In 2012, MassMutual made news when it announced it was purchasing the retirement plans business from The Hartford. The acquisition, which closed earlier this year, has diversified MassMutual’s business, allowing it to offer its tools and services to a broader array of clients. Alison Cooke Mintzer spoke with Elaine Sarsynski, Executive Vice President, MassMutual’s Retirement Services Division, about the changes the company has experienced and what the acquisition has meant for plan sponsor clients and advisors.
PS: After the acquisition of The Hartford’s Retirement Plans business in 2013, MassMutual moved up significantly in PLANSPONSOR’s annual Defined Contribution (DC) Recordkeeping Survey rankings based on its size. What does this new growth mean for MassMutual’s future success?
Sarsynski: We were very excited when The Hartford’s Retirement Plans business came on the market, and we were able to announce in early September of last year our intention to purchase it. The negotiations and the closing of the transaction were very quick, I think, because it was such a complementary acquisition.
With the acquisition, we were able to go from roughly $70 billion of assets under management (AUM) to about $130 billion of assets under management today. In terms of overall AUM, it moved us near the top 10 position in the industry, and we’re actually number one in terms of new sales in the under $500 million segment.
We were also able to widen our distribution capabilities, not only in terms of the number of wholesalers and employees who came on board, but also through groups of advisors and third-party administrators (TPAs) with whom we did not previously have relationships. This complementary model gives MassMutual the opportunity to serve virtually every plan size and every type of financial professional, from those who serve smaller businesses all the way up to the advisors who focus on very large plans.
We now have a tremendous footprint all over the country with roughly 80 to 90 wholesalers covering the market. We have an additional 1,200 employees that joined us at the beginning of the year, so today we have more than 2,400 employees and colleagues serving our clients and distribution partners. We have many smaller plan solutions now that create a great deal of flexibility for our plan sponsors and advisors, and we also have additional retirement income capabilities through the acquisition.
We wanted to expand our presence in the government market as well and this transaction has certainly enabled us to expand our government competency and capability as well.
PS: Can you describe how this acquisition benefits MassMutual clients and financial advisors?
Sarsynski: It gave us an increase in breadth and scope throughout the country. It was a proof point in terms of our commitment to the marketplace because we put a significant amount of capital behind this acquisition. It validated our commitment to the retirement services industry at a time when many of our competitors may be thinking about consolidation or restricting their growth targets.
It does improve and increase the scope of products and service models that we offer. We were fortunate in that we have a new lifetime income product that was also part of the acquisition. It’s a small plan solution currently. We picked up some terrific brands, including the Aviator brand, which is highly regarded by the financial professionals using it today, and we will be extending that to other MassMutual clients.
Our new location in Phoenix—in addition to our Memphis location—strengthens some of our call center and account management needs. That Phoenix location gives us more hours in terms of servicing our West Coast and Hawaii clients.
PS: You mentioned the acquisition of a significant book of governmental retirement plan business. What is MassMutual’s strategy to serve that segment of the DC space?
Sarsynski: The acquisition of the government and the small case product lines, and the assets under management, really turbo-charged our growth in both the government and small plan businesses and probably saved us three to five years in terms of organic growth.
Our award-winning RetireSmart participant services platform and world-class plan sponsor support will be available to our government book of business as well. We acquired a significant book of government business and MassMutual is seriously committed to this market. The government plans on our platform can look forward to accessing MassMutual’s award-winning participant education tools and highly regarded service model.
I think that our targeted participant communication and education will be well received by new advisor relationships and sponsors, as well as the participants in the government book. We have some great tools, such as our RetireSmart Ready tools and our RetireSmart Income tools at the participant level, as well as our PlanSmart sponsor tools, which will allow plan sponsors and their advisors to see a holistic picture of retirement readiness for their entire workforce, rolled up into a report that actually shows them the number of participants who are on track to retire with sufficient replacement income.
PS: You mentioned the innovation MassMutual has been pursuing with your tools and services as it relates to government plans. How are clients and participants of all sizes and types benefitting from this endeavor?
Sarsynski: Our plan health tools, which include MassMutual’s RetireSmart Ready at the individual level and the PlanSmart Analysis at the plan level, are unmatched in the industry. For example, a plan’s data may show that 68% of employees are on track to retire at age 67 with 75% of final income. That’s valuable information that the sponsor, together with the adviser, can use to help make changes to the plan that can improve outcomes for participants. Likewise, participants can make simple changes that will help them, on an individual level, get closer to their personal retirement goals.
We will also continue to use data and demographic trending to inform our plans for new tools as we move forward. We will continue to use our Custom Choice products, which allow plan sponsors and plan advisors to pull together their own target-date funds (TDFs) that are specifically designed to meet the needs of their employee base.
We will continue to use and promote our RetireSmart Income products. These are tools to help in the decumulation of plan participants’ balances. So, to clarify, pre-retirees and retirees, will have access to tools that help them understand and prepare for the next phase of their retirement lifecycle. It’s important for participants to see how their savings translate into a monthly income level.
MassMutual will continue to do what we do well, which is to innovate and make it easier for every customer to do business with us, whether it’s at the financial adviser, TPA, sponsor or participant level. It all gets back to why we come to work every day, and that’s to ensure that our more than 3 million plan participants are prepared to retire on their terms.
PS: Do you find that participants are responding to seeing their savings turned into an income figure?
Sarsynski: No question about it. Our job is to communicate and interact with our participants in ways that will motivate them to take the next best step to retirement. Seeing their income in terms of a monthly figure is very impactful in helping them on their journey towards retirement readiness.
©2013 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001. All rights reserved. www.massmutual.com. MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) [of which Retirement Services is a division] and its affiliated companies and sales representatives.
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