Large recordkeepers are poised to get even bigger as smaller players seek to grow scale or sell out, according to industry analysts.

Fidelity, the largest recordkeeper, has been expanding organically, growing its defined contribution plan assets under administration to $3.2 trillion by the end of November, a 23% increase year-over-year, FA-IQ sister publication Ignites writes, citing a Fidelity spokesperson.

Empower, the second-largest player, has been growing through acquisitions, according to the publication. In July, the firm announced that it’s picking up Prudential’s recordkeeping platform, which is expected to boost Empower’s assets under administration to more than $1.4 trillion across 16 million participants when the deal is scheduled to close in the first quarter this year, the company said at the time, according to Ignites.

Empower also acquired the retirement assets of MassMutual, Truist and Fifth Third in recent years, the publication writes. Across the industry, 13 deals took place between 2019 and mid-2021, Empower said in a June investor day presentation, according to Ignites.

In November, meanwhile, Ascensus and Newport Group announced that they’re merging to form an entity with around $700 billion in assets under administration, the publication writes.

Smaller firms are also getting into acquisitions. In June, American Trust Company announced its planned acquisition of LT Trust, its third in 12 months, according to Ignites. Along with its affiliates, American Trust had $125 billion in retirement assets under advisement, management or custody, the firm said in mid-2021, according to the publication.

Analysts expect that level of consolidation in the industry will continue apace.

“[R]ecordkeeping will continue to consolidate, squeezing out or rolling up marginal firms, which will leave the remaining competitors with greater scale and profitability and the ability to invest in improved participant and sponsor experiences,” McKinsey predicted in February 2021, according to Ignites. “In fact, this scenario may take shape more quickly than we had expected.”

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