Family Office
Schwab agrees to buy Nationwide's 401(k) subsidiary
Acquisition of 401(k) Company to bolster Schwab's mega
pension-plan efforts. Last month Charles Schwab agreed to pay
$115 million in cash to acquire the 401(k) Company from
Nationwide Financial Services. Schwab plans to fold the mega-plan
vendor into its Investor Services Enterprise which includes
Schwab's Corporate & Retirement Services division.
The transaction is expected to be completed by the end of March
2007.
Bigger
"Many Americans are depending on their 401(k) accounts to help
them achieve a comfortable retirement -- it's one of the pillars
of our retirement security system," says Charles Schwab, chairman
and CEO of San Francisco-based Schwab. "The 401(k) Company has
dedicated itself to providing retirement-plan sponsors and
employees with absolute quality and low-cost products and
services, driven by a strong sense of entrepreneurial spirit and
integrity."
More to the point, Schwab sees the Austin, Texas-based 401(k)
Company as a complement to its retirement-business strategy in
that it increases Schwab's ability to provide retirement plans of
all sizes. "[Although] Schwab has enjoyed strong growth in the
small, mid and large retirement-plan segments, the 401(k) Company
has been very successful winning against traditional providers in
the mega plan segment," according to a Schwab press release.
"During the past two years, the 401(k) Company's newly acquired
plans have averaged more than $500 million in assets and more
than 8,000 participants."
The 401(k) Company's CEO Jerry Bramlett says business owners are
becoming more active in helping their employees meet their
retirement goals -- a plus for his company -- and that Schwab's
strong brand "adds tremendous strength to our message and our
ability to help with those goals."
Meanwhile Columbus, Ohio-based Nationwide sees selling the $01(k)
Company as a way to re-focus on its "core' insurance businesses.
"By sharpening our focus, not only will we better serve this
market, but we also will be able to more effectively deploy
capital through reinvestment in core businesses," says
Nationwide's president and COO Mark Thresher.
The 401(k) Company administers $21.7 billion in contribution
plans for more than 100 companies and 400,000 participants across
the U.S. -FWR
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