John Hancock had announced its intention to exit the recordkeeping business a month ago (see John Hancock to Jettison 401(k) Recordkeeping ), because it did not consider it a “core” business for the company. The announcement preceded by just two days an announcement by Wachovia Bank to move its recordkeeping business to Invesco as it chose to focus on “relationship-oriented” activities.
The Hancock sale includes approximately 1,300 defined contribution plans with some 160,000 plan participant accounts. At December 31, 2000, this business had approximately $2.2 billion in assets, of which $1.7 billion were invested in John Hancock mutual funds, according to the press release.
Under the terms of the agreement, John Hancock will continue to manage the assets of the business, and UPI will assume the recordkeeping and support responsibilities.
The transition will begin immediately and is scheduled to be completed by June 30, 2001. Further terms of the sale were not disclosed.
The companies plan to work together to develop a new marketing program that will feature investment management by John Hancock and recordkeeping by UPI. The new program will continue to offer multi-manager investment options, including John Hancock funds.
John Hancock expects to take a non-operating charge of approximately $9 million after tax in the first quarter of 2001 in conjunction with this exit transaction.
– Nevin Adams
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