Merit Financial Advisors, a corporate registered investment advisor based in Atlanta, Ga., announced today that it had acquired Mersberger Financial Group in a transaction that increases Merit’s assets under management by $830 million and establishes a new defined contribution plan division with $489 million in assets under advisement, along with an experienced manager.
Adding new offices in Sheboygan Falls and Appleton, Wisc., the deal also brings Merit’s presence to the region, as well as to Montana and Illinois where Mersberger advisors have established home offices.
Founded in 1994, Mersberger specializes in qualified retirement planning services, as well as financial planning and wealth management. The firm is led by Joshua and Zachary Mersberger, who will become regional directors at Merit and will be joined by a team of more than 20 employees—including Donald Hammond, who will lead Merit’s new retirement plan division.
“We've never had a big focus on the defined contribution space,” Merit CEO Rick Kent told WealthManagement.com. “We've been really focused on planning and money management, but we're now seeing more and more retirement plans becoming available for acquisition. And so, we think it’s prudent for us to begin creating a new vertical in the defined contribution space but what we felt like what we were lacking was a good leader, somebody who has a lot of experience there. With this acquisition, we also got Don Hammond, who has a lot of experience as a 3(38) [investment manager] and a broad understanding of the retirement business.”
Calling the acquisition “a good pick for them,” Rob Madore, director of M&A advisory for Wise Rhino Group, said that the selection of a good manager is crucial. A South Carolina–based consulting firm focused on the retirement and wealth management sectors, Wise Rhino Group has worked with Merit on past transactions and been instrumental in facilitating a number of high-profile retirement and wealth mergers.
“That's what they need,” he said on hearing that Hammond will be leading up the new division. “Any of the successful acquisitions in the retirement world have someone running it that comes from that niche of the industry. It really helps with acquisitions because they speak the language right away and, then also, anyone that has a personal brand can be very helpful.”
“We are thrilled to partner with Merit to develop the firm’s presence in the Qualified Retirement Plan market,” Hammond said in a statement. “Our dedication and industry knowledge, along with Merit’s technology will be of great benefit for our existing and future clients.”
This is Merit’s eighth acquisition since taking a minority investment in December 2020 from Wealth Partners Capital Group and a group of strategic investors led by HGGC, leveraging its Aspire Holdings platform. Year to date, Merit has announced four other additions, growing AUM by a combined $812 million and establishing its presence in Oklahoma and Colorado.
Merit also recently completed a two-year transition to a new technology stack with a price tag in excess of $4 million. Developed with the help of F2 strategy, a wealthtech consulting firm and outsourced CTO provider, the new platform brings all data in-house, allowing the firm to produce its own customized statements and reporting, rather than relying on one of its multiple custodians.
“It took a long time to get those speeds and everything coming in, but we have it today,” said Kent. “Once you have all that data and it's in your warehouse, there are a lot of things you can do with it.” A new portal is being rolled out, to be followed by an app, that will provide access to all the new technology has to offer, including a secure vault in which clients will be able to store sensitive documents.
Merit expects to pursue more retirement-focused acquisitions over the coming months, including a 401(k) advisor already in the pipeline, but Kent said there are also plans to roll out a tax division this year and begin building out a CPA referral business within the next year.
“They've always been really focused on wealth, but they’ve got a pretty scaled business and a lot of opportunity to add that kind of corporate side of services for their current clients,” said Madore. “And they’re a very strategic group of really smart people; They’ll certainly be an acquirer to watch.”
“There will always be firms that stick to their specialty and stay pure wealth, retirement or insurance,” said Peter Campagna, partner at Wise Rhino.” I think in the next three years you will see more organizations acquiring all three types of these firms strategically and approaching their clients holistically. This has many challenges operationally to integrate all of these different efforts but when it all starts to click these firms are going to be very formidable to compete against.”