The OppenheimerFunds Inc. unit of MassMutual Financial Group will be replacing Legg Mason Inc. as the manager for Illinois' 529 college savings program.
When the contract is finalized this month, the state's Bright Start College Savings Program will be the nation's lowest-cost 529 plan, according to a press release the state treasurer's office issued Wednesday. Plan expenses will be slashed by nearly 40%, saving participants nearly $8 million a year, the office said.
Raquel Granahan, OppenheimerFunds' vice president of wealth management, said in an interview Wednesday that the program's fees will be "far lower" than the 99 basis points Legg Mason charged annually. Legg Mason bought the program when it traded its brokerage network for Citigroup Inc.'s asset management operations in December 2005.
OppenheimerFunds, of New York, already manages 529 savings programs in New Mexico and Oregon with total assets of $1.7 billion. Ms. Granahan said it beat bids from Legg Mason, Upromise Inc., Vanguard Group Inc., TIAA-CREF, and Bank of New York Co. Inc. to take over the administration and distribution of the Illinois program, which had $2 billion of assets under management at the end of 2006.
Ms. Granahan said that by adding Illinois, the company will more than double its total 529 plan assets under management.
OppenheimerFunds plans to continue bidding for more states as contracts come up for renewal, she said. "Our strategy has always been that these are very state-centric programs. We want to marry ourselves to the right states."
OppenheimerFunds ended 2006 with $235 billion of assets under management.
