Deals & People November 11, 2021

M&A UPDATE: Lockton and Creative Planning Latest to Join Forces

One industry merger and acquisition expert familiar with the background of this deal says it represents a significant milestone in the broader M&A action that has been remaking the plan adviser and recordkeeper industry for some time now.

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Word emerged early Thursday that Lockton and Creative Planning are combining forces, with the goal of creating a “best-in-class advisory offering designed to serve corporate retirement plans and the plans’ participants.”

The partnership itself will be named “Lockton Retirement Services, an Offering of Creative Planning.” Moving forward, Lockton will take an equity position in Creative Planning, meant to underscore the firms’ “mutual commitment” to “forge an aligned, tangible and differentiated partnership.”

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In a discussion with PLANADVISER about the partnership, Peter Mallouk, president and CEO of Creative Planning, says the firms’ mutual clients are looking for a more robust retirement offering. 

“Given today’s war for talent, employers looking to stand out must meet the holistic retirement and financial advice needs of their staff,” Mallouk says. “The Lockton–Creative Planning partnership will help our clients create more value for their people through personal retirement, estate planning, legal, tax and other advice resources, which they would otherwise not have access to. It also broadens the range of organizational advisory services available to them.”   

Mallouk says another important outcome of the partnership is to create more career growth opportunities for the firms’ people. With this partnership, Creative Planning will advise on more than $210 billion in assets this year.

“We have long admired what Peter Mallouk has built at Creative Planning and feel the opportunity to partner with his firm is consistent with our goal to be the best and not the biggest,” Ron Lockton, chairman of Lockton, said in a statement revealing the partnership. “Importantly, our cultural values around client service and caring for people are in perfect alignment. The synergy between our cultures will undoubtedly provide fertile soil for continued innovation and a best-in-class service platform.” 

Founded in 2000, Lockton’s retirement practice provides fiduciary outsourcing in retirement plan management and investment oversight. That business services 1,500 clients with more than $110 billion in assets under advisement (AUA).   

Peter Clune, Lockton’s CEO, emphasizes that each firm brings a complementary service offering that, combined, will represent an “end-to-end solution for companies seeking to provide deeper resources to their people.”

“This approach accelerates the speed to market of our differentiated offering and will fuel growth for each firm, creating immediate value for our mutual clients,” Clune says.

Explaining the specific structure of the new arrangement, Mallouk described it as a special “affinity relationship,” not a true merger or acquisition.

“The affinity relationship means we are going to be able to work together such that any respective weaknesses are now our strengths,” Mallouk says. “Lockton is still Lockton and Creative Planning is still Creative Planning. In practice, we will be referring our clients to Lockton in areas where they are stronger than us, and the same is true of Lockton. Together, we can work with our respective clients to creative a holistic and very powerful service offering.”

Speaking about the news, Dick Darian, CEO of Wise Rhino Group, says the partnership represents a significant milestone in the broader M&A action that has been remaking the plan adviser and recordkeeper industry for some time now. The idea is that, by combining the insurance/brokerage resources of Lockton with the independent wealth management capabilities of Creative Planning, the partnership should be well positioned to compete with the likes of CAPTRUST, Hub International, SageView, OneDigital and other firms, all of which have engaged in meaningful M&A activity.

Darian says it is meaningful that the private equity (PE) firm General Atlantic is in the background of the new partnership, suggesting that General Atlantic’s interest in Creative Planning demonstrates the important role that advisory and wealth management shops will play in the future of the broader financial services competitive landscape. In other words, private equity firms seem to believe influence is migrating away from investment product manufacturers and toward the firms/entities that manage and control the end client relationships—i.e., the adviser.

“The PE firms are moving their money closer to where the client interaction is,” Darian suggests.

To be clear, Mallouk emphasizes that General Atlantic’s investment in Creative Planning is a passive minority stake, meaning the PE firm has not provided additional assets to make acquisitions or sought to change the firm’s goals, strategy or approach. Still, given the capital supporting the new partnership, it is possible that further partnership activity is on the horizon.

Data & Research November 10, 2021

Demand for Talent Outstrips Labor Supply

Among 160 human resources leaders polled by Willis Towers Watson, only 2% indicate they are having no problems with employee attraction and retention.

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A new survey published by Willis Towers Watson (WTW) shows over three-quarters of employers (77%) in the U.S. report having problems finding and keeping employees. It is just the latest piece of research to indicate the labor market is going to be tight in 2022, with a third of U.S. workers considering a job change or retirement.

The WTW survey finds only 2% of employers say they are having no problems with talent attraction and retention, while 19% say that they are not struggling now but may do so in future. The poll was conducted in October and surveyed 160 human resources leaders.

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All over the world, people are reevaluating what they want from their working lives in the context of the COVID-19 pandemic. Meanwhile, demand for talent is outstripping supply in some countries and regions, with sectors like hospitality, manufacturing and transportation hit particularly hard.

Hospitality labor shortages could get even worse, as one-third of current hospitality workers report being dissatisfied or very dissatisfied with their jobs, and 58% saying they are planning to quit before the end of 2021, according to a survey by job search site Joblist. The job search site recently released its third quarter report on the U.S. labor market, questioning more than 26,000 job seekers about their outlook on the job market and future expectations.

In that survey, 22% of all job seekers report have quit their previous job. On the other hand, 73% of job seekers who remain employed say they are actively thinking about quitting their current role. Though not a universal experience, many workers say they are unhappy with their jobs and how employers are treating them during the pandemic.

Nineteen percent of workers cite unhappiness as the primary reason for quitting, 17% say low pay or lack of benefits, and 13% say the lack of work-life balance drove them to quit. On the positive side, 20% of workers report quitting in order to pursue a new career path, according to Joblist, reflecting how the pandemic created an opportunity for some to switch fields or level up to more appealing roles.

The WTW survey suggests people are leaving their jobs because they can find better pay elsewhere, with 76% of employers saying this is impacting peoples’ decision to leave. They are also moving because of a perceived lack of career opportunities in their current organizations, say 64% of employers.

Companies must create visible career opportunities to attract talented people, say 63% of the HR leaders who responded to the WTW poll. Candidates want to have a clear idea of how they will progress once they join an organization.

Increasing flexibility and hybrid working (58%) was another top attraction tool identified by WTW. The pandemic has rewritten the traditional workplace contract, with employers and employees alike coming to terms with what the future of work will look like. Increasing pay and benefits (52%) is a third key lever for employers, the survey shows.

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