DC Provider Moves Seen as Response to Industry Needs

Big mergers and acquisitions have altered the defined contribution (DC) retirement plan industry in recent years, leading some to ask what it all means for sponsors and advisers.

Some industry watchers say the ball started rolling when MassMutual snapped up The Hartford’s retirement plans business in September 2012. Soon after that came the announcement that Transamerica Retirement Services and Diversified—both owned by parent company Aegon—would become a unified brand under the Transamerica Retirement Solutions heading.

The ball has definitely gained speed in the last year—Great-West, for example, has picked up J.P. Morgan’s DC recordkeeping business and the retirement business of Putnam Investments. And the moves are not restricted to just plan providers or large firms. For example, 403(b) plan provider TIAA-CREF is expanding its asset management capabilities with the acquisition of Nuveen Investments, and a relatively “large” small third-party administrator (TPA) deal was announced in January, as Verisight scooped up Daily Access Corporation.

Although not a move between providers, ING U.S. has recently completed a total rebranding of its business to Voya Financial.

While there has certainly been a flurry of activity recently, this is not uncommon in the industry, explains John Guido, a principal at Retirement Research, Inc. in West Hartford, Connecticut. “There have been pockets of a similar level of flurries—consolidations, acquisitions, divestitures—over the years,” he tells PLANADVISER. “I wouldn’t necessarily draw the conclusion that it’s accelerating or vastly different than before.”

Guido also points out the moves aren’t necessarily being made in competitive ways—while some firms are growing others are exiting the business. Some providers are moving into new segments of the DC industry and others are recommitting to the segments they are serving.

He adds that plan sponsors and advisers are not likely to experience inferior service because of the moves, as the various mergers and acquisitions are actually creating more choice. Guido points to the MassMutual acquisition of The Hartford as an example of how the small DC plan segment of the market will be better served. ASPire Financial, CUNA Mutual and Guardian have also made deals that will offer more services to the small plan market. Some providers are also increasing services for 403(b) plans (see “USRP Acquires Common Remitter Business”).

“From a vendor service prospective, we see firms are investing in their business and enhancing capabilities, responding to regulations and the demand for more investment types/classes and more fiduciary support tools,” Guido says. “These are long-term, substantive business changes that are good for plan sponsors and participants, and for advisers in helping them deliver their services.”