Genstar Capital, a San Francisco-based middle-market private
equity firm—which, among other companies, is an owner of Asset International, Inc.—and
Aquiline Capital Partners, a New York-based private equity firm investing in
financial services, have entered into a definitive agreement to acquire Ascensus,
Inc. from J.C. Flowers & Co. The transaction is expected to close in the
fourth quarter, following regulatory approvals and other customary closing
conditions.
“From the perspective of plan sponsors, financial advisers and consultants, it will be business as usual for us at Ascensus,” says Roberta Hess, vice president of marketing and communications for Ascensus. “Since the company has been owned by a private equity firm, and will be acquired by another private equity firm, it will not impact our day-to-day business. We’re excited about how Genstar Capital and Aquiline Capital Partners will be able to help us further focus on servicing our clients’ needs.”
Ascensus is an independent service provider of retirement
and college savings plans, offering a suite of defined contribution (DC) and
defined benefit (DB) retirement solutions, including benefits education, 529
college plan recordkeeping and administration for more than 17 states, as well
as individual retirement account (IRA) and health savings account (HSA)
administration.
Ascensus President
and CEO Bob Guillocheau says, “Genstar and Aquiline’s commitment to Ascensus
will strengthen our capabilities and services, allowing us to maintain our
long-term focuses on serving our clients’ needs and remaining a top workplace
for our associates.”
Ascensus Inc. manages retirement assets of $57 billion and
$69 billion in college saving plans.
Millennials Must Understand Both Sides of Balance Sheet
Many Millennial workers show a healthy focus on paying down
debt—student debt especially—but their actions reveal little appreciation for
opportunities on both sides of the balance sheet.
Cathy Weatherford is president and CEO of the Insured Retirement
Institute (IRI), and she says she is especially qualified to discuss trends taking
shape among Millennial investors.
“I have got three Millennial girls at home,” she said during
a recent webcast hosted by IRI and the Center for Generational Kinetics (CGK). “So
I’m deeply entrenched and personally involved in all these trends we’re talking
about today.”
The webcast was called to highlight research results from a joint IRI/CGK survey fielded earlier this year, focusing
squarely on Millennials and their developing habits at work and in the investing
marketplace. As Weatherford explained, until about five years ago, Baby Boomers “were
still the big research focus for us” and for the retirement planning industry in
general, but around that time the Millennial generation actually overtook
Boomers in terms of sheer size.
Turning the focus to Millennials quickly helped IRI debunk
some myths, Weatherford noted, not least among them that
Millennials “are not thinking about retirement or about their careers and
long-term future,” Weatherford said.
“In a few words they are very closely engaged with the retirement
planning effort, especially those who have been in the workforce a few years,”
she said. “At the same time, it confirms what many have believed, that Millennials
are already falling behind what we expect they’ll need to do to prepare for
retirement. Bottom line, Millennials will need to do more than their own
parents if they want to have a financially secure retirement.”
Among the large sample of Millennials survey recently by
IRI/CGK, more than three in four (77%) are focused “first and foremost on
cutting their debt.” This is a healthy stat viewed in isolation, researchers explained, but the
problem arises from the fact that a similar number say “cutting debt today” is
also their current approach for improving their retirement outlook.
According
to
the IRI, Millennials need to ask themselves whether paying down debt at
the
expense of making investments is the most productive use of the wealth
they
have been able to generate so far. Often it is not, Weatherford said,
because student loans generally have manageable interest rates and
sensible time horizons (see “Linking Student Debt and Retirement Savings”).
NEXT: Millennial
strategies taking shape
Weatherford explains one of the keys to ensuring Millennials
will have successful retirements “is getting them educated about both sides of
the balance sheet.”
“Millennials, in our data and in other reports, don’t in
general have great financial knowledge,” Weatherford said. “What we can say
without a doubt is that there’s a big gap between what they need to know and
what they do know, and there’s still another gap between what people know and
what they do.”
Here’s a good example: When it comes to expenditures in
retirement, fully 70% of Millennials think they will spend less than $36,000
per year. This is already 30% less than the current national average, $46,757,
for those aged 65 to 74, Weatherford said, and is likely far below what
Americans will be spending annually in retirement by 2050 or 2060.
This all makes Millennials a great target market for
professional financial advice, she noted. According to IRI, a pretty strong
majority (62%) of Millennials would like an adviser to walk them through every
step of the retirement planning process, and 87% said it is important that an
adviser be willing to meet them in person. About one in five (19%) Millennials
said they are likely to use a robo-adviser at some point.
The research also asked Millennials to pick among a list of
celebrity advisers. Interestingly, about half of Millennials (48%), would pick
Warren Buffett to be their financial adviser, and 32% would choose Oprah
Winfrey. By contrast, 77% of Boomers selected Buffett and 15% picked Winfrey.
Weatherford said this shows Millennials want an adviser who
can help set life goals and put retirement planning into context—not simply a
stock picker who can potentially improve returns.
Concluding the webcast, Weatherford and other experts said
automatic enrollment has been a major boon to Millennials’ retirement planning
effort, so she urged plan sponsors and advisers to double down on innovative
plan design features that leverage inertia.