Wachovia Corp. is buying Ameriprise Financial Inc.'s defined-contribution record keeping business to add scale in processing for 401(k) plans.
The price was not disclosed. The Ameriprise business has 225 retirement plans and 682,000 participants, along with $28.3 billion of assets. A Wachovia spokesman said that about 430 employees would move over to Wachovia Retirement Services.
The deal is to close this quarter. Once it had done so the Wachovia division would have 5,735 retirement plans, more than 2 million participants, and $102 billion in defined-contribution assets. It would jump to 14th from 23d in number of participants, according to data in the June 2005 edition of Plansponsor magazine. (Fidelity Investments had the most, 10.8 million.)
Wachovia, of Charlotte, and Ameriprise, of New York, use the same technology platform for their record-keeping businesses, said Joseph Ready, the director of Wachovia Retirement Services. The deal "increases our scale significantly, which allows us to invest in technology and people and be more competitive," he said.
Mr. Ready added that retirement planning, like many other business lines, is in a state of consolidation. "We'll take a look" at other acquisitions "where the right opportunities are available both in terms of size and scale," he said.
Wachovia is no stranger to acquiring businesses tied to retirement services. In April 2003 it its retirement outsourcing division by acquiring PFPC Retirement Services from PNC Financial Services Group Inc. of Pittsburgh. In December of that year it acquired the record-keeping and trustee-services business for defined-contribution plans from Bank of New York Co. Inc.
Over the past year, Wachovia has put together several small acquisitions to build scale in specific business lines. Last month the $542 billion-asset company agreed to buy the New York multifamily lender American Property Financing Inc. from Emigrant Bank. In March it acquired Westcorp of Irvine, Calif., and WFS Financial Inc., an auto-finance company of which Westcorp owned 84%.
