Empower’s Personal Capital acquisition highlights convergence of wealth and retirement

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If we weren’t sure about the convergence of wealth and retirement, or the focus on serving and monetizing 401(k) and 403(b) plan participants, then Empower Retirement’s pending acquisition of Personal Capital gave us 1 billion reasons to believe.

Though some question the $1 billion price tag for a company with an estimated $50 million in earnings before interest, taxes, depreciation and amortization, Empower really had no choice. It needed to keep up with its main defined-contribution rivals, Fidelity and Vanguard, as well as with Charles Schwab, a giant in retail finance with a foothold in the DC space.

For Personal Capital, Empower provides easy access to 10 million potential clients.

“Growth in the wealth management business will not come from traditional marketing,” said Mark Bruno, managing director at Echelon Partners. “Wealth managers that add new clients, especially younger mass affluent investors, will be those that make it easy to do

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Empower Retirement acquires Personal Capital in billion-dollar deal

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Empower Retirement, the Greenwood Village financial firm with its name on Mile High Stadium, has made a major acquisition to fill out its roster.

Courtesy of Empower Retirement

Ed Murphy

The company announced Monday that it would acquire Personal Capital, a digital wealth management firm, for up to $1 billion. The price includes $825 million on closing later this year and up to $175 million if Personal Capital can hit undisclosed growth targets.

The purchase will allow Empower plan participants and individual investors to obtain a more complete picture of their financial holdings, access digital personal finance tools, and receive customized advice, the company said.

Longer-term, the combination should allow Empower to retain more plan participants as customers after they retire.

“The acquisition of Personal Capital and the integration of their tools and capabilities into the Empower offering is designed to create a best-of-breed platform — powered by digital and

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Empower Retirement to acquire Personal Capital – Business Insider

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The US-based retirement services provider has entered into a definitive agreement to acquire wealthtech Personal Capital for an initial $825 million, with a further $175 million in planned growth incentives.

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Personal Capital describes itself as a hybrid advisor: It offers automated portfolios in stocks and bonds for retail investors and registered investment advisors, much like fully automated robo-advisors, but it also offers human advice and financial planning services and tools, including on tax optimization and insurance coverage. Empower Retirement is a subsidiary of Canadian insurer Great-West Lifeco and is the second-largest administrator of retirement investment plans in the US.

Personal Capital has been seeking a buyer on and off for at least a few years and has been in negotiations with other financial institutions (FIs). Personal Capital has likely been exploring a takeover in order to access a steady stream of funding and infrastructure to help scale

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Empower Retirement to Buy Personal Capital

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Empower Retirement, the nation’s second-biggest retirement plan record keeper (Fidelity is No. 1), is buying Personal Capital, a digital RIA that offers varying levels of access to human financial advisors.

Empower said it would acquire Personal Capital for “up to $1 billion in enterprise value, composed of $825 million on closing and up to $175 million for planned growth.” The companies said they expect the deal to close in the second half of this year.

“Empower and Personal Capital are joining forces to take the next step forward in the evolution of an integrated platform to deliver personalized advice, financial wellness and comprehensive financial planning to millions of individual investors and retirement plan participants,” said Edmund F. Murphy III, president and CEO of Empower.

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How Much You Should Have in Your Retirement Fund at Every Age

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If you’re counting on Social Security to fund your retirement, you might want to think again. According to MarketWatch, the two funds that pay Social Security’s benefits — the Old-Age and Survivors Insurance and the Disability Insurance trust funds — will run out of money in 2035 if Congress does nothing to fix the program. While Social Security benefits won’t disappear if this happens, the funds will come only from taxes and therefore payouts will be lower. With less help from the government, it’s important to start saving now to protect yourself and your loved ones during your golden years.

There are numerous studies and theories about how much you should have saved for retirement, emergencies, necessities and other expenditures. For example, studies by Fidelity and T. Rowe Price show the retirement savings benchmarks for where you need to be, starting at age 25. Both studies stress the need to

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