Empower Retirement to acquire money management company Personal Capital

Great-West Lifeco subsidiary Empower Retirement is acquiring San Francisco-based Personal Capital for an upfront consideration of $825 million, and deferred consideration of up to $175 million subject to achievement of target growth objectives.

Founded in 2009, Personal Capital is a hybrid wealth manager that combines a digital experience with personalized advice delivered by human advisors. It is a team of ~865 employees and has raised a total of $265 million from several investors including BBVA Ventures and USAA.

Personal Capital will continue to operate as a direct-to-consumer business “that is currently profitable prior to new customer acquisition costs and is expected to reach standalone profitability as it achieves scale.”

Empower plans to integrate Personal Capital’s technology and capabilities to deliver a suite of financial wellness tools along with digital and human advice to current and future Empower retail clients.

Finally, Empower will leverage Personal Capital’s platform to provide its 9.7 million plan participants with a singular view of their entire financial picture, creating new opportunities to improve financial wellness. This should increase DC plan sales, managed accounts usage rates, participant engagement, and adoption of additional services.

“This transaction supports Empower’s objective of accelerating growth in retail advice and wealth management for participants and is complementary to its objective of scaling its Defined Contribution retirement business both organically and through M&A. Personal Capital has a highly attractive business model that is achieving high growth. We are excited about adding the Personal Capital platform because of its standalone growth potential as well as its capacity to accelerate Empower’s retail and defined contribution growth. The combination of Empower and Personal Capital strengthens our value proposition for customers and supports our objective of increasing value for shareholders.” – Paul Mahon, President and Chief Executive Officer at Great-West Lifeco .

“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. Empower will be able to deploy Personal Capital’s market-proven technology and capabilities to support the retirement and financial service needs of its 9.7 million plan participants, while Personal Capital will leverage Empower’s scale and infrastructure to accelerate its growth.” – Edmund F. Murphy III, President and Chief Executive Officer of Empower.

Empower Retirement’s brand will be unchanged and Personal Capital will be branded as Personal Capital, an Empower Company.