{"id":789033,"date":"2026-05-11T15:46:21","date_gmt":"2026-05-11T15:46:21","guid":{"rendered":"https:\/\/www.europesays.com\/us\/789033\/"},"modified":"2026-05-11T15:46:21","modified_gmt":"2026-05-11T15:46:21","slug":"how-the-leafhouse-mesirow-deal-could-change-the-cits-landscape","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/789033\/","title":{"rendered":"How the Leafhouse-Mesirow Deal Could Change the CITs Landscape"},"content":{"rendered":"

There\u2019s a lot to unpack from the acquisition of Leafhouse\u2019s fiduciary services by Mesirow,<\/a> starting with understanding the various businesses that Leafhouse founder and CEO Todd Kading has and continues to create. It seems simple at the surface level, with Mesiorw picking up Leafhouse\u2019s $23 billion in fiduciary services, adding to its $115 billion business while making a strategic investment in Leafhouse\u2019s tech division.<\/p>\n

That transaction makes sense\u2014fiduciary services require scale as fees decline, with Morningstar the clear leader, along with Wilshire. Not only does it make sense for advisors, record keepers, broker\/dealers and aggregators to outsource these 3(21) and 3(38) services, but the potential for adding private investments adds a level of complexity that few advisory firms and providers are equipped to handle.<\/p>\n

Employee-owned Mesirow, established in 1937, lists investment banking, high-net-worth wealth services and institutional asset management services as its main businesses. They sold their $13 billion mid-market RPA division to Creative Planning in 2023<\/a> and list RIA acquisitions as a goal, though there have been few transactions, and they made a fleeting attempt to distribute to advisors directly over 10 years ago.<\/p>\n

Related:401(k) Real Talk Episode 191: May 6, 2026<\/a><\/p>\n

Kading retains the financial services division of Leafhouse, which covers HSAs, IRAs and managed accounts, as well as CIT services, and now has capital and a partner to expand while providing additional distribution to Mesirow. Assuming it\u2019s not a majority interest, Kading retains control and creative freedom.<\/p>\n

The really interesting part of Leafhouse\u2019s business is their CIT Compass platform, which GTC, a division of BPAS, recently joined<\/a>. Kading said the coalition is set up to include other members, with the goal of streamlining CIT management of documents and participation agreements, as well as implementing an e-signature option.<\/p>\n

The boom in CIT adoption by 401(k) and soon 403(b) plans has been stunning. While larger plans have already been using them, with 34% of assets in those vehicles according to the ICI, retail 401(k) plans have been able to access them over the past decade because their provider or advisor can leverage all client assets in a particular strategy. The majority of target-date funds are now in CITs, and the ICI projects that overall DC assets will reach $9.2 trillion in 2030, up from $6.8 trillion in 2025.<\/p>\n

But the ICI warns that the current operational processes are outdated<\/a>, fraught with danger and friction, just as mutual funds were before the implementation of the NSCC\u2019s Profile Service II, which established a standardized format, eliminating data re-entry and streamlining processes and workflows. ICI recommends that the CIT industry go through the same transformation.<\/p>\n

Related:FIS\u2019 New Cloud-Based Record-Keeping System Could Unlock the Potential of 401(k) Plans<\/a><\/p>\n

SEI\u2019s retirement services division, led by Chris Randall, who, with Rob Barnett, lifted Wilmington Trust out of M&T Bank, funded by Madison Dearborn, recently announced its own digital onboarding and processing system, citing a lack of standardization<\/a>. Great Gray, the dominant CIT provider for advisor-sold 401(k) plans, has their own system, adding significant distribution capabilities through the acquisition of RPAG and, most recently, Flexpath.<\/p>\n

Another CIT provider is Reliance Trust, part of FIS, which dominates DC record-keeping software, and is about to release a cloud-based version this summer, along with Alta Trust. Almost every major record keeper owns a trust company, such as Fidelity, that may be wondering why they are outsourcing to a third party.<\/p>\n

There are issues with CITs<\/a> beyond operation inefficiencies, including:<\/p>\n