Recordkeeper Consolidation Continues Amid Pandemic

Renee Schaaf, president of retirement and income solutions at Principal Financial Group, recently jumped on the phone with PLANADVISER for a discussion of her firm’s ongoing integration of the Wells Fargo Institutional Retirement and Trust business.

On several occasions, Schaaf has offered her take on the integration progress since the deal was cut in July 2019, but this was the first time she offered an update about how the coronavirus pandemic is impacting the work of bringing together two large and sophisticated financial services enterprises.

Schaaf says the combined organization has some ways to go, but it is already delivering new and enhanced capabilities to Principal and Wells Fargo customers, including a digital plan onboarding experience, the Principal Complete Pension Solution, the Principal Milestones financial wellness program and more.

“Despite COVID-19, our integration team has continued to make important progress in bringing these two businesses together,” Schaaf says. “We have stayed dedicated to the integration without losing focus on supporting current customer and financial professional needs, particularly as they’re navigating rapidly evolving market conditions impacting retirement plans, investments and businesses as a result of the pandemic.”

According to Schaaf, the goal is to complete the integration sometime during 2021. Reaching this point will not only require further operational and technology changes but also updates to the combined company’s physical footprint. The company plans to retain locations in Charlotte, North Carolina; Minneapolis/Roseville, Minnesota; Waco, Texas; Winston-Salem, North Carolina; and Manila, Philippines. Last month, Principal secured an office space in downtown Minneapolis that will welcome employees in 2021, Schaaf says. 

At this point, many Wells Fargo Institutional Retirement and Trust employees have received job offers to transition employment to Principal effective in 2021. Principal has also appointed a new sales leadership team and is updating its adviser/consultant service model. Schaaf says the company intends to “meet the needs of all customer segments with comprehensive retirement, trust and custody, executive benefits and discretionary asset management offerings.”

Schaaf says a key part of the firm’s strategy moving forward will be accelerated innovation in its retirement recordkeeping technology platform. As a part of these efforts, she says, the company continues to expand the Principal Total Retirement Suite with more advanced retirement plan management capabilities, financial wellness tools and “other resources that help people to save enough and have enough in retirement.”

To this end, Principal will start transitioning participants in October through Principal Real Start. Schaaf says Real Start represents a simplified and highly personalized onboarding experience.

“The process aims to be seamless for plan sponsors and participants as Principal manages all transition logistics,” she says. “We could have made the decision to run parallel systems, but, ultimately, we didn’t think that would serve anyone well. We took time to thoughtfully review and plan the transition to make sure it will be seamless and easy for clients. What has really resonated with the Wells Fargo Institutional Retirement and Trust client base is that we are going to be bringing over the very same service teams that handle them today. This is especially important in the eyes of the large and complex plans in the client base.”

Asked to put the ongoing Principal-Wells Fargo integration into the context of broader recordkeeping industry trends, Schaaf says there is no reason to believe that consolidation of this type will slow down.

“Pressure to consolidate and build scale has been around for years and will no doubt remain an important trend moving forward,” she says. “This is a challenging industry, but when we look forward at the path we want to follow, we know that recordkeepers that can serve defined contribution plans incredibly well will continue to thrive. We also see big opportunities to blend together different types of retirement programs, from defined benefit pensions to non-qualified deferred compensation plans to employee stock ownership plans. We see a natural runway and an opportunity to do more across these spaces—to focus on total retirement solutions while also bringing new innovations to the marketplace.”