Creative Planning to Buy Lockton’s Retirement Business

It’s the latest deal to fuel the ‘extraordinary’ growth of the retirement firm aggregators over the past five years
Creative Planning M&A
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Creative Planning, one of the country’s largest independent RIAs, will acquire Lockton’s retirement business, the Kansas City-based companies announced Thursday, yet Lockton will take an equity position in Creative Planning. The combined business will be named “Lockton Retirement Services, an Offering of Creative Planning.”  

Peter Mallouk

“It will be a partnership in that sense,” Creative Planning President and CEO Peter Mallouk said. “Both organizations are going to work together to grow the unit.”

While Creative Planning has a dominant presence in wealth management, and Lockton in benefits and P&C, both firms also exist in different segments of the 401k space. Lockton mainly targets plans with $50 million or more in assets, an area where Creative Planning has a small presence, preferring the start-up and mid-market space. 

The acquisition fills a hole for the firm, Mallouk explained, which needed experienced professionals to compete in the larger 401k market, and “hit a treasure trove in Lockton Retirement, so it changes the game for us.”

It’s the latest deal to fuel the “extraordinary” growth of the retirement advisory firm aggregators over the past five years, according to Wise Rhino Group CEO Dick Darian, who Lockton engaged pre-sale to value the retirement business and provide recommendations around next steps.

The M&A advisory firm projects that the top 15 firms now have $2.3 trillion in assets under advisement (AUA) and serve 20 million participants. Based on current growth trends, it expects that at least five aggregator firms will exceed $300B in retirement and wealth AUA by 2024, with CAPTRUST on track to exceed $1 trillion in AUA in 2022.

“There will be a clear need to engage and monetize the retirement plan participant, and that will be through wealth advisory,” Darian said. “If you’re a firm that isn’t sure about committing completely to the retirement plan business, which means really having to build out a competitive wealth business as well, you have to think about whether you should be in [the retirement plan space].”  

Strategic thinking

“If you look at M&A, including Creative Planning, most are not blockbuster deals,” Mallouk said. “For us, we’re trying to do incremental things that are complementary to our organic strategy. Almost every acquisition we’ve done has been to get stronger in a market where we’re already competing. We have talented wealth managers. We’re very focused on building out our capacity with our talent and then being more competitive in the marketplace versus traditionally in our space when a firm enters a market with an acquisition. That’s very, very rare for Creative Planning.”

The companies will not disclose the terms of the deal. Subject to the completion of regulatory approvals and other conditions, they expect it to close before the end of the year. 

The companies appeared to word the announcement carefully, noting Lockton will take an equity stake in the new entity even though it was acquired. 

“Clearly, in a situation like this, Lockton, with such strong benefits and P&C businesses, has had a significant amount of cross-selling and a strong connection with their retirement business,” Darian explained. “In this design, Lockton is being very careful that their clients are retained and there is a sense of partnership going forward.

M&A as ‘inflation’

Creative Planning acquired over a dozen firms in the past two years, and Mallouk compared M&A activity overall to inflation, noting its transitory and permanent nature.

“The transitory part is all the people worried about the tax increases and so on, and the permanent part is people are going, ‘It’s hard to build a 401k team or a private wealth team to compete at the highest level today,'” he said. “The average advisor is getting older and looking for a succession plan where they really know their clients and are in the best place possible. Their advisors have a clear way to grow professionally. And I think people want to have more services for their clients.”

Seeing bigger players enter their markets through acquisition is also driving activity among advisors, he concluded, “I think all of those things happening in an industry that’s fragmented with a lot of money in the economy is kind of a perfect storm for why we’re seeing so much M&A.”

John Sullivan

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.

1 comment
  1. “There will be a clear need to engage and monetize the retirement plan participant, and that will be through wealth advisory,” Darian said.
    ” . . wealth advisory,” Ar ar ar!

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