Firm driving additional scale and scope through strategic acquisitions, record sales
GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–On the cusp of its sixth anniversary, Empower Retirement, the nation’s second-largest retirement services provider,1 is announcing record sales growth and new client commitments totaling some $110 billion while furthering plans for expanded offerings to serve the needs of millions of new retirement investors and their advisors through financial wellness, advice and holistic financial planning services.
Empower, which announced some $4.3 billion in strategic acquisitions in the 92 days from June 29 to Sept. 28, has dramatically increased the scale and scope of its business to accompany a much wider set of retirement plans and a broad new offer to serve a more complete array of financial needs for millions of retirement plan participants and individual investors.
The recently completed acquisition of Personal Capital and announced plans to acquire the retirement businesses of MassMutual and Fifth Third Bank2 combine to form a more robust enterprise bolstered by new client commitments.
“Empower is experiencing a period of significant and transformative expansion through an intense focus on how we can better serve the needs of more individuals, their employers and the advisors who assist them,” said Empower President and CEO Edmund F. Murphy III. “With this level of growth, we have the ability to develop new opportunities to serve all of these stakeholders.”
Murphy explained that by focusing sharply on customer needs — particularly through the COVID-19 pandemic — Empower has earned the trust of thousands of new clients and their plan participants. Request-for-proposal activity in the last year has been higher than ever before in the company’s six-year history. During that period, Empower has taken in approximately $110 billion in new client commitments, which include new 401(k), 457(b) and 403(b) defined contribution plans of all sizes covering corporate, government and not-for-profit employers. The $110 billion represents funded and committed sales from the 12-month period that ended Sept. 30.
In the large and mega market (plans with more than $50 million in assets), Empower has signed 64 new clients, 130 new public plan clients, 15 not-for-profit clients, and over 3,200 advisor-sold clients with less than $50 million in assets.
Since its inception in 2014, Empower has annually grown at more than twice the rate of the industry average,3 fueled by integrated financial technology tools that have been the hallmark of Empower’s highly successful retirement plan solutions. The company was created by bringing together the retirement companies of Great-West Financial, Putnam Investments and JP Morgan Retirement Plan Services.
“The importance of providing a robust retirement plan is paramount in the thinking of the diverse range of employers we serve from across the corporate, government and not-for-profit landscape,” said Murphy. “If anything, the COVID-19 pandemic has highlighted the importance of this benefit. However, employers are recognizing that the needs of their employees are going well beyond defined contribution plans — the needs are deeper and more wide-ranging than retirement and go into advice and financial wellness. That trend will not be changing, and we believe that it is more widely recognized because of the pandemic.”
Personal Capital: Expanding Scope
Empower Retirement announced on August 18 the completion of its acquisition of Personal Capital, a digital-first registered investment adviser and wealth manager with award-winning financial tools.
The combination will bring together Empower’s leading retirement plan services and integrated financial tools and Personal Capital’s rapidly growing, digitally oriented personal wealth management platform. Retirement plan participants and individual investors will have access to added financial wellness tools and a better ability to budget and see retirement savings within the context of their whole financial picture — including their personal assets and liabilities — and will have the ability to manage progress toward their financial goals.
The new profile of Empower broadens the company’s strategic value proposition from one of a retirement-focused, service-oriented innovator to that of a provider of a more complete array of personal financial wellness and advisory services.
Murphy explained that the Personal Capital suite will be offered to individual investors and retirement plan participants saving through defined contribution plans.
“In a word, the demand for advice is insatiable, and the need for helping individuals grow their financial knowledge cannot be understated,” said Murphy. “We acquired Personal Capital because their highly skilled team, technology, toolset and overall hybrid offering is second to none.”
Personal Capital is utilized by more than 2.5 million customers and bolsters Empower’s existing consumer business, which serves IRA and brokerage account customers.
MassMutual & Fifth Third: Expanding For Scale
In September, Empower announced the acquisition of the retirement businesses of MassMutual and Fifth Third in transactions that, when closed, will amount to an estimated 2.5 million new participants on the Empower recordkeeping platform. The transactions are expected to close later in 2020 pending regulatory approval.
The MassMutual retirement plan business comprises 26,000 workplace savings plans through which approximately 2.5 million participants have saved $167 billion in assets. Following the close of the transaction (pending regulatory approval) and combined with new organic sales, Empower will have nearly 13 million participants on its platform and more than $800 billion administered in approximately 67,000 workplace savings plans.4
“As we expand the scale of our participant base, we can deliver these innovations to more people and achieve new economies of scale over time,” said Murphy. “When combined with the leading-edge technology in the Personal Capital platform, our participant base gains access to a very high-quality financial planning experience that will be directly aligned with their goals and at the center of their engagement with their financial advisors. We are excited about the opportunity to reach new customers and serve even more Americans in this way.”
About Empower Retirement
Headquartered in metro Denver, Empower Retirement administers $667 billion in assets5 for more than 9.7 million retirement plan participants as of June 30. It is the nation’s second-largest retirement plan recordkeeper by total participants.1 Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; small, mid-size and large corporate 401(k) clients; non-profit 403 (b) entities; private-label recordkeeping clients; and IRA customers. Personal Capital, a subsidiary of Empower Retirement, is an industry-leading hybrid wealth manager that currently manages more than $13 billion in assets virtually delivered from offices across the U.S. For more information please visit empower-retirement.com and connect with us on Facebook, Twitter, LinkedIn and Instagram.
1 Pension & Investments 2020 Defined Contribution Survey Ranking as of April 2020.
2 The MassMutual and Fifth Third transactions are expected to close during the fourth quarter, subject to required regulatory approvals and other customary closing conditions. References in this document constitute forward-looking statements, representing management’s current view of future events based on reasonable assumptions. These statements are not guarantees of future performance, as actual results may differ depending on the development and completion of these business combinations. Consider these and other factors, uncertainties and potential events carefully and do not place undue reliance on forward-looking information. Other than as specifically required by applicable law, forward-looking information as a result of new information, future events or otherwise will not be updated.
3 Retirement Resources, Inc. 2019.
4 Estimated joint assets under administration of Empower Retirement and MassMutual.
5 As of June 30, 2020. Information refers to the business of Great-West Life & Annuity Insurance Company and its subsidiaries, including Great-West Life & Annuity Insurance Company of New York. Of the total $667B assets under administration, $16.8B represents the AUA of GWLANY. AUA is a non-GAAP measure and does not reflect the financial stability or strength of a company. GWLA assets total $47.7B and liabilities total $46.1B. GWLANY assets total $1.59B and liabilities total $1.48B.