Raymond James to buy $35B retirement plan firm

As incumbent wealth managers aim to further their reach in the $32-trillion U.S. retirement market, Raymond James scooped up a plan administration, consulting and actuarial firm.

Raymond James agreed to buy the independent holding company that owns Seattle-based Northwest Plan Services, which services more than 400,000 participants with $35 billion in plan assets, the firms said Dec. 10. The St. Petersburg, Florida-based wealth manager didn’t disclose any financial terms of the deal, which is expected to close by the end of the year.

“We are both people-oriented companies that place a high priority on excellent service,” CEO Paul Reilly said in a statement. “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.”

Wealth managers have long sought to gain business through 401(k) plans and other employer-based services. The rising consolidation of recent years has only made rivals like Cetera Financial Group and Morgan Stanley more eager to tap them. For example, Morgan Stanley added 3 million stock-plan participants through its purchases of E-Trade and Solium.

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With about $6.3 trillion in assets as of June 30, 401(k)s represent almost one-fifth of a retirement market that includes employer plans, pensions, IRAs and annuities, accordingto the Investment Company Institute.

Raymond James has a strong existing foothold in every sector of wealth management. Despite tumbling pretax income in the third quarter on the impact of interest rates, the Raymond James Private Client Group reached record assets under administration of $883.3 billion and a new high in fee-based account holdings of $475.3 billion, according to the firm.

Upon closing of the deal, Northwest Plan Services will fold into the Private Client Group to supplement its existing Institutional Fiduciary Solutions department. Northwest will, however, retain its 160 employees in its existing locations in Seattle, Baltimore and San Jose, California, including CEO Tim Wulfekuhle and the leadership team. It will also keep operating under the same brand name.

“Finding the right partner for the continued growth of our business is gratifying and exciting for me and our team,” Wulfekuhle said in a statement.

The arrangement enables Raymond James to expand its retirement plan administration services, after last year’s Secure Act ushered in more potential business among smaller employers. A 26-year-old firm, Northwest has substantial experience working with advisors, according to its website, which says the firm is 100% open architecture.

“We also provide multiple managed account options and can accommodate model portfolios,” according to the site. “Our advisor partners know that we don’t compete with them and protect their client relationships by doing what we say we will.”