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Technology > Investment Platforms > Turnkey Asset Management

Principal Acquires KeyCorp 401(k) Business

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NU Online News Service, June 12, 1:03 p.m. – KeyCorp, Cleveland, has agreed to sell its $8 billion-asset defined contribution retirement plan operations to Principal Financial Services Inc., Des Moines, Iowa.

The companies have not yet discussed the value of the deal or other financial details.

KeyCorp has been running the operations, which manage retirement plans for 1,400 employers, through two affiliates, Victory Capital Management and KeyBank National Association.

KeyCorp says it is selling the operations so that Victory can focus on its $72 billion-asset investment management business.

Principal emphasizes in the release announcing the deal that it will try to keep the “blackout period” as short as possible.

A blackout period is a transition period when members of a defined-contribution plan cannot change asset allocations or make other major investment moves.

Enron Corp., Houston, triggered lawsuits and congressional attacks in late 2001 when it imposed a blackout period on its 401(k) plan members, who had a high percentage of their assets in Enron stock, at a time when the Enron share price was plummeting.

“Our mutual goal is to minimize the blackout period to be far less than industry norms,” Daniel Houston, a Principal senior vice president, says in the deal announcement. “The Principal has extensive experience in plan conversions, performing more than 1,000 each year.”

Principal will give the former KeyCorp plan participants access to a wide variety of educational services and automated investment management and analysis tools, Principal says.


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