In its most recent update on June 17, Principal Financial Group said it expected to close its acquisition of Wells Fargo Institutional Retirement and Trust early in the third quarter of the year, pending regulatory approval.
Well, “early” third-quarter can’t get any earlier than July 1. Today, Des Moines, Iowa-based Principal officially announced the closing of the deal, which effectively doubles the size of Principal’s retirement business and creates one of the largest U.S. retirement services providers, with 7.5 million customers and 56,000 plans.
With the closing, Principal said it has immediately begun the integration of Wells Fargo’s defined contribution, defined benefit, executive deferred compensation, employee stock ownership plans, institutional trust and custody and institutional asset advisory businesses.
The terms of the $1.2 billion transaction remain consistent with what was previously announced on April 9, 2019. The agreement also includes an earnout of up to $150 million tied to better than expected revenue retention, payable two years post-closing.
“With this acquisition, we are broadening our offerings and deepening our ability to serve customers with unmatched capabilities across retirement, asset management and protection solutions,” said Dan Houston, chairman, president and CEO of Principal. “As a top-three leader in the U.S. retirement industry, we will be well-positioned to invest and grow our business to the benefit of our customers, employees and shareholders.”
Integration process moving quickly
In addition to doubling the size of its U.S. retirement business, Principal is “bringing on attractive institutional trust and custody offerings for the non-retirement market and expanding its discretionary asset management footprint,” according to the company’s July 1 statement about the closing.
“Principal is committed to helping people live their best lives through our holistic financial solutions,” said Renee Schaaf, president of Retirement & Income Solutions at Principal. “Together with the Wells Fargo Institutional Retirement & Trust business, our customers can expect a powerful combination of passion, talent and expertise to help empower them to reach their financial goals.”
Just a couple of weeks ago, Principal announced its progress toward a unified retirement leadership team to help guide the integration and future organization, including appointing several executives from Wells Fargo Institutional Retirement & Trust. The company has also committed to retaining locations in: Charlotte, N.C.; Minneapolis/Roseville, Minn.; Waco, Texas; Winston-Salem, N.C.; and Manila, Philippines.
As of December 31, 2018, the respective Wells Fargo retirement businesses had $827 billion in assets under administration served by approximately 2,500 employees in locations across the U.S., Philippines and India.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
