Key Takeaways
- • Hightower's acquisition of a majority stake in NEPC, an institutional investment consulting and OCIO firm, would create a combined firm with $1.81 trillion under advisement and $258 billion under management, according to the article's author Fred Barstein.
- • Hightower contributes $156 billion in assets managed by 642 advisors, giving the combined entity access to institutional investment capabilities, including private markets, for its wealth clients.
- • The combination bridges retail wealth management and institutional DC retirement services, positioning the firm to serve the retirement plan needs of Hightower's 50,000 wealth clients and NEPC's plan sponsors.
- • Hightower CEO Bob Oros said cost synergies are not a priority, while the strategic leadership question and overlapping investment analysts remain integration challenges, with integration expected to take 18 to 36 months.
- • The deal is set to close at the start of 2025 and may prompt copycat moves by RIA aggregators and institutional consultants, though the author argues first movers hold an advantage only if execution is strong.
Summary
Fred Barstein, founder and CEO of The Retirement Adviser University, argues that Hightower's acquisition of NEPC could be a pivotal event in the convergence of wealth management, retirement services and workplace benefits. The combined firm would have $1.81 trillion under advisement and $258 billion under management, with $156 billion coming from Hightower, which manages it through 642 advisors. Publisher context indicates Hightower is taking a majority stake in NEPC, and that NEPC's clients will continue to receive investment advisory and OCIO services while the deal creates a new growth channel for NEPC.
Hightower CEO Bob Oros said the company had explored expanding its OCIO capabilities for about four years before engaging a third party and meeting NEPC roughly 18 months earlier. NEPC managing partner Mike Manning said his firm had been attracted to the RIA space to distribute its research but had been cautious about engaging with a large number of individual RIAs. Manning also noted that the move to fee-based financial planning is bringing the retail and institutional markets closer together.
Barstein contends the deal gives Hightower advisors access to institutional investment analysis, including alternative investments, at a lower cost due to NEPC's scale. It also lets Hightower serve the retirement plan needs of its wealth clients' organizations, many of whom influence their companies' DC plans. For NEPC, the author writes, the combination provides a sizable advisor network and potential access to participant data through record keepers, which he describes as valuable in a DC market moving beyond declining plan-level fees toward participant services. Oros cited a $1 billion DC plan that came in through one of Hightower's advisors within two weeks of the announcement, and a $20 million plan that NEPC had been unlikely to pursue and passed to Hightower.
Barstein also identifies execution risks, including the cultural gap between institutional and retail advisors, overlapping investment analysts and the question of which firm leads strategically. He notes that integration typically takes 18 to 36 months. He compares the deal with NFP's pending acquisition by Aon, which he judges significant but less transformational given NFP's smaller wealth business, and references Mariner's acquisition of Andco as a precedent for copycat activity.
The deal is expected to close at the start of 2025, according to a publisher context item.
Hightower CEO Bob Oros said the company had explored expanding its OCIO capabilities for about four years before engaging a third party and meeting NEPC roughly 18 months earlier. NEPC managing partner Mike Manning said his firm had been attracted to the RIA space to distribute its research but had been cautious about engaging with a large number of individual RIAs. Manning also noted that the move to fee-based financial planning is bringing the retail and institutional markets closer together.
Barstein contends the deal gives Hightower advisors access to institutional investment analysis, including alternative investments, at a lower cost due to NEPC's scale. It also lets Hightower serve the retirement plan needs of its wealth clients' organizations, many of whom influence their companies' DC plans. For NEPC, the author writes, the combination provides a sizable advisor network and potential access to participant data through record keepers, which he describes as valuable in a DC market moving beyond declining plan-level fees toward participant services. Oros cited a $1 billion DC plan that came in through one of Hightower's advisors within two weeks of the announcement, and a $20 million plan that NEPC had been unlikely to pursue and passed to Hightower.
Barstein also identifies execution risks, including the cultural gap between institutional and retail advisors, overlapping investment analysts and the question of which firm leads strategically. He notes that integration typically takes 18 to 36 months. He compares the deal with NFP's pending acquisition by Aon, which he judges significant but less transformational given NFP's smaller wealth business, and references Mariner's acquisition of Andco as a precedent for copycat activity.
The deal is expected to close at the start of 2025, according to a publisher context item.
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