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.

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.”

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 LocktonCreative 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.