Creative Planning’s Massive SageView Deal May Be ‘Creating A Monster’

And then there was one.

Creative Planning’s blockbuster acquisition of the $250 billion retirement-focused RIA SageView Advisory Group will create a massive firm with $640 billion in total client assets and 550 advisors, according to a statement. It is also one of the largest deals to date in an industry experiencing unprecedented levels of M&A. Experts said it’s a harbinger of future multi-trillion dollar deals to come, particularly in the retirement planning segment.

“We were two of the top retirement plan consulting providers in the United States, and now, we’re a formidable force together,” Creative Planning President and CEO Peter Mallouk told The Daily Upside. “The retirement plan space is consolidating extremely rapidly … You’re going to have just a few players working with most of the retirement plans.”

Land of the Giants

The Creative Planning purchase comes at the height of wealth management M&A, as deal sizes grow both in terms of AUM and advisor headcount. The number of transactions in the first half of this year was 132, which is 25% more than from the same period last year, according to Fidelity. RIA consolidators, which acquire and integrate RIAs, have also grown considerably over the last decade and now account for $1.5 trillion in assets. Still, the latest deal is an outlier. “Creative Planning is creating a monster,” said Fred Barstein, CEO of The Retirement Advisor University. “It’s just huge.”

Other recent mega-deals include:

• LPL Financial’s acquisition of $100 billion Atria Wealth Solutions.
• Pathstone’s purchase of the $45 billion firm Hall Capital Partners.

The RIA industry has entered a new stage of consolidation, according to Barstein. The first stage occurs when one firm starts building a monopoly, like Fidelity did in the ‘90s with recordkeeping, he said. The second stage happens alongside a flurry of activity and integrations, with firms focused primarily on scale. The third stage is where Barstein thinks the RIA industry is headed now: fewer but increasingly large acquisitions that maximize profit. “It starts winnowing down who’s gonna be able to make it,” he said.

Convergence Point. The Creative Planning mega-deal also represents the continued convergence of wealth and retirement planning. Defined contribution plans and 401(k)s have a combined $13 trillion, with IRAs representing $18 trillion, Barstein said, a vast pool of potentially untapped assets. Fees are generally lower in the 401(k) world, but RIAs might leverage retirement plans to pull in new clients, he added. “Creative Planning is leaning into this in a big way — more than their other competitors,” Barstein said. “It has caused [other] RIAs to say, ‘Maybe I’m missing something here.’”