PCIA’s Take on Retirement Adviser Industry M&A, Wealth Trends

Emerging market realities continue to strengthen the ties between retirement plan advisory services and individual wealth management, as evidenced by recent M&A activity.


Prime Capital Investment Advisors (PCIA) recently announced its acquisition of the assets of Sphere Wealth Management, an independent wealth management shop in Fayetteville, Arkansas.

The transaction added more than 200 families and three new advisers to PCIA’s business, which, according to chief executive officer Glenn Spencer, remains equally focused on the retirement planning and wealth management segments. In fact, while discussing the transaction and the broader industry merger and acquisition (M&A) landscape, Spencer suggested this dual focus is probably his firm’s greatest advantage moving forward.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

For context, M&A activity remains at historic levels among retirement plan advisers, wealth managers, asset managers and recordkeepers. Notably, the first quarter of 2021 set yet another transaction volume record for registered investment advisers (RIAs), according to data provided by Echelon Partners. PCIA played its part in the first quarter’s deals with the acquisition of the retirement advisory practice of the First National Bank of Omaha.

“The pace of M&A has always had a strong influence on our firm,” Spencer says. “As you may recall, we became PCIA in 2017 through an acquisition process, when we bought the non-insurance assets and operations of another firm. Since then, we have sought to grow in a way that has maintained the balance between retirement plan advice and wealth management.”

Spencer says the strategy is built on a theme of creating balanced and symbiotic revenue streams that reflect the shifting demographics of today’s middle class and mass-affluent investors.

“I have been working in this space for over 30 years now and so we can learn from that experience,” Spencer says. “When we look back, we know the 401(k) was legislated in the late 1970s, but the 401(k) infrastructure was really created in the ’80s, and then the accounts became widespread in 1990s. Eventually, the contributions became really significant in the 2000s. Today, the next question is about distribution and management of the significant wealth that has been generated in the retirement plans. I’ve seen stats that show 75% of all assets in 401(k) plans are owned by people who are at least 50.”

In Spencer’s view, this demographic reality will remain a primary driver of a growing demand to link workplace retirement planning with overall financial wellness and wealth planning services.

“The scope of what we are expected to do has broadened,” Spence suggests. “Our retirement plan participants have more individualized needs, hence our focus on managed accounts and broader wealth management capabilities. We are already the trusted adviser in the workplace, and we have the financial planning and wellness services, so it’s a natural fit for our clients to work with us across retirement and wealth.”

Other firms engaged in recent RIA M&A action have expressed similar motivations, including CAPTRUST. Its leaders say that serving retirement plans and private individuals does not mean a firm will be aggressively soliciting rollovers or engaging in other potentially problematic cross-selling behaviors barred in the workplace by the Employee Retirement Income Security Act (ERISA). Instead, they say building a firm that does both private wealth and institutional retirement plan business is about creating a holistic service ecosystem that clients want and need, especially as the defined contribution (DC) plan system matures and becomes a key component of individuals’ retirement income.

Similar to CAPTRUST’s take, Spencer says the elevated M&A activity will undoubtedly continue for years to come. In addition to the demographic trends, there are internal pressures causing advisory firms to reassess their operations.

“If you look back just 20 years or so, you still saw all the advisers working at the big institutional wirehouses,” Spencer observes. “Over the years, many broke away, such that there are now some 17,000 independent wealth management firms in North America. The average firm out there today is a small business with fewer than 10 employees. In this environment, it is becoming really hard for those small businesses to match efficiency and scale of the consolidators. We can afford to invest in the resources that clients are demanding. The consolidator’s value proposition for the independent advisers is that we will take on all of the administration and infrastructure work, and we’ll do it better and cheaper. We will let you focus on dealing with your clients and winning new clients.”

Spencer expects the same names will continue to dominate the M&A activity that is of most interest to the subset of advisers focused on serving retirement plans in a fiduciary capacity—including but not limited to Hub International, CAPTRUST, Marsh & McLennan Agency, and, of course, PCIA.

“The retirement plan advisers are going to be most attracted to firms that are independent but with scale,” he suggests.

Once They Catch On, PEPs Could Grow Exponentially

The current hesitancy over how they will take shape will be overcome by appreciation among advisers and sponsors alike at the prospect of expanding retirement coverage, sources say.


Much has been said so far about the importance of the nascent pooled employer plan (PEP) market. Recordkeepers, investment managers, third-party administrators (TPAs) and retirement plan advisers and consultants alike are all expected to take different roles in PEPs as sponsors, administrators, registered pooled plan providers (PPPs) and fiduciaries.

But industry experts and recordkeeping executives say they have not heard many inquiries from advisers about PEPs thus far.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Nonetheless, Micah DiSalvo, chief revenue officer at American Trust, expects PEPs will have a big impact on the retirement planning industry.

“They will drive access and efficiencies for smaller plans and give them access to some of the institutional services typically only available among larger plans,” he says. “We expect advisers, recordkeepers and third-party administrators will pay increasing attention to PEPs—and that the adoption will look like a hockey stick over time. A big part of what is going to drive this adoption is the fact that 51% of workers at private companies don’t have access to a retirement plan.”

As a PPP and a 3(38) and 3(16) fiduciary to a PEP, American Trust hopes to be a major player in this space and has been hosting webcasts and podcasts and issuing white papers in conjunction with recordkeepers, TPAs and ERISA [Employee Retirement Income Security Act] attorneys to educate advisers about the potential of PEPs, he says. The firm has also been working with multiple employer plans (MEPs) looking to convert their plan to an open MEP, or PEP.

American Trust is also partnering with other companies looking to enter the PEP space and can adjust its services depending on what these partners want to offer themselves, DiSalvo says. “Some want to have private label investments. Others want to offer the investments themselves. We believe there will be multiple distribution channels and models that will be relevant and meaningful.”

Likewise, Aon Retirement Solutions worked for a number of years with elected and regulatory officials to help shape the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the introduction of PEPs, says Rick Jones, partner at Aon. Aon launched its first PEP in January.

“Beyond Aon, we see increasing interest and ‘buzz’ on PEPs in the retirement plan and financial services industries,” he says. “We have also had a significant number of advisers and consultants in the industry reach out to us directly to learn more about the Aon PEP and how it could be valuable to their clients. The 401(k) and PEP landscape will change dramatically in the coming years, and we anticipate that advisers will become increasingly supportive of PEPs as they better understand the associated cost savings opportunities, risk mitigation and day-to-day work efficiencies.”

In fact, Aon projects that half of single 401(k) plans will move to PEPs by 2030.

Besides the efficiencies noted above, Nasrin Mazooji, vice president of compliance and regulatory affairs at Ubiquity Retirement + Savings, says she is very hopeful that as PEPs grow, plan compliance failures will decrease, which would be a positive for sponsors and advisers alike. “Many operational components that are monitored by plan sponsors today will be delegated to 3(16) fiduciaries and PPPs that are likely competent professionals with years of experience in identifying and preventing possible plan failures.”

As to how retirement plan advisers can educate themselves about PEPs, Ari Sonneberg, chief marketing officer and partner with Wagner Law Group, says his practice has been issuing informative newsletters, “which have garnered enormous interest, as well as webinars, which have also featured members of our firm. Certainly, PLANADVISER and PLANSPONSOR have served as excellent resources on this topic for advisers as well.”

However, echoing earlier sentiments about advisers’ reactions to PEPs, Sonnenberg says, “I think there are mixed feelings among advisers when it comes to PEPs, and many are still on the fence. On the one hand, I think many advisers are excited about the prospect of being in a position to assist clients by helping them evaluate and select a PEP to help lower the costs of sponsored a retirement plan and to offload and simplify some administrative responsibilities. At the same time, many advisers are concerned with the inherent loss of flexibility, as it applies to plan features and plan investment selection, that comes with the transition from a standalone 401(k) plan to a PEP.”

For those plan advisers who are conscientious and who are aware of their plan sponsors’ struggles with plan costs and administration, however, Sonnenberg thinks they will, in the end, recommend sponsors switch to a PEP. In fact, the expanded use of PEPs can serve as a boon for advisers’ businesses, he says, as some advisers may offer their own PEP. PEPs may also allow registered investment advisers (RIAs) to manage more plan assets.

In most cases, PEPs present an opportunity for advisers to provide added value to their plan sponsors by helping them select among a variety of emerging PEPs, he says.

«