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Assets jump 9.9% to new high point at $5.56 trillion

Consolidation shrinksfield of players, but assets

continue to increase

By ROBERT STEYER

A ssets of defined contribution

record keepers surpassed $5.5

trillion for the year ended Sept.

30, a record high, according to

the latest Pensions & Investments survey of

the largest record keepers.

Record-keeping assets for firms

responding to the P&I survey jumped

9.9% to $5.56 trillion, up from $5.06 trillion

for the year ended Sept. 30, 2013. The

number of participants among survey

respondents rose to 90.56 million, up 5.8%

from 85.57 million.

Fifty companies participated in the lat-

est survey vs. 52 for the previous survey

and 56 in the survey ended Sept. 30, 2012,

when total assets were $4.45 trillion.

The record-keeping industry reached

the new asset high point with fewer

major players thanks to a series of con-

solidations in recent years. The biggest

deal involved the establishment of

Empower Retirement, Greenwood

Stanley Rowin

MORE TO COME: Edmund Murphy III said new hires in the pipeline will ensure continued growth for Empower.

March 9, 2015

S P E C I A L R E P O R T

DC RECORD KEEPERSDC RECORD KEEPERS

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March 9, 2015

The largest DC record keepers U.S. DC plan assets under record keeping, in millions, as of Sept. 30.

RANKED BY ASSETS UNDER RECORD KEEPING

Rank Record keeper Assets

RANKED BY NUMBER OF PARTICIPANTS

Rank Record keeper Participants

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1 Fidelity Investments $1,406,491

2 TIAA-CREF $422,407

3 Empower Retirement $407,466

4 Aon Hewitt1 $393,872

5 Vanguard Group $378,862

6 Voya Financial $346,321

7 Wells Fargo $214,000

8 BofA Merrill Lynch $165,672

9 T. Rowe Price Group $147,791

10 Principal Financial $147,615

11 Xerox $143,001

12 Prudential Financial $130,555

13 Transamerica Ret. Solutions $119,395

14 MassMutual Financial $119,127

15 Charles Schwab $110,139

16 Mercer $96,996

17 Nationwide Financial $96,286

18 John Hancock Financial $84,048

19 VALIC $66,442

20 Ascensus $55,810

21 ICMA Retirement $53,231

22 Lincoln Financial $51,314

23 ADP Retirement $50,307

24 New York Life Inv. Mgmt. $43,509

25 Alliance Benefit Group $32,350

26 Newport Group $31,104

27 American United Life $28,808

28 Milliman $28,547

29 BMO Retirement $27,456

30 AXA Equitable Life $25,145

31 Paychex $22,000

32 Alerus Financial $16,400

33 Standard Insurance $15,948

34 Securian Retirement $12,864

35 BB&T Retirement $8,802

36 DailyAccess $7,427

37 Ameritas Retirement $6,921

38 Security Benefit $6,728

39 EPIC Advisors $6,566

40 BOK Financial $5,652

41 USI Consulting Group $4,722

42 SunTrust Banks $4,541

43 Associated Inst’l Trust $4,091

44 NADART $3,212

45 Insperity $2,535

46 Lincoln Trust $2,281

47 MidAmerica Admin. & Ret. $1,019

48 Correll $991

49 Reed-Ramsey $290

50 GAMCO Investors $41

Total $5,557,0981As of Dec. 31.

1 Fidelity Investments 17,572,222

2 Empower Retirement 7,121,212

3 Aon Hewitt1 5,736,312

4 TIAA-CREF 5,613,287

5 Voya Financial 4,883,671

6 Principal Financial 3,980,955

7 Vanguard Group 3,785,464

8 BofA Merrill Lynch 3,374,523

9 Transamerica Ret. Solutions 3,330,212

10 Wells Fargo 3,010,381

11 MassMutual Financial 2,524,048

12 Xerox 2,477,254

13 Prudential Financial 2,438,657

14 Nationwide Financial 2,198,534

15 VALIC 1,971,900

16 T. Rowe Price Group 1,923,037

17 Ascensus 1,785,258

18 John Hancock Financial 1,680,173

19 ADP Retirement 1,501,806

20 Lincoln Financial 1,418,060

21 Mercer 1,282,536

22 ICMA Retirement 1,139,837

23 Charles Schwab 1,136,894

24 New York Life Inv. Mgmt. 1,078,647

25 AXA Equitable Life 847,454

26 Paychex 740,000

27 BMO Retirement 733,399

28 Alliance Benefit Group 719,903

29 Milliman 664,109

30 American United Life 624,302

31 MidAmerica Admin. & Ret. 572,556

32 Standard Insurance 329,483

33 Newport Group 314,629

34 Securian Retirement 281,602

35 Alerus Financial 268,877

36 Security Benefit 218,820

37 USI Consulting Group 213,095

38 BB&T Retirement 173,601

39 DailyAccess 140,446

40 EPIC Advisors 109,609

41 Ameritas Retirement 108,496

42 NADART 98,499

43 Insperity 93,506

44 SunTrust Banks 82,471

45 BOK Financial 81,446

46 Associated Inst’l Trust 74,054

47 Correll 61,000

48 Lincoln Trust 30,532

49 Reed-Ramsey 13,800

50 GAMCO Investors 266

Total 90,560,8351As of Dec. 31.

Village, Colo., created by the combina-

tion of Great-West Retirement Services,

the retirement business of Putnam

Investments and J.P. Morgan Retirement

Plan Services.

Empower placed third in assets with

$407.5 billion for the 12 months ended

Sept. 30. In the previous P&I survey,

Great-West was sixth in assets, while J.P.

Morgan was eighth in assets. Putnam

Investments declined to participate.

Some transactions didn’t close before

the Sept. 30 deadline or were announced

after the deadline. One of those was the

December 2014 announcement that John

Hancock Retirement Plan Services,

Boston, would acquire New York Life

Retirement Plan Services, Westwood,

Mass. The transaction — which excludes

New York Life’s stable value business —

is expected to close during the first half

of 2015. In the current survey, John

Hancock ranked 18th with $84 billion in

assets and New York Life placed 24th

with $43.5 billion in assets.

Consolidation will continue among

record keepers, especially those catering

to DC plans with assets from $100 million

to $500 million, said Robyn Credico,

Arlington, Va.-based defined contribu-

tion practice leader for Towers Watson &

Co. “There’s not much more room for

consolidation for large plan-sponsor

record keepers,” she said.

Good news or bad newsFor DC plan executives, the consolida-

tion trend can offer good news or bad

news, she said. Reduced competition

among record keepers could make it

tougher for plans to negotiate better

prices and services, she said. Other draw-

backs could be reduced flexibility for

investment options and services as

record keepers standardize their offer-

ings, or concerns by participants that a

change in record keepers represents a

takeaway of services and options.

On the positive side for sponsors, she

said consolidation could lead to

improvements such as enhanced web-

based displays for participants to moni-

tor their savings performance and goals

and better service from a larger record

keeper making a commitment to staying

in the business.

Empower Retirement is still inte-

grating elements of the three record-

keeping units now under one roof and

brand name, said Edmund Murphy III,

Empower president of retirement

services.

The former Great-West and Putnam

record-keeping units used the same plat-

form, but J.P. Morgan’s was different.

Integrating the J.P. Morgan system into

the fold starts in April and will continue

through 2016. The integration is being

done this way due to different sponsor

asset sizes, different sponsor plan com-

plexities and other sponsor-related

issues that make difficult an all-at-once

integration, he said.

Empower Retirement also will inte-

grate the respective record-keeping

units’ interfaces — what web-based

services participants see and use on their

computers and mobile devices — by the

first quarter of 2016.

Mr. Murphy predicted growth in 2015

thanks to some new contracts that have

been announced or are pending. One

new contract is the Washington State

Department of Retirement Systems,

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March 9, 2015

RANKED BY NUMBER OF SPONSORS

Rank Record keeper Sponsors Rank Record keeper Sponsors

1 Paychex 67,000

2 ADP Retirement 46,773

3 Voya Financial 46,227

4 John Hancock Financial 45,072

5 Ascensus 44,377

6 Nationwide Financial 39,219

7 BofA Merrill Lynch 34,483

8 Principal Financial 34,101

9 MassMutual Financial 32,658

10 Empower Retirement 31,734

11 AXA Equitable Life 29,082

12 Fidelity Investments 28,757

13 Lincoln Financial 28,401

14 Security Benefit 27,407

15 VALIC 25,874

16 TIAA-CREF 24,545

17 Transamerica Ret. Solutions 23,049

18 Alliance Benefit Group 12,197

19 American United Life 9,829

20 ICMA Retirement 7,024

21 Alerus Financial 4,222

22 Vanguard Group 3,933

23 Wells Fargo 3,731

24 T. Rowe Price Group 3,530

25 Prudential Financial 3,380

26 Ameritas Retirement 3,140

27 Insperity 3,057

28 Standard Insurance 2,972

29 Securian Retirement 2,359

30 Lincoln Trust 2,058

31 NADART 1,956

32 Newport Group 1,887

33 EPIC Advisors 1,723

34 New York Life Inv. Mgmt. 1,584

35 MidAmerica Admin. & Ret. 1,532

36 DailyAccess 1,387

37 BB&T Retirement 1,232

38 Correll 1,067

39 Charles Schwab 954

40 Milliman 848

41 SunTrust Banks 812

42 BMO Retirement 706

43 Associated Inst’l Trust 593

44 USI Consulting Group 464

45 BOK Financial 447

46 Aon Hewitt1 428

47 Mercer 405

48 Xerox 167

49 Reed-Ramsey 152

50 GAMCO Investors 6

Total 688,5411As of Dec. 31.

Olympia, for its deferred compensation

program and for three other defined

contribution plans whose investments

are overseen by the $103.6 billion

Washington State Investment Board,

Olympia.

The Washington hire was announced

in January and contracts take effect in

October. Empower Retirement has been

the record keeper for the $3.5 billion

deferred compensation plan; it will

replace ICMA-RC as record keeper for

the other DC plans with aggregate assets

of $10.7 billion.

In November, Intuit Inc., Mountain

View, Calif., announced that Empower

Retirement would become record keep-

er for its $1.2 billion, replacing Fidelity

Investments.

Despite Empower’s stronger pres-

ence, Fidelity Investments, Boston,

remained the asset leader by a wide

margin. Fidelity’s $1.41 trillion in

record-keeping assets represented an

11% gain from the previous survey

period.

Fidelity’s performance was aided by

growth in the largest-sponsor markets as

well as among startups, said Steve

Patterson, executive vice president for

sales, workplace investing. Mr. Patterson

said Fidelity added $42 billion in new

record-keeping business during 2014,

while retaining more than 99% of existing

record-keeping assets.

Although Mr. Patterson didn’t provide

a forecast for 2015, his company picked

up a major client in American Airlines

Inc., Fort Worth, Texas. The five-year

agreement, to take effect in mid-2015,

was announced in October.

Fidelity was the record keeper for US

Airways Inc., which merged with

American. J.P. Morgan Retirement Plan

Services (now Empower Retirement) has

been American’s record keeper. When

Fidelity assumes responsibility for the

combined plans, it will administer aggre-

gate assets of about $14 billion and serve

approximately 120,000 participants.

Fidelity didn’t acquire any record

keepers. Neither did TIAA-CREF, New

York, which again placed second in

assets with $422.4 billion, up 8.9% from

$388 billion.

TIAA-CREF benefitted from the con-

tinuing consolidation of record keepers

for 403(b) plans among colleges and

universities, said Edward Moslander,

senior managing director and head of

TIAA-CREF’s institutional client serv-

ice organization.

Prompted by changes in Internal

Revenue Service requiring more fidu-

ciary responsibility for 403(b) plans, a

university that once might have had

five record keepers now has one or two,

he said.

The pace of consolidations “ebbs and

flows,” Mr. Moslander said. “There’s a

medium pace right now. Next year, it’s my

gut feeling there will be more consolida-

tions.”

Other growth sources for TIAA-CREF

include 457(b) deferred compensation

plans and the defined contribution com-

ponents of hybrid plans in the public

sector, he said.

Other major playersAmong the other largest record keep-

ers ranked by assets:

�Aon Hewitt, Lincolnshire, Ill., placed

fourth vs. third in the previous survey, as

assets rose 9.1% to $393.9 billion. Unlike

other companies in the survey, Aon

Hewitt’s data is based on the calendar

year rather than the 12 months ended

Sept. 30;

�Vanguard Group, Malvern, Pa.,

placed fifth vs. fourth in the year-ago sur-

vey as assets rose 11.7% to $378.9 billion;

�Voya Financial Inc., New York,

slipped to sixth from fifth on assets of

$346.3 billion, up 6.4%. Voya was former-

ly known as ING U.S. Retirement;

�Wells Fargo Institutional Retirement

and Trust, Charlotte, N.C., held onto sev-

enth place with $214 billion, a gain of

11.1%;

�Bank of America Merrill Lynch,

Boston, moved to eighth place from ninth

on the strength of a 12% increase to

$165.7 billion from $147.9 million;

�T. Rowe Price Inc., Baltimore, rose to

ninth from 11th with a 2.4% gain to

$147.8 million from $144.3 million;

�Principal Financial Group Inc., Des

Moines, Iowa, advanced to 10th from

12th, with assets of $147.6 billion, a gain

of 10.4%;

�Xerox HR Solutions, Secaucus, N.J.,

dropped to 11th from 10th place, as its

assets slipped 1.5% to $143 billion

from $145.1 million. In the previous

survey, however, Xerox’s asset total

climbed by 51.1%. Xerox was the only

record keeper among the top 25 firms

that posted an asset decline during the

latest survey.

Among record keepers with the

largest number of clients, Paychex Inc.,

Rochester, N.Y., remained the leader

with 67,000 for the latest survey vs.

63,000 in the previous survey. ADP

Retirement Services, Roseland, N,J.,

climbed to second place from sixth,

reporting 46,773 clients vs. 39,414 in the

previous survey. �

March 9, 2015

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