Independent recordkeeping giant Ascensus will merge with Newport Group, the companies said Wednesday. The newly combined organization will offer a wider set of “capabilities and products to benefit institutional partners, clients, advisors, and savers,” according to the announcement.
“We saw a really great opportunity to band together with Newport to be able to bring a broader set of products and solutions to our respective clients and also really create a leader in the broader tax advantage savings markets across retirement, education, and health,” Ascensus President and CEO David Musto said.
Musto added that the leadership team will look to maximize both firms’ technology capabilities pre- and post-close that their clients will use to drive better outcomes for savers.
“We’ve used acquisitions in a couple of ways, but I’d start with our focus on growing client relationships and driving more value in the market through investment in our own capabilities, products, and solutions,” he said. “We’ve been very successful doing that. Where we do see opportunities to accelerate the expansion of capability sets or to access segments of the market that we’ve not previously tapped to create additional scale, those are the opportunities that appeal to us. Newport checks the box across each one of those areas.”
Musto will serve as CEO of the combined company, and Newport CEO Greg Tschider has stepped down. Newport COO Laura Ramanis will become interim CEO “to ensure continuity of leadership, operations, and client service through closing,” and will then join the Ascensus executive leadership team.
“We’re not buying [just] anything. There are a lot of opportunities in the market that aren’t the right fit for us and where we’re not going to devote and commit time and resources,” Musto explained when asked about the company’s buying spree. “But where there are unique experiences to take advantage of what’s playing out in a transforming and consolidating marketplace, as a leader in the space, we’re certainly going to step up to the plate.”
The list of “strategically compelling” benefits to come from the combination include:
Market strengths
- The combination represents a compelling strategic fit and creates a leader in tax-advantaged savings that is well-positioned amid industry transformation
- An expanded tax-advantaged savings participant base of more than 15 million people across the United Sates
- The increase of Ascensus-administered assets under administration to more than $700 billion when combined with Newport’s business
- A diversified client base, including more than 150,000 retirement plans
- The management of $184 billion in government savings accounts (including 529 plans, ABLE savings accounts, and state-facilitated retirement programs), more than 700,000 health and flexible savings and COBRA accounts, nearly 300,000 COLI/BOLI policies, and more than 140,000 non-qualified retirement plan participant accounts
Client, partner, and saver benefits
- A broader set of products and solutions delivering value to new and existing clients
- Increased investment in technology and digital solutions designed to enhance partner efficiency and drive saver outcomes
- Experienced leadership teams with track records across both organizations
- The continued commitment to service excellence and client satisfaction offers the opportunity to build on world-class NPS scores to set a new performance standard in markets served
- Increased size and reach of sales and distribution channel relationships supporting partner growth
- The depth and breadth of their combined expertise, including retirement, compliance, actuarial, non-qualified, insurance, and fiduciary services, represents a significant value-add for clients
Associate benefits
- New and expanded career path opportunities for Ascensus and Newport associates resulting from the combination of two companies focused on long-term growth
- The increased ability to attract, retain, and develop top talent
- The continued commitment to a diverse and inclusive work environment where every associate feels welcome, valued, and safe and enjoys a sense of belonging
- A common heritage of integrity and independence, coupled with the resourcefulness and speed of a market innovator
The transaction is expected to close in the first quarter of 2022, subject to regulatory approval. Evercore acted as the financial advisor to Newport, with financing coming from Goldman Sachs, SPC Financing, and KKR Capital Markets.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
