HARTFORD, Conn. -- The U.S. Department of Labor has granted an exemption to Aetna Inc. that allows the company to cross-sell the products of various Aetna subsidiaries to trust company clients.
The exemption gives Aetna a way around the prohibited transactions section of the Employee Retirement Income Security Act. Section 406(a) of ERISA restricts investment advisers from indirectly profiting from professional advice that leads to the sale of items from which the advising company benefits.
A class exemption, which allows certain such transactions, was created in 1977 and reissued in 1984, said Roberta Ufford, an attorney with the Groom Law Group, a benefits practice in Washington.
Many insurance companies now rely on that exemption to protect cross-selling between the insurance, mutual fund and wealth management divisions, Ms. Ufford said.
However, the exemption doesn't fully cover the cross-selling activities between a trust company, which serves as the client's discretionary trustee, and other arms of the company's business, said Aetna attorney Christine Grady.
Aetna Trust Co. FSB was launched in late October to provide trustee, custodial and record-keeping services to small and midsize retirement plans. Aetna already operates Aeltus Trust Co., which will continue to be managed separately from Aetna Trust, officials said.
Aetna wants to be able to lead trust clients into collective trusts as well as the separate account management services of Aetna's subsidiary, Aeltus Investment Management Inc., Hartford.
"We wanted the comfort of having our own personal exemption to address what we saw as a technical glitch. We think this now clears the decks for us to cross-sell between Aeltus Trust Co., the Aetna mutual funds, Aetna life insurance products and more, offering each capability to a retirement plan," Ms. Grady said.
Aetna has $63 billion in total assets under management or administration, through various subsidiaries of the Aetna Financial Services business unit.
