Empower to Buy Personal Capital in $1B Deal

A retirement plan provider has bought a robo-advisor. (Image: Thinkstock)

Empower Retirement says it is acquiring Personal Capital in a transaction that values the robo-advisor at $1 billion. The buyer will pay $825 million at closing and up to $175 million for planned growth.

The deal aims to unite Empower Retirement’s back office with the client-facing platform of Personal Capital. It is expected to close later this year.

Blogger Michael Kitces tweeted early Monday, “Woa, huge FinTech news. $1B is a stunning ‘premium’ for Personal Capital relative to its (strong but not THAT strong) $12B AUM base as an RIA. Real story is that Empower is trying with PC to do what Financial Engines is doing with Edelman — human advisors in 401k channel.”

Kyle Van Pelt, a fintech watcher, agreed and explained on Twitter: “Killer acquisition for a relatively cheap price. With 652bn in AUA and 9.7 million participants, rolling this out to their entire base will pay for PC in no time.”

Personal Capital has some 2.5 million clients with about $12 billion in assets, while Empower works with 40,000 retirement plans, as well as some $13 billion in individual retirement and brokerage accounts.

“Companies like Empower have traditionally been stellar at the back office services, but lacked greatly on the front end. This is where Personal Capital is a great buy,” Van Pelt tweeted.

More Thoughts on the Deal

According to Empower President & CEO Edmund F. Murphy: “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.”

Plus, “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 market,” he added.