’s best interest is really instrumental to rollover IRA consideration,” she says. “Those are the things you want to be communicating and demonstrating in the market.”

Davis notes research from a retirement plan adviser trends study identifying the types of rollovers usually recommended by advisers. The breakdown showed 61% recommending IRA rollovers, 30% recommending rolling into their most current employer-sponsored retirement plan and the remaining 9% a mix of options, including some recommending sticking with the employer-sponsored retirement plan due to institutional pricing and access to plan features.

Move Carefully

Whatever participants do with their retirement savings, it will hopefully be informed and thought through—which, according to a separate Human Interest Inc. survey released Thursday, is not always the case.

In a survey of more than 1,000 working Americans conducted for the 401(k) plan provider by Censuswide, 83% of respondents had regrets about their retirement planning decisions.

Another 41% of those surveyed expect to retire later than planned due to recent financial circumstances, and 83% plan to continue working after retirement, according to the survey.

When it came to withdrawing funds from their 401(k) savings, 17% of respondents reported doing so through a loan, and 23% said they withdrew money before retiring from their jobs—though they may have withdrawn after the official age of 59.5 allowed by the IRS without tax penalty.

Either way, a fair share regretted the decision to tap their savings: 48% of loan takers regretted the move, and 60% regretted taking funds out before retiring.

Human Interest noted that employees with access to financial wellness programs are more likely to enroll in an employer-sponsored retirement plan: 91% of employees with financial education from their employer enrolled, while 76% without access to financial education enrolled.

The Cogent Syndicated study was conducted among 3,452 defined contribution plan participants in June; participants were required to be at least 18 years old and contributing at least 1% to a current plan or holding at least $5,000 in at least one former plan. The Human Interest research was conducted among 1,041 full-time employed Americans in July.

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