Empower Retirement and Personal Capital, a digital-first registered investment adviser and wealth manager, today announced that they have entered into a definitive agreement for Empower to acquire Personal Capital.
Under the agreement, Greenwood Village, Colo.-based Empower will acquire Redwood Shores, Calif.-based Personal Capital for up to $1 billion in enterprise value, composed of $825 million on closing and up to $175 million for planned growth.
In a statement announcing the deal, Empower said the combination will bring together its retirement plan services and integrated financial tools and Personal Capital’s rapidly growing, digitally oriented personal wealth management platform. “Retirement plan participants and individual investors will have all the tools and advice they need to see a complete, 360-degree financial picture—that includes their personal assets and liabilities—and the ability to manage their progress toward their financial goals,” the statement said.
“Empower and Personal Capital are joining forces to take the next step forward in the evolution of an integrated platform to deliver personalized advice, financial wellness and comprehensive financial planning to millions of individual investors and retirement plan participants,” said Edmund F. Murphy III, President and Chief Executive Officer of Empower. “The acquisition of Personal Capital and the integration of their tools and capabilities into the Empower offering is designed to create a best-of-breed platform—powered by digital and human advice—to help individuals achieve their financial goals.”
In addition, Murphy added that “the retirement plan sponsors and advisors we serve will be able to offer their plan participants a more powerful retirement benefit that is highly valuable in a competitive labor market.”
Personal Capital’s President and Chief Executive Officer Jay Shah added, “In Empower, we have found a purpose-oriented partner that shares our values and drive to deliver better client outcomes and customer-focused innovation. When we founded Personal Capital over a decade ago, we set out to redefine the financial services landscape by always putting our customers first. By pairing consumer technology and human advice, we provide data-driven personalized financial solutions and help our clients find financial confidence at scale. With Empower, we are joining forces with a philosophically aligned partner to accelerate our original vision and mission.”
Since its founding in 2009, Personal Capital has added over 2.5 million users on its platform, tracking over $771 billion of household assets. Personal Capital is recognized for creating a digital-first, virtually delivered wealth management platform and is among the fastest-growing in its market.
Personal Capital co-founder Rob Foregger, now the co-founder and Executive VP at NextCapital, a digital advice provider to the retirement industry, also chimed in on the deal.
“We started Personal Capital with the hope of changing the landscape of the investment industry. I think the company is doing just that, reimagining how financial services is done. I am incredibly proud of Jay Shah and the entire team at Personal Capital for bringing this vision to reality,” Foregger said. “It’s clear that the COVID-effect is compressing the digital transformation of the investment industry by 5 years, if not more. The Demerais Family and Empower are fortunate to have Personal Capital fully in their fold.”
After the close of the transaction, Personal Capital will be branded as “Personal Capital, an Empower Company” and will continue to provide its financial tools and investment solutions to its clients.
Personal Capital CEO Jay Shah will serve as President of Personal Capital, reporting to Empower CEO Edmund F. Murphy III, and will be a member of its executive team. A joint team from both enterprises will work together to integrate the Personal Capital and Empower offerings.
The transaction is expected to close in the second half of 2020 subject to required regulatory approvals and other customary closing conditions.
Compelling strategic benefits
In its statement, Empower noted some strategic benefits of the business combination. Among them:
- The addition of Personal Capital’s digital platform to Empower’s retirement services business will provide a complete financial wellness experience for retirement plan participants and individuals investing on their own.
- Empower and Personal Capital will have the capability to offer retirement plan sponsors’ employees a singular view of their entire financial picture. This visibility will in turn create new opportunities for plan sponsors to offer improved financial wellness benefits that are highly tuned to the needs of individual employees.
- Leveraging Empower’s scale and infrastructure, Personal Capital will be positioned to serve the growing segment of consumers who seek a combination of digital and human advice while helping to accelerate the capture of rollovers and other out-of-plan assets.
Empower, formed in 2014, is the nation’s second-largest retirement plan recordkeeper by total participants and administers $656 billion in assets on behalf of 9.7 million American workers through approximately 40,000 workplace savings plans. Empower serves all segments of the defined contribution plan market and provides services to plans of all sizes, including private-label recordkeeping clients. Empower serves 135,000 IRA and brokerage account customers with approximately $13 billion in assets.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
