Manulife Financial's plan to rename its 529 product to reflect its recent John Hancock Financial Services acquisition is the first in a series of rebrandings that it says will encompass all the company's financial protection and wealth management products offered in the United States.
The 529 plan will become known on Tuesday as John Hancock Freedom 529. It has been known as Manulife College Savings since its introduction in 2001.
Carey Foran Hoch, Manulife's vice president of marketing and product, U.S. college savings, said the change was part of an overall strategy to capitalize on consumer awareness of the Hancock name in the United States.
"We're the first product to go, but it will happen with all of our products sold in the U.S. over the next year," she said.
John Hancock said that all the name changes are expected to be completed by early next year.
Ms. Hoch said that, because 529s are unregistered and require no insurance filings, changing the name can be done very quickly, which is one reason this product went first.
But even more importantly, she said, the fourth quarter is typically a big sales period for 529 products, and Manulife wanted to accomplish the change before then.
"To change your name during your biggest sales season is not the best strategy. We wanted to address the name now," she said.
The fourth quarter and January generally see big 529 sales volume because people fund them as part of estate planning and to diminish their tax liabilities for the year, since plan contributions are tax-deductible in some states.
Ms. Hoch said the company is explaining the change to advisers and consumers through a series of mailings. So far, she said, "we haven't heard anything except for positive feedback." The strength of the Hancock brand has helped because so many consumers and advisers are already familiar with it, she said.
In addition to the rebranding, the Hancock purchase is helping Manulife's 529 product in other ways, Ms. Hoch said, for example, by expanding its distribution and wholesaling and contributing a John Hancock fund to the available investment mix.
Most successful 529s are distributed through a mutual fund group, Ms. Hoch said, but Manulife has generally sold its product through the variable annuity channel because it lacks a mutual fund group. Hancock has a fund family, though, and its 30 fund wholesalers will soon be offering the 529 plan, she said.
In addition, John Hancock owns Essex Corp., a third-party marketer in the bank channel. "We've started to develop a rollout plan to them," Ms. Hoch said, which would introduce the 529 product in the bank channel "right during the prime gifting season."
"Essex will be wholesaling and selling our 529 product and really bringing it to a channel that Manulife hasn't had," Ms. Hoch said. Though Essex has experience at wholesaling third-party 529s, this will be its first proprietary product; Hancock did not have its own 529 product.
Toronto-based Manulife bought John Hancock of Boston last month in a stock deal worth about $13 billion.
Robert Blanchard, an analyst at Moody's Investors Service in New York, said the decision to rebrand Manulife products with the Hancock name is "unconventional" but makes sense in light of the two brands' comparative strength in the United States.
"In Canada Manulife clearly has the brand recognition it needs, but in the U.S., the more powerful brand, with higher recognition, is definitely John Hancock," Mr. Blanchard said.
Though "a lot of companies like to put their name on everything" after an acquisition, Manulife appears to have chosen to capitalize on the value it acquired in the John Hancock brand, he noted.
John Hancock Freedom 529 is a national, multimanaged section 529 education savings plan. It is distributed by Manulife Financial Securities LLC through other broker-dealers it appoints.
The savings plan is managed by the mutual fund giant T. Rowe Price, sponsored by the Education Trust of Alaska, and offers a multimanager approach that lets investors work with their financial consultants to adopt strategies maximizing their investment opportunities while managing risk.
The investment managers available as of Tuesday will be: A I M Advisors Inc., American Funds, Davis Advisors, Fidelity Investments, Franklin Templeton, John Hancock Funds, OppenheimerFunds Inc., Pacific Investment Management Co., and T. Rowe Price Associates Inc.
