Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. DEFINED CONTRIBUTION
April 09, 2019 01:00 AM

Principal to acquire Wells Fargo's record-keeping business

Christine Williamson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg News

    Principal Financial Group headquarters, Des Moines, Iowa

    Principal Financial Group will acquire the institutional retirement and trust business of Wells Fargo & Co. for $1.2 billion.

    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.

    The largest DC service providers

    The combined Principal/Wells Fargo entity would rank sixth among service providers. Assets are in billions as of Sept. 30, 2018.

    RankProvider2018

    assets

    1Fidelity Investments$2,154
    2TIAA$651
    3Empower Retirement$553
    4Vanguard Group$544
    5Alight Solutions$444
    6Principal/Wells Fargo$416
    7Voya Financial$375
    8BofA Merrill Lynch$268
    9Transamerica$208
    10Prudential Financial$195
    11T. Rowe Price Group$194
    12Conduent$162
    13Charles Schwab$161
    14MassMutual$158
    15John Hancock Financial$156

    Source: Pensions & Investments survey

    The combined $416.3 billion of U.S. defined contribution plan record-keeping AUA for Principal ($208.8 billion) and Wells Fargo ($207.5 billion) as of Sept. 30 would move the firm to sixth place from eighth and 10th, respectively, in Pensions & Investments' annual ranking of defined contribution record keepers, according to data provided by each firm.

    About 2,500 people work in Wells Fargo's institutional retirement business, and job layoffs might be necessary as Principal assesses the synergies between the two similar businesses prior to the close of the deal, Ms. Slusark said.

    Principal will maintain four of Wells Fargo's primary offices in Charlotte, N.C.; Roseville, Minn.; Waco, Texas; and Manila, Philippines, she added.

    Principal will pay $1.2 billion upfront to Wells Fargo through a combination of between $400 million and $500 million in new debt and the remainder in cash, showed a Principal presentation about the deal provided to P&I.

    The agreement includes an earnout of up to $150 million payable to Wells Fargo two years after the deal has closed if existing client fee revenue retention exceeds a preset level.

    The firm expects to accrue $60 million of pretax run-rate net expense savings after the Wells Fargo business is fully integrated in 2022, Principal's report said.

    As of Dec. 31, Principal had $626.8 billion in assets under management and Wells Fargo Asset Management had $466 million in AUM.

    Related Articles
    Brookfield-Oaktree tie-up creates alternatives giant
    Wafra, Landmark Partners take minority stake in Siris Capital
    UBS said to weigh asset management options including merger
    Deutsche Boerse to acquire Axioma for $850 million
    Macquarie to acquire $12.3 billion in mutual fund assets from Foresters
    Easterly takes majority stake in Levin Capital's institutional business
    T. Rowe Price record-keeping business taps new leader
    Cybersecurity still key issue for record keepers
    Wells Fargo exec: Sale of asset management unit not in the cards
    Recommended for You
    ONLINE_170809948_AR_-1_TIYUNLNPIEDC.jpg
    DC rollovers fuel IRA growth to $13.9 trillion, largest part of retirement market
    retirement income senior desk money_1550-main_i.jpg
    Non-qualified deferred compensation plans used to draw top talent, survey says
    Microsoft_Logo_i.jpg
    Microsoft to trim workforce, citing macroeconomic conditions
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing