Mercer LLC announced today that it will offer its defined contribution plan administration services directly to financial advisers after ending an exclusive relationship with Putnam Investments of Boston.
The firm offers consulting, outsourcing and investment services.
While both Putnam and Mercer will continue their alliance for a customer base of some 500 plans with about 500,000 participants with $12.5 billion in assets, they are separately pursuing new business in the defined contribution marketplace.
Today, Putnam announced plans to
expand its defined contribution offerings using the platform of sister company FASCore LLC, which is owned by Montreal-based Power Financial Corp.
Mercer began the alliance to offer administration and record-keeping services for defined contribution plans with Putnam when both were sister companies under then-parent Marsh & McLennan Cos. Inc of New York. The relationship continued even after Marsh sold Putnam to Power in 2007.
The decision to end the alliance was a mutual one, said Eric Levy, retirement business leader for Mercer’s outsourcing business.
“We believe there is an opportunity for Mercer to stand alone in the adviser-sold market,” he said.
“We felt at this time, with all that is going on with plan sponsors and their fiduciary responsibility, that the time has never been better to start this.”
Not being affiliated with an asset manager will be an advantage for Mercer, Mr. Levy said.
“We are fully independent and fully fee-transparent,” he said. “The market has continued to evolve to an open investment platform.”
Mercer’s defined contribution business already has 600 plan sponsors with 1.3 million participants and $45 billion in assets under management. Many of those clients include large plans.
The goal for distribution is to reach out to financial advisers and registered investment advisers who work with plan sponsors in the midsize market, including companies with 500 employees or more.
To that end, Mercer has already hired a six-member distribution team. The firm had been working on this for the past nine months, he said.
Putnam’s decision to move forward with a new platform was based on efficiency, said Jeffrey Carney, head of global marketing and products at Putnam.
“We feel we could do more for clients on this [new] platform going forward,” he said. “We can do more because of size, scale, flexibility and the technology. The size of the plans we could put on the platform is broader. We are committed to providing fee transparency as well.”
There is a lot of room for competition, he added. “We enjoy competition,” Mr. Carney said. “We know we have to earn the right to have people buy Putnam funds every day.”
