Growth of Great-West Financial's record-keeping business will be organic from now on, even though the company gobbled up J.P. Morgan's large-plan defined contribution business and merged Putnam Investments' record-keeping business into Great-West's.
“We have the pieces we need, so all of our discussions are, 'let's grow this business organically,''' Robert L. Reynolds said in an interview. Mr. Reynolds is president and CEO of Putnam Investments LLC, Boston, and Great-West Lifeco U.S., Great-West Financial's U.S. operations and holding company. In May, he will become president and CEO of Great-West Financial. Putnam and Great-West Financial are both owned by Great-West Lifeco Inc., Winnipeg, Manitoba.
Mr. Reynolds added: “But I think to say, 'We'll never make an acquisition,' is too big a statement to make.”
The combined record-keeping business will have $387 billion in assets under administration for 6.8 million participants, according to Pensions & Investments data. That makes Great-West Financial, Greenwood Village, Colo., second only to Fidelity Investments, Boston, which had $1.3 trillion in AUA and 16.7 million participants as of Sept. 30, P&I survey data show.
“They've got a long way to go to make it to that No. 1 spot,” said Rick Meigs, founder and president of 401khelpcenter.com, LLC in Portland, Ore. But he added: “Fidelity's been in a bit of a malaise of late. A general sentiment among industry insiders is that Fidelity lacks direction and focus, thus no clear vision of where it should be a player.”
He also said he's “sure” that Great-West will make more acquisitions.
Steve Patterson, executive vice president of sales for workplace investing at Fidelity Investments, told P&I: “Our commitment to retirement services has never been better. Our clients don't care if we're the biggest, they want the best fit for their specific needs.”
He noted that in 2013 Fidelity retained 98.7% of its DC clients and won $45 billion in commitments from 1,700 new customers, and is “on a similar pace for 2014.”
“Our results speak for themselves,” said Mr. Patterson. “Nobody comes even close.”
On the asset management side, Great-West/Putnam isn't making any acquisitions but isn't abandoning plans to increase assets under management, Mr. Reynolds said.
“We're concurrently growing our money management business,” he added.
Great-West Lifeco has $468.21 billion in AUM; Great-West Financial had $59.4 billion in AUM at Dec. 31.
Putnam had $150 billion in assets under management at Dec. 31, according to spokes- man Jon Goldstein. Of that, $73 billion was institutional. That's an increase of 17% in total assets from a year earlier, 10.5% in institutional.
The firm had $128.3 billion in AUM ($66.07 billion institutional) at Dec. 31, 2012, and $116.66 billion in AUM ($45.12 institutional) a year earlier.