NFP Corp., the New York City-based property and casualty broker and retirement plan advisor, is continuing to beef up its wealth management presence and yesterday announced that it had acquired Utah firm Divergent Wealth Advisors, an RIA with $675 million in client assets under management.

A spokesperson said NFP has closed 20 acquisitions in 2023, including five in its wealth and retirement business segment.

Divergent, based in South Jordan, Utah, was formed by three breakaway Morgan Stanley Smith Barney advisors in 2017: Rick Collins; Rick's son, Jordan Collins; and Brady Ririe. According to Divergent’s website, they were previously known as the Collins Group and were the largest Morgan Stanley wealth management team in Utah when they decided to leave and set up their own tent.

Divergent focuses on wealth management and retirement planning. NFP said that Jordan Collins and Ririe will now report to Jeff Scott, NFP’s senior vice president of the retirement business. Sources close to Divergent said Rick Collins is now less involved in the business.

“We’re expanding our wealth management and retirement plan capabilities, while increasing our presence in the fast-growing Western U.S.,” said Scott in a press release. “We’re also adding a group of talented wealth advisors who are committed to delivering an amazing client experience built on a foundation of trust and fiduciary care.”

The deal closed August 7, NFP said.

NFP is the 13th largest insurance broker in the U.S., according to Fitch Ratings. It went private in 2013 and has 8,000 employees.

While it’s known for its history in insurance, it has been reportedly increasing its revenue share from wealth management. In 2019, it forged an RIA subsidiary, Wealthspire Advisors, through which it has bought such firms as Private Ocean LLP in California, Actuarial Consulting Group in Virginia, Lenox Wealth in New York and Sage Financial Advisors in Nevada.

NFP forged Wealthspire after combining RIA firms Sontag Advisory and Bronfman Rothschild before going on its growth tear. Last year, NFP reorganized its business units, creating a new wealth and retirement segment, including Wealthspire. Though many NFP acquisitions have been conducted through Wealthspire, the current acquisition seems to have been done by NFP outright, though it was not clear how the businesses would be integrated.

Wealth and retirement now make up 16% of the company’s revenue, Fitch said.

On September 11, Fitch said it had issued a first-time, long-term issuer default rating of “B” to NFP and its holding company and a “BB-” to NFP’s first-lien, senior secured debt.

“NFP's ratings are reflective of the company's solid market position in insurance brokerage, stable and recurring business model, solid EBITDA margins, and exposure to a recession resilient end market,” Fitch said. “However, high EBITDA leverage (debt/EBITDA), weak interest coverage, and an aggressive M&A strategy weighs against the ratings.” 

Fitch said the company’s diverse income streams are a help to its ratings, though the company’s debt leverage could weigh against it. Fitch said it expects mergers to be key to NFP’s growth strategy. “Fitch estimates the company could spend nearly $650 million on acquisitions in 2023 and spent more than $2.6 billion since 2018. NFP completed more than 350 deals since 2013, with most acquisitions being relatively small tuck-in deals. NFP historically funded M&A via a combination of debt and operating cash flow, thus resulting in a high leverage profile.”

Companies like NFP and Captrust have been combining retirement plan and wealth management capabilities for their complementary qualities. Very often, clients “graduate” from retirement plan work to wealth management work once they get to a certain level of assets and at that point need more holistic help, one of the reasons companies are trying to find the right combination of insurance, benefits and wealth management. Wealth management is also seen as a more profitable business line.