LEXINGTON, Mass. - Persumma Financial, a subsidiary of the MassMutual Financial Group, has been closed.
Persumma had close to 20 plan sponsor clients with a total of more than $100 million in assets. Tom Johnson, senior vice president of MassMutual Financial Group, Boston, said 95% of that client list has transferred to MassMutual.
Persumma offered bundled 401(k) services that gave participants the choice of the entire universe of investments available. Mr. Johnson said the firm, with its subscription pricing and wide-open plan choice, was ahead of its time. But it did not meet projected profits in the three-year window given it by MassMutual.
"I think that Persumma was an early attempt, in a major-scale way, to achieve a position in what we believed was an emerging market," Mr. Johnson said.
The goal was for Persumma to be at or above the size of MassMutual's retirement services defined contribution business in three years as of 2001, he said.
"It was a very aggressive plan and we understood that," Mr. Johnson said. "We believed there was a reasonable chance to achieve those goals. We weren't right."
Launched in 2000
The joint venture was launched in 2000 with Nextera Enterprises Inc., Boston, and Knowledge Universe, Los Angeles, as investors.
Persumma's new idea was to provide defined contribution plan participants with a tiered strategy. The first tier was a simplified approach in which Morningstar Associates LLC, Chicago, picked funds to make up three portfolios - conservative, balanced and aggressive.
The other three tiers gave participants greater levels of choice, with the last tier providing the full universe of investments available. To help participants make their choices, the model included investment advice provided by Morningstar.
Plan sponsors could access the service either by hiring Persumma as sole provider or by including the Persumma plan as an option for participants.
J. Spencer Williams, Persumma chief executive officer and president, now is a senior vice president in MassMutual's life insurance company. Steve Randolph, chief marketing officer, now is the No. 2 executive with MassMutual's trust company, Mr. Johnson said.
