Included in the deal are Wells Fargo's record-keeping services for defined contribution, defined benefit and employee stock ownership plans; executive deferred compensation program; institutional asset advisory business; and trust and custody offerings for the retirement and non-retirement markets.
Principal will add 3.9 million retirement plan participants from Wells Fargo after the deal closes in the third quarter for a total of 7.5 million participants.
"We think this is a great move," said Daniel J. Houston, Principal's chairman, president and CEO, noting that "the retirement business increasingly has become one of scale, and this acquisition moves the needle for Principal."
Increasing consolidation within the retirement plan record-keeping industry was one of the drivers behind Principal's move now to pick up Wells Fargo's retirement business, Mr. Houston said.
Some of Wells Fargo's areas of strength, including its prominence in the $10 million to $1 billion range of the DC plan record-keeping market and close relationships with DC plan consultants, also were attractive to help Principal broaden its range of services in the DC plan market, Mr. Houston said.
Buying Wells Fargo's record-keeping and trust business will help Principal gain enough scale to move higher in the ranks of service providers.
Wells Fargo's assets under administration totaled $827 billion as of Dec. 31.
As of the same date, the combined AUA of Principal and Wells Fargo for DC plans was $359 billion and $500 billion for all retirement accounts, said Jane Slusark, a Principal spokeswoman.