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CAPTRUST Enters 3(38) with Freedom One Deal

By PLANSPONSOR staff editors@plansponsor.com | January 09, 2013
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January 9, 2013 (PLANSPONSOR.com) - On a steady course of expansion, CAPTRUST Financial Advisors in Raleigh, North Carolina, has acquired Freedom One Financial Group in Clarkston, Michigan.

Since starting on the East Coast and working its way west, CAPTRUST now has 19 offices coast to coast and clients in 50 states. They have been averaging two acquisitions a year since 2006. J. Fielding Miller, the company’s founder and chief executive, told PLANSPONSOR the firm’s 10-year plan is to establish a national firm.

The Freedom One acquisition stands out among CAPTRUST’s previous acquisitions because of the scale and focus on 3(38). Miller met Mark Wayne, managing director and former chief executive of Freedom One, at a conference and struck up a friendship a couple of years ago. At that time, CAPTRUST was starting to look into providing more 3(38) fiduciary services. Wayne had been building his entire business on 3(38) format, which Miller found intriguing.

“With a national reach, CAPTRUST could take what he had built, and that would be our foray into scaling out a 3(38) offering,”Miller said. The firm had already been providing 3(21) but had been seeing a need for increased fiduciary advice.

The Freedom One acquisition brings CAPTRUST about $85 billion in assets as well as new capabilities. “There’s a trend emerging in midmarket plans toward more discretionary and more fiduciary services,” said John Curry, senior director of marketing at CAPTRUST. “Freedom One has a history of working with discretionary managed accounts, and we’ve been exploring ways of providing this but finding better ways to scale it. With Freedom One’s 250 plans, the acquisition brings significant scale,” Curry said, as well as operational capabilities. CAPTRUST now has about 1,425 401(k) plans.

As plan sponsors have been trying to run their businesses, attempting to survive and thrive in the post-crisis economy, they find they are saddled with an ever-growing burden of fiduciary obligations while they are also trying to focus on participant outcomes, according to Curry. “They need help,” he said.