OneAmerica and BMO Financial Group have reached an agreement for OneAmerica to acquire BMO’s Milwaukee-based, U.S. retirement services business, BMO Retirement Services, a division of BMO Global Asset Management.
BMO’s U.S.retirement services business has more than 200 professionals with approximately 830 plans. The retirement services businesses of OneAmerica serve more than 11,000 plans and have more than $30 billion in retirement assets under administration.
“The addition of this business expands our award-winning service platform, enriches our professional services individually directed account capability and gives us additional sales expertise and geographic reach,” says Bill Yoerger, president of the retirement services division for OneAmerica. “We’re committed to growing our retirement business, and this acquisition helps us meet that goal.”
The acquisition raises OneAmerica’s assets under administration by approximately $26 billion, bringing the total to more than $70 billion, according to Scott Davison, president and CEO of OneAmerica, who took the helm as CEO last year.
OneAmerica, based in Indianapolis, will have about $56 billion in defined contribution (DC) assets, making 401(k) plans the firm’s largest market. “We continue to invest and grow 403(b) plans,” Yoerger tells PLANSPONSOR, “with about 40% of sales in nonprofits.”
Future growth can be organic or external: “Where we see opportunities with a great market fit, we’re certainly interested and have excess capital for other deals,” Yoerger says. “But we’re realistic enough to know that bigger isn’t always better.”
Plan sponsors have landed in a great place with the OneAmerica acquisition, Yoerger tells PLANSPONSOR, because the firm competes on the basis of the service relationship. “We’re very committed to the retirement services arena,” Yoerger says, “and we plan to keep the service level high so the combined organization can continue to win plan sponsor cups for service.”NEXT: OneAmerica’s plans for participant engagement and future acquisitions.
OneAmerica is keenly focused on participant engagement, which they aim to boost through financial wellness. “A lot of people are working on getting folks into the plan to accumulate a balance for retirement, but very few are taking the initiative to say, ‘What do they do when they get there?’”
Yoerger notes that OneAmerica has engaged Peter Dunn, a/k/a Pete the Planner, who brings a mock retirement plan to current plan participants so they can take a 30-day trial run to experience the difference between budgeting a retirement income and living with their current salary.
While OneAmerica can offer annuities outside the plan, Yoerger says the firm is continuing to look at ways to provide income in retirement. “We’re still hung up on in-plan guarantees,” he notes. “The issue is portability and very low take-up rates. We haven’t seen a robust solution.”
Barry McInerney, co-CEO at BMO Global Asset Management, says BMO’s decision to sell its U.S. retirement services business is consistent with BMO Global Asset Management’s strategy to focus on its asset management business. “The transaction will not change BMO’s role in managing a portion of the investments in the plans moving over to OneAmerica as well as acting as the directed trustee and custodian for those plans,” McInerney said in a statement.
A year ago, OneAmerica announced an agreement to acquire City National Bank’s San Diego-based retirement services business, with 240 plans and $6.5 billion in assets under administration.
The transaction is expected to close during the third quarter of calendar year 2015. At that time, the business will adopt the name OneAmerica Retirement Services LLC. OneAmerica will continue business operations from BMO Retirement Services’ current locations, and most clients will continue to work with their current service teams. BMO Retirement Services employees covered by the agreement will become OneAmerica employees.