Mercer sources half its new belongings from custodian referrals, S&P says

Roughly half of Mercer Advisors‘ internet new belongings within the first half of 2026 got here via custodial referral packages, based on an S&P Global Ratings report printed on the RIA’s new credit standing.  

“We imagine the corporate’s excessive reliance on the custodian referral packages might restrict margin growth, though its current diversification into different channels might assist. During the primary half of 2026, roughly 50% of Mercer’s internet new belongings had been sourced via the custodial referral channel,” wrote S&P Global on Sept. 9. “While the channel has been a gentle supply of asset progress traditionally, the usage of it requires the corporate to pay referral charges to the custodian companions.” 

Mercer has $111 billion in consumer belongings. The RIA’s custody is concentrated with its two largest referral sponsors — Schwab holds $57.7 billion of Mercer’s regulatory belongings and Fidelity holds $20.9 billion, based on Mercer’s newest Form ADV filed Sept. 17. 

Schwab will elevate the asset minimal for its client referrals to $5 million from $2 million on Jan. 5, 2027, after initially lifting the minimal from $500,000 final yr. While some advisors have shared concerns of Schwab competing to maintain extra shoppers amid its growing in-house advisor teams, Mercer’s CEO welcomes the newest minimal hike. 

“The focus of our efforts with Schwab has extra been on the segments the place they really want us. So the vast majority of shoppers that we shut via that program had been already over $5 million, if not over $10 [million],” Mercer Advisors CEO Dave Welling instructed InvestmentNews. “We assume that is a excessive space of want throughout their retail consumer base and curiosity, and it is the place they’ve articulated they most want us, or the place the partnership has probably the most advantages.” 

Schwab has mentioned greater than half of Schwab Advisor Network’s (SAN) internet flows come from referred shoppers with $10 million or extra in investable belongings. 

S&P assigned a ‘B’ issuer credit standing to Mercer guardian OG Crimson Parent Inc. forward of a $1.9 billion refinancing Mercer announced last week: a $1.65 billion time period mortgage B and a $250 million delayed draw time period mortgage, alongside a $340 million revolver. Mercer expects the brand new mortgage’s fee, 1.75 proportion factors under its prior debt, to avoid wasting $35 million to $40 million in curiosity in 2027, InvestmentNews reported. 

“We anticipate S&P Global Ratings-adjusted debt to EBITDA above 7x on the transaction’s closing, with the corporate steadily decreasing leverage after that amid robust natural progress and free money move. We additionally anticipate EBITDA curiosity protection to enhance via 2027, to 2x-3x from barely under 2x on the transaction’s closing,” S&P wrote. 

S&P put Mercer’s natural proceeds progress, excluding market returns, at 11% in 2025 and 6% in 2024, barely forward of friends. Welling instructed InvestmentNews the agency is including greater than $1 billion a month in new consumer belongings and has employed near 400 folks in 2026. Welling mentioned that Mercer accomplished 18 acquisitions in 2025, whereas S&P says Mercer has accomplished 119 since 2016. 

“Mercer remains to be meaningfully smaller than many wealth supervisor friends akin to Creative Planning and Focus Financial, when it comes to each billable AUM and absolute EBITDA ranges,” added S&P.  

Mercer’s majority homeowners embrace private equity corporations Altas Partners, Genstar Capital and Oak Hill Capital, in addition to Singapore’s sovereign wealth fund GIC, based on S&P.  In June 2025, Mercer mentioned 674 of its employees held equity within the agency. 

“Furthermore, [Mercer’s] proceeds stream is extra concentrated in non-public wealth-related providers, whereas most of its rated friends preserve publicity to institutional, retirement, and 401(ok) companies,” mentioned S&P’s observe. “While institutional belongings are sometimes much less sticky than non-public wealth belongings, they do present diversification and cross-selling alternatives that Mercer lacks.” 

Mercer pays Fidelity’s Wealth Advisor Solutions program 10 foundation factors a yr on referred fastened revenue and 25 bps on all different referred belongings, plus a $50,000 annual price, per its Form ADV brochure. Schwab Advisor Network fees 26.25 bps on the primary $2 million of referred belongings, stepping all the way down to 10.5 bps above $10 million, InvestmentNews has reported. 

Mercer joined the brand new Goldman Sachs Ayco referral program this yr, which has additionally gained entry from RIA giants Wealth Enhancement and Creative Planning. Goldman Sachs was additionally lead left arranger on Mercer’s current mortgage refinancing as its important financial backing financial institution within the transaction.  

“We had been invited to take part in [Goldman’s] referral program, which has proven some early good outcomes, but it surely’s very early,” mentioned Welling. “When we joined the Fidelity program in 2019, it was already an present program with present velocity, there was movement. [Goldman] constructing it on their facet, largely via the Ayco business referrals and explicit conditions, it is simply it is a completely different program than among the others that we take part in.” 

Asset minimal modifications to Schwab’s referrals come as a number of new consumer referral packages launch from different RIA custodians.  

Robinhood’s TradePMR takes 25% of the gross revenue an advisor earns from referred shoppers and requires RIAs to handle no less than $500 million. BNY Pershing fees a $50,000 annual price and as much as 30 bps on referred belongings, based on a Kitces analysis. Betterment‘s pilot charges 0.25% a year on referred belongings, whereas Altruist instructed InvestmentNews in 2025 that it aspires to build a referral community. 

“Mercer Advisors has an extended monitor report of supporting new packages which have entered the market, akin to E*Trade and TD Ameritrade up to now,” a Mercer spokesperson instructed InvestmentNews in January.