Winnipeg Free Press - PRINT EDITION

Great-West Lifeco buys J.P. Morgan division

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Great-West Lifeco wasn't kidding around when it said it was going to make a serious run at the U.S. retirement market a couple of weeks ago.

The Winnipeg-based financial services giant announced Thursday its Great-West Financial subsidiary had acquired J.P. Morgan Retirement Plan Services.

By adding nearly 6.8 million participants and $387 billion in record-keeping assets, GWF will become the second-largest retirement services provider by participants in the U.S. Terms of the deal, scheduled to close in the third quarter and subject to regulatory approval, were not disclosed.

Paul Mahon, president and CEO of GWL, said the addition of the J.P. Morgan division complements GWF's existing presence south of the border.

"Great-West Financial has a lot of strength in the small and mid-sized client range in the 401k business. (The J.P. Morgan acquisition) represents significant scale in the large client space," he said.

"It now puts us in a place where we have strong share in all segments. That will give us greater credibility and scale in the U.S."

A senior executive at J.P. Morgan Asset Management believes the deal is "very complementary."

"Great-West Financial is one of the largest and most respected retirement-plan administration firms in the industry -- with an existing expertise in serving large plans -- and we believe that our clients and employees will benefit from the acquisition," said Michael Falcon, its head of retirement.

It's unlikely GWL is done wheeling and dealing in this sector. Mahon said the U.S., as the largest financial services market in the world, is a primary focus for GWL. The fact it's more fragmented than the Canadian retirement market means there will likely be more opportunities for adding companies and different blocks of business under its corporate umbrella, he said.

Mahon said GWF wants to leverage its state-of-the-art record-keeping system through which it does its own retirement plan and participant record-keeping as well as for other financial services organizations.

Two weeks ago, GWL merged its retirement business with that of Putnam Investments and named Robert Reynolds, president and CEO of Putnam, as the leader of the new entity.

"We're bringing together the best of those three organizations. We think we'll have the best in class corporate 401k capabilities, including client service, products, marketing and technology," he said.

The J.P. Morgan business comprises 200 clients with approximately 1.9 million participants and US$167 billion in retirement plan assets. More than 1,000 staff and management affiliated with the division will join GWL.

The entire U.S. defined contribution plan market is worth $6.8 trillion in assets. Of this, the 401k market makes up about $4.25 trillion, or nearly 70 per cent, of all defined contribution assets.

geoff.kirbyson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 4, 2014 B7

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