John Hancock has introduced two tools designed to help solve the challenges of unexpected expenses and planning for and funding higher education costs, in an effort to help retirement plan participants work toward retirement readiness.
A national survey from the Federal Reserve reported that 40% of people can’t afford a $400 emergency expense such as a car repair or replacing a broken appliance, and John Hancock’s most recent Financial Stress Survey showed one-quarter of respondents had no emergency savings at all.
Now, with the click of a button on John Hancock Retirement’s participant site, participants can create an emergency savings account. Once a savings goal is entered, the participant links his checking account and sets up weekly recurring deposits.
Participants can track progress toward the savings goal and are able to withdraw funds at any time with no fees. The company says this can help participants prepare for unexpected financial needs and may prevent them from tapping into their retirement account.
Patrick Murphy, CEO, John Hancock Retirement, tells PLANSPONSOR the emergency savings solution can be made available to all participants in retirement plans served by the company, but it is up to each plan sponsor client whether to make it available to their plan’s participants.
When it comes to college planning, while more than half of American households are currently saving for college, planning for college remains a top worry among parents, according to Sallie Mae. In addition, fewer than one-third of parents say they have the knowledge needed to guide their children through the application and decision-making process, an American Student Assistance report says.
The Education Planning Center, not affiliated with John Hancock, is also available on the company’s participant site and allows participants to estimate the costs of higher education and help define funding gaps in current savings strategies. The portal offers resources to help with college selection, scholarships and financial aid, navigation of the college application process and more. In the complimentary Education Planning Center, participants can:
Get expert step-by-step guidance based on the prospective student’s age;
Search for schools that best fit a student’s academic profile, and compare school details such as admissions and tuition costs;
Prep for standardized tests; and
Find scholarships.
“Everyone’s journey to retirement readiness is different,” says Sosseh Malkhassian, head of participant experience, John Hancock Retirement. “By offering resources that are easy to access and use, we’re making it easier for our participants to make well-informed decisions, manage multiple priorities and take action in their financial lives. And that sets them up to build and meet long-term retirement readiness goals.”
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Franklin Templeton Expands Institutional Footprint With Acquisition of Legg Mason
With the acquisition, Franklin Templeton will preserve the autonomy of Legg Mason’s affiliates, ensuring that their investment philosophies, processes and brands remain unchanged.
Franklin Resources Inc., a global investment management organization operating as Franklin Templeton, has entered into a definitive agreement to acquire Legg Mason Inc. for $50 per share of common stock in an all-cash transaction. The company will also assume approximately $2 billion of Legg Mason’s outstanding debt.
The acquisition of Legg Mason and its multiple investment affiliates, which collectively manage more than $806 billion in assets as of January 31, will establish Franklin Templeton as one of the world’s largest independent, specialized global investment managers with a combined $1.5 trillion in assets under management (AUM) across one of the broadest ranges of investment teams in the industry. The combined footprint of the organization will significantly deepen Franklin Templeton’s presence in key geographies and create an expansive investment platform that is well balanced between institutional and retail client AUM.
In addition, the combined platform creates a strong separately managed account business.
“This is a landmark acquisition for our organization that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies,” says Greg Johnson, executive chairman of the board of Franklin Resources Inc. “Our complementary strengths will enhance our strategic positioning and long-term growth potential, while also delivering on our goal of creating a more balanced and diversified organization that is competitively positioned to serve more clients in more places.”
Jenny Johnson, president and CEO of Franklin Templeton, says, “This acquisition will add differentiated capabilities to our existing investment strategies with modest overlap across multiple world-class affiliates, investment teams and distribution channels, bringing notable added leadership and strength in core fixed income, active equities and alternatives. We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.”
During a conference call, Jenny Johnson said Franklin Templeton spent a significant amount of time reviewing its options and determined Legg Mason was the best fit for its strategic plan. The company has been working with Legg Mason on the agreement for several months. It is part of a multiyear strategic plan for which Franklin Templeton identified key growth initiatives.
She added that the transaction brings together two especially complementary platforms. “We realized multiple strategic objectives in one transaction—acquiring several companies as well as a holding company,” Johnson said.
Joseph A. Sullivan, chairman and CEO of Legg Mason, says, “The incredibly strong fit between our two organizations gives me the utmost confidence that this transaction will create meaningful long-term benefits for our clients and provide our shareholders with a compelling valuation for their investment. By preserving the autonomy of each investment organization, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimizing the risk of disruption. Our clients will benefit from a shared vision, strong client-focused cultures, distinct investment capabilities and a broad distribution footprint in this powerful combination.”
With this acquisition, Franklin Templeton will preserve the autonomy of Legg Mason’s affiliates, ensuring that their investment philosophies, processes and brands remain unchanged. The company says it has spent significant time with the affiliates and there is strong alignment among all parties in this transaction and shared excitement about the future of the company.
For example, Terrence J. Murphy, CEO of ClearBridge Investments, a Legg Mason affiliate, says, “As part of Franklin Templeton, we are confident that we will retain the strong culture that has defined our success as a recognized market leader in active equities. Their commitment to investment autonomy, augmented by the scale and reach that the combined organization will provide, will allow us to deliver for our existing clients and expand our ability to deliver our investment capabilities in new channels and regions. We are very pleased to join the team at Franklin Templeton and excited about what we can do together.”
Western Asset Management Co. and Brandywine Global Investment Management, affiliates of Legg Mason, bring high assets in fixed income to the deal, and Clarion Partners brings real estate investments. “We are third overall in separately managed accounts,” Johnson said during the teleconference.
“Given all the strategic benefits and new capabilities, it makes the resulting company not only larger but far stronger. We will be a true leader in multiple asset categories,” she stated.
“We will have a wide range of strong performing strategies,” Johnson said, noting that 86% of Legg Mason assets under management have been beating their benchmarks. In addition, the deal transforms Franklin Templeton’s institutional business to meet the size of its retail business—creating a 50/50 institutional/retail mix. “Clients will have a broader range of investment choices,” she added.
As with any acquisition, the pending integration of Legg Mason’s parent company into Franklin Templeton’s, including the global distribution operations at the parent company level, will take time and will commence only after careful and deliberate consideration.
Johnson pointed out to teleconference attendees that Franklin Templeton has a history of large acquisitions, meaning it “understands the complexity involved in successful execution. She said Greg Johnson will play a key role in the execution of the deal.
Following the closing of the transaction, Johnson will continue to serve as president and CEO, and Greg Johnson will continue to serve as executive chairman of the Board of Franklin Resources Inc. There will be no changes to the senior management teams of Legg Mason’s investment affiliates. Global headquarters will remain in San Mateo, California, and the combined firm will operate as Franklin Templeton.
However, EnTrust Global, a Legg Mason affiliate that provides alternative investment solutions, and Franklin Templeton jointly agreed that it was in their best interest that EnTrust repurchase its business, which will be acquired by its management at closing. EnTrust will maintain an ongoing relationship with Franklin Templeton.
Franklin Templeton notes that while cost synergies have not been a strategic driver of the transaction, there are opportunities to realize efficiencies through parent company rationalization and global distribution optimization. These are expected to result in approximately $200 million in annual cost savings, net of significant growth investments Franklin Templeton expects to make in the combined business and in addition to Legg Mason’s previously announced cost savings. The majority of these savings are expected to be realized within a year, following the close of the transaction, with the remaining synergies being realized over the next one to two years.
The transaction has been unanimously approved by the boards of Franklin Resources Inc. and Legg Mason Inc. It is subject to customary closing conditions, including receipt of applicable regulatory approvals and approval by Legg Mason’s shareholders, and is expected to close no later than the third calendar quarter of 2020.
Johnson noted during the teleconference that the deal also offers growth in international markets, such as the UK, Japan and Australia. “Our focus is to grow for many years to come,” she said.