PLANSPONSOR - August/September 2019 - 21

Merger Increases Range of Services
PRINCIPAL Financial Group acquired
Wells Fargo & Co.'s institutional retirement
and trust business in the third
quarter. Through this acquisition,
Principal doubled the size of its U.S. retirement
business, while bringing on institutional
trust and custody offerings for the
non-retirement market and expanding its
discretionary asset management footprint.
According to Renee Schaaf, president
of retirement and income solutions
at Principal in Des Moines, Iowa, one
of the guiding principles in the integration
of the two firms has been to bring
forward the best of both business and
service models. " It's very important to
us to identify what features clients most
appreciate, " Schaaf says. Both organizations
bring strength in the defined
contribution (DC), defined benefit (DB),
nonqualified plan, employee stock ownership
plan (ESOP) and institutional asset
advisory businesses, she says.
As an example of adding depth,
she says, Wells Fargo brings strength
in DB plan fiduciary services, particularly
in the large-plan market; it also has
robust plan sponsor reporting capabilities.
These strengths will combine with
Principal's recordkeeping and administration
proficiencies, in addition to its
ability to offer bond designs to assist
with asset-liability management.
Schaaf says Principal is not only
acquiring additional capabilities and
scale but an experienced and highly
professional team. " We are very keen on
retaining talent, " she says.
As for the future, " we've been having
early conversations with Wells Fargo
institutional retirement and trust business
clients, and there is a real interest on
their behalf in accessing and leveraging
the strong financial wellness capabilities
we have, as well as the capabilities for the
entire participant experience, " Schaaf says.
Principal has broad electronic proficiencies
on the table to onboard participants in
an intuitive, simple and fun experience.
" When we've compared our [system]
with other methods of enrollment, we see
a 20% increase in the overall amount of
deferrals, " she notes. She says Principal
will spend the next 18 months carefully
integrating the capabilities of the two
companies. " The biggest challenge is
getting our story out and working hand
in hand with every consultant, adviser
and plan sponsor to make sure we address
everyone's needs in the best possible way.
But it's a challenge we are very prepared
for and that we welcome, " Schaaf says. " We
are so pleased with the cultural similarities
TALKING POINT
401(k)'s Outsized Role
A SURVEY of 1,000 plan participants
published by Schwab Retirement Plan
Services underscores the vital role 401(k)
plans play in Americans' financial lives.
Most (58%) respondents said it is their only
or largest source of retirement savings.
Catherine Golladay, chief operating
officer (COO) at Schwab, says many of
those surveyed seem to take a " set it and
forget it " approach to their 401(k), with
less than half saying they have increased
their contribution percentage in the
past two years. When asked how they
chose their initial contribution rate, 55%
said they picked a percentage they were
comfortable with, 36% said they opted
for the amount their employer matched,
and 8% were automatically enrolled at
the default percentage chosen by their
employer. -PS
Participants Would Like Help With the Following:
41%
With gauging at
what age they
can afford
to retire
40%
With calculating
how much they
need to save for
retirement
37%
With receiving
specific advice
on how to invest
their 401(k)
Source: Schwab Retirement Plan Services, 2019 401(k) Participant Survey
35%
With figuring
out what their
expenses will
be in retirement
between Principal and Wells Fargo and
know there is so much we can do. "
Patrick Murphy, CEO of John
Hancock Retirement Plan Services, which
recently acquired the plan services division
of New York Life, applauds this measured
approach to integrating the two companies.
He says, as the integration proceeds, it will
be important for Principal's leadership to
regularly communicate achievements to
clients and employees. He recommends
that Principal ask employees for their feedback
as to where the most and least value
is being delivered to clients. John Hancock
encourages such input from its own
employees, he says.
-John Manganaro, Rebecca Moore
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