Convergence is buying the top of the market, not the middle

The retirement industry's merger list now reads like a census of the institutional end: Hightower and NEPC, Mariner and Andco, Cerity and Verus, Aon and NFP, Morgan Stanley with Hyas and Cook Street, and Creative Planning's just-announced deal for RVK. Jessica Sclafani, the retirement strategist leader at T. Rowe Price, offers that roster as evidence that "convergence is blurring lines between advisors and consultants," and she is right about the blur; the fee collapse underneath it is the part that decides who ends up owning which client, and it is happening at the top of the market, not the middle.

The line between a defined contribution advisor and an institutional investment consultant has been softening for two decades, drawn partly along plan size, and price is what moved. Advisory plan fees are "plummeting," in the article's word, which sends both camps hunting revenue elsewhere: institutional consultants toward the OCIO model, retirement plan advisors toward 3(38) fiduciary assignments, and a few, Aon among them, into proprietary investment products, a step the article allows "can get complicated." RPAs, meanwhile, have moved upmarket on cheap, easy access to institutional-grade investment analysis and plan design, and Sclafani adds that the two camps have "different trends, challenges and opportunities," which is the part of the story the deal list keeps papering over. The convergence is a revenue problem both sides are solving with the same trade.

The survey data behind the trend is thinner than the deal list—T. Rowe's sixth annual defined contribution consultant study now includes 12 traditional advisory firms among the 36 it surveys, roughly one in three, and does not break its findings out by firm type, which makes the count a headcount rather than a diagnosis.

Where service actually reaches is more revealing: of the 40 national record keepers, seven can effectively serve all markets in some reasonable fashion—five of them at scale, two more significantly—while on the advisory side few, if any, firms sell to and service every market well. Record keepers once spanned the whole market, but that era is over; the first of the three 401(k) and 403(b) markets the article describes is smid-large, running from $3 million plans to $500 million with sub-markets of its own, and that is the band advisors have traditionally owned, most of them out of wealth management and financial planning firms. Morgan Stanley might be the exception, and maybe UBS—both offered as possibilities rather than findings; that buying habit is of a piece with the bank consolidation wave this publication has argued is a custody and talent story before a lending story.

The AI numbers are where the small-plan answer was supposed to be, and only 14% of RPAs and institutional consultants now say it is too early to adopt AI, down from 44% a year earlier, while firms with a formal policy use it at a rate 50% higher than those without. What that conviction has not produced is advice: very few use AI for plan design or advice, the two tasks that decide whether a small plan is worth serving at all. The article's paired question—whether consultants reach smaller plans through pooled employer plans and whether AI delivers advice at scale through financial wellness tools—lands as ambition rather than deployment on both counts.

So the deals are being done at the top of the market. What the buyers get on Sclafani's list is institutional expertise, sponsor relationships and the consultant's seat on the plan's shortlist, which is why the transactions pair a wealth platform with capabilities it did not have. The RIA market already ran this play: in the breakaway wave, the deals are now fought over whole enterprises and the contracts that hold them, not single advisors. Creative Planning, whose regulatory AUM stood at $295.6 billion on Sept. 19 per PWD's records, announced a deal for RVK that the article sizes at $4.3 trillion. Consulting mandates and registered advisory AUM are not the same denominator, so the two figures do not stack, but the direction of the trade does not depend on the arithmetic. A wealth manager is buying institutional standing it does not have to build.

The constraint that decides wealth-management M&A generally is no longer finding a seller but funding, staffing and integrating what gets signed, and this corner of the market tests that harder than most. What changes hands in a consultant acquisition is expertise and access rather than a book of accounts, which suggests the real integration risk is pricing. Consulting mandates are not custody relationships, and whether their fees hold inside a platform organized around assets under management is the question the announced backlog will answer, in this corner and everywhere else.

Aon's sequence on the list is the instructive one: the consultant bought NFP, then almost immediately sold the retirement, wealth and Fiducient businesses into what is now Wealthspire, the closest thing to a caution sign in the piece. Buying the other side of the market is easier than holding it.

The deals are probably the right trade for the buyers and are unlikely to change who serves the smallest plans. Gatekeeper seats and sponsor relationships are scarce, and buying them is faster than building them; the $3 million to $500 million band where advisors have always lived does not get cheaper to serve because a consultant changed owners. Watch two numbers next year: whether the study's AI use for plan design and advice moves off "very few," and whether the next deal on the list buys a consultant or buys participants.