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Technology > Investment Platforms > Turnkey Asset Management

Why the Orion-Brinker Merger Is a Big Deal

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Financial services is the hot space for mergers and acquisitions — with news breaking over the weekend that Orion Advisor Services is merging with Brinker Capital and then on Monday that Empower Retirement is buying robo-advisor Personal Capital.

Orion and Brinker should have a combined $40 billion in assets under management and some 6,000 advisor clients, with Orion also working with some $1 trillion in assets under administration on its platform. 

“It’s a brilliant move by CEO Eric Clarke and the Orion team to scoop up one of the few remaining sizable TAMPs left in the industry,” said Tim Welsh of Nexus Strategy in an email to ThinkAdvisor about the market for turnkey asset management programs.

“Consolidation continues to accelerate in the independent wealth space, as size and scale matter ever more in a world of declining basis points,” Welsh explained.

What makes this deal significant, says Technology Tools for Today’s Joel Bruckenstein, is how Brinker “complements what Orion is doing” while also bringing it size and scale.  

For instance, Brinker’s operations include behavioral finance tools, training and resources, as well as insights from Chief Behavioral Officer Daniel Crosby.

“I speak with Orion CEO Eric Clarke from time to time, … and they want to get better in this area,” Bruckenstein explained in an interview with ThinkAdvisor. “Having Crosby as part of the team is a big plus.”

On the investments side of the business, Orion is looking to expand its TAMP business and investment management work, too, “so the expertise of Brinker is strategic,” the tech consultant said. 

The deal also brings economies of scale, Bruckenstein points out. “At $40 billion-plus these days, scale matters,” he noted. “All these reasons make the merger a good fit for Orion.”

The combined entity gets Orion closer in size to rivals like AssetMark. “To compete in this space, Orion needed to grow, and this makes them substantially bigger overnight, which — again — makes sense,” Bruckenstein explained. 

While Envestnet remains the biggest player in the TAMP and related technology field, “This move shows that Orion is growing as fast as anyone in the marketplace, and there’s still a lot of the market to be had,” he added.

Other Growth Areas

The Brinker merger can help push Orion further into the independent broker-dealer segment, via TAMP expansion, and into the RIA-focused side of the business — by expanding the asset management work it does for advisors looking to outsource that task and focus more on financial planning, for instance, Bruckenstein explains.

“When it comes to the spectrum of investing, the deal makes Orion a more robust end-to-end solution … and it could help them in the high-net-worth space” given some of Brinker’s investment offerings, he said. 

As part of the merger, Brinker CEO Noreen Beaman will become president of the combined firm’s investment operations.

Overall, the deal “strengthens Orion’s brand across the different horizontal and vertical offerings, and it opens up new possibilities for them in a very competitive marketplace,” Bruckenstein explained.

And that marketplace could see more deals this year, according to Jamie Hopkins, director of retirement research for Carson Group. It’ll be “interesting to see what other technology and RIA combos occur in 2020 — I expect this trend to continue for awhile,” Hopkins said Monday on Twitter.

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