5 Ideas About the Great-West-MassMutual Deal, for Annuity Sellers

The MassMutual retirement plan business deal should help Empower use Personal Capital tools to grow the individual retirement account rollover business and "expand retail cross-sell capabilities," according to Empower's deal conference call slidedeck.

But, again: Empower didn't actually use the word "annuity."

3. Big midsize financial services businesses may be acquisition-prone.

The very biggest financial services companies are flush with cheap cash and hungry for reasonable things to do with large piles of cash.

Corporate boards, meanwhile, are nervous about the state of the economy and quick to convert anything that's not nailed down into another pile of cash.

MassMutual, for example, is a life insurance giant, but it ranked only 11th in terms of defined contribution retirement plan participants, and 11th in terms of assets. That positioning as a big midsize player may have made the business attractive for Empower to buy and attractive for MassMutual to sell.

4. The deal itself could breed more deals.

Empower was already the second biggest player in the retirement plan market, but Principal Financial recently came close to it, in terms of the number of participants, by acquiring the Wells Fargo retirement plan business. Completing the MassMutual deal should help Empower pull further ahead of Principal, although it will still be much smaller than Fidelity.

Managers of seven other players with $3 billion to $7 billion players may look at the rankings themselves and decide, simply based on the look of the rankings, that this is a good to buy, or a good time to sell.

5. Even a smooth Empower-MassMutual retirement plan integration could leave some MassMutual retirement plan participants hungry for personal financial advice.

Empower says one reason to make the deal is that MassMutual now has three different recordkeeping systems for its retirement plan business.

"Empower has a proven proprietary and highly efficient recordkeeping platform that currently administers 9.7 million participants at a lower unit cost," according to Empower. "Empower expects to migrate the MassMutual business to its platform over the following 18 months after close."

That integration process could lead to a large wave of MassMutual retirement plan participants getting notices. In some cases, the notices could increase the participants' level of interest in hearing from financial professionals of their own.

— Read A Midwestern Life and Annuity Issuer May Go Private, on ThinkAdvisor.

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