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Why Raymond James' Purchase of $35B Retirement Plan Firm Is a 'Strategic Fit'

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Raymond James headquarters in St. Petersburg, Florida. Raymond James headquarters in St. Petersburg, Florida.

Thursday’s move by Raymond James to buy a retirement plan administrator with $35 billion in plan assets and 400,000 participants is being praised by industry consultants for its strategic value.

The deal includes Seattle-based NWPS and Northwest Plan Services, as well as its 160 employees, and comes a week after rival broker-dealer LPL Financial said it was buying the wealth unit of Waddell & Reed, which includes about $63 million in assets and 920 advisors, for $300 million.

“As basis points get squeezed out of the investment management supply chain, manufacturers and distributors — of which Raymond James is both — need to find new ways to grow and diversify revenues,” said Tim Welsh, head of the consultancy Nexus Strategy.

“Retirement plan servicing is a key component in that marketplace, so this provides them with a new channel and capability — a very strategic deal,” Welsh explained.

Terms of the deal were not disclosed, but Raymond James says it expects the transaction to close by year-end.

“Access to expanded retirement service capabilities is a big plus for advisors,” said executive search consultant Mark Elzweig. “Many advisors feel that they have more of a sense of control  with an in-house department than with an external relationship. If NWPS has any proprietary competencies that’s of course helpful, too.”

Since assets in retirement accounts tend to be “sticky,” Elzweig added, “this is a worthwhile area” for Raymond James to invest and dedicate resources.

What Comes Next

Raymond James is “excited to add this important capability to our broad suite of advisor and client-centric retirement services,” said Scott Curtis, president of the firm’s Private Client Group, in a statement.

The addition of NWPS means Raymond James is able to expand retirement services offerings, such as retirement plan administration, to its advisors and their clients, according to the firm, based in St. Petersburg, Florida.

“The timing is opportune as the industry prepares for new solutions created by this year’s SECURE Act, such as pooled retirement arrangements, and increases the investable market for employer and employee small business solutions,” it explained.

NWPS employees are set to stay in Seattle under the leadership of President and CEO Tim Wulfekuhle. The business will operate as part of the Raymond James Private Client Group and its Institutional Fiduciary Solutions department.

“Beyond being a good strategic fit with our long-term growth strategy, one of the key factors we weigh when considering whom to bring onto the Raymond James team is culture, and NWPS’s values profile is very similar to ours,” Chairman and CEO Paul Reilly said in a statement.

“We are both people-oriented companies that place a high priority on excellent service. Adding this valuable retirement capability for our advisors and their clients while providing NWPS with Raymond James’ scale enables managing the end-to-end experience for plan sponsors and plan participants,” Reilly added.

Current Headcount, Assets

Raymond James has 8,239 advisors as of Sept. 30  up 228 from a year ago and 84 from June 30.

Its total Private Client Group asset level was $883.3 billion, up 11% over September 2019. Fee-based asset grew 16% from a year ago to $475.3 billion. Overall, Raymond James’ operations include $923 billion of assets.

“We’re confident our advisors will benefit from NWPS’s excellence in this area, and that advisors considering Raymond James will find the capability compelling,” explained PCG chief Curtis.

The firm, known for its conservative approach to M&As, bought Silver Lane Advisors of New York — an investment bank focused on deal-making in wealth and asset management, including RIA mergers, and work in private banking, trust and fintech — last year.

That deal came several years after Raymond James acquired Alex. Brown, the private client division of Deutsche Bank, and its nearly 200 advisors — who cater to high-net-worth and ultra-high net worth investors.

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