Truist Financial sells 401(k) business to OneDigital

Truist Financial Corporation has sold its 401(k) unit, with OneDigital buying the investment advisory relationships and Empower Retirement and Ascensus taking on portions of the firm’s record-keeping business, the companies announced this morning.

Truist Financial, the county’s sixth-largest bank, was formed from the 2019 merger of SunTrust and BB&T. Each bank had a legacy retirement-plan business, with record keeping handled by Empower and Ascensus.

The advisory relationship sale, which closed on Dec. 31, gives OneDigital 1,200 new plans, representing an additional $10 billion in assets under advisement. That acquisition capped a busy year for OneDigital, which closed on 37 deals in 2020.

Financial terms of the deal were not disclosed.

Additional deals are also expected to be announced soon, said Vince Morris, president of OneDigital retirement and wealth.

“Our big move in the marketplace is supporting our vision of this convergence of health, wealth and retirement,” Morris said. “We really think that ultimately we’re serving the people … the workforce side of the business.”

The pandemic has put a spotlight on the connections between health and financial wellbeing, and that has increased demand from employers for comprehensive benefits services, Morris said.

Last year, OneDigital purchased $45-billion firm Resources Investment Advisors, of which Morris was president. That deal also included adviser affiliates, including the firm he founded, Bukaty Cos. Financial Services, as well as 401k Advisors Intermountain, Cafaro Greenleaf, Capstone Advisory Group, Chepenik Financial, SHA Retirement Group, Strategic Retirement Group, Teros Advisors and others.

“We’re going to continue to see consolidation,” Morris said. “Scale matters. This is a huge play for us in the marketplace. We’re going to continue to have more acquisitions. We were very successful in 2020.”

The 23 client-facing advisory staff at Truist Financial, who are based in the Southeast, became OneDigital employees at the time the deal closed, he said. OneDigital’s presence in the region, along with its experience in acquisitions, helped get the deal done, Morris said. Many of the former Truist Financial retirement plan clients continue to have banking relationships with the company, and the seller made it clear that providing good retirement plan service would be an important aspect, he said.

With the acquisition, OneDigital has about 5,000 plan clients, representing $72 billion in assets, according to the firm.

The timing of the deal made for a “clean break” with the full calendar year of 2021 of the acquired business being part of OneDigital, Morris said.

DEALS, DEALS, DEALS

Yesterday, the $119-billion advisory firm Sageview Advisory Group announced that it had sold a majority stake to private equity firm Aquiline Capital Partners.

Numerous acquisitions closed by the end of 2020, with buyers likely motivated to close ahead of potential tax law changes that could result from the incoming administration and change in control of Congress. But that hasn’t prompted sellers to put their firms on the market, said Dick Darian, CEO of Wise Rhino Group.

“The timing [of various deals] was impacted by the change in administration and the potential for capital gains increase — at least the perception of that,” Darian said. “It wasn’t the reason that people were selling, but there is no coincidence that the fourth quarter was the time to get [deals] done.”

Darian’s firm consults for OneDigital on buy-side advisory on a monthly basis, but it did not advise on the Truist deal, he said.

But Wise Rhino did advise for Greensboro, N.C.-based Compass Financial Partners, which on Tuesday indicated it sold its business to Marsh & McLennan. Terms of that deal were not disclosed. Compass advises on more than $14 billion in assets, and provides private wealth management and financial planning on an individual basis, according to the announcement.

In a separate deal also announced yesterday, PCS Retirement indicated it has acquired independent record keeper Alliance Benefit Group-Rocky Mountain, which administers about $2 billion in plan assets among about 100,000 participants. That deal boosts PCS’s book of business to about $26 billion in assets, according to the firm.

Valuations have skyrocketed for experienced advisory firms, and those might be best positioned to survive industry consolidation are also more likely to sell.

“It’s interesting that it’s the top firms like Compass who are selling, even though they are the ones with the best chance of continuing to thrive as an independent firm. “It’s really the best firms that have the size, talent and capabilities that are selling and choosing partners.”

That trend will almost certainly continue during the first quarter of 2021, Darian said.

RECORD KEEPING CHANGES

In the Truist deal, Empower reached an agreement to buy the former SunTrust 401(k) record keeping business, which is already on the company’s system. That deal includes 300 plans, representing 73,000 participants and about $5 billion in assets, according to Empower. The deal is expected to close in the first quarter. Term were not disclosed.

Meanwhile, Ascensus is acquiring the legacy record keeping business of BB&T, which the firm also already serves. That include 1,200 plans, 125,000 participants and about $5 billion in assets, according to Ascensus. That deal is also expected to close in the first quarter.