(Bloomberg) — Robert Reynolds, who built the industry’s biggest 401(k) business while at Fidelity Investments, is seeking a reprise.
The 62-year-old chief executive officer of Great-West Lifeco U.S. Inc. catapulted his firm to the No. 2 spot among 401(k) providers with last month’s acquisition of JPMorgan Chase & Co.’s recordkeeping business. Reynolds said his goal is to go after the top spot, occupied by his former employer Fidelity, where he was once chief operating officer.
“I’m very hungry to be the best,” Reynolds, a West Virginia native who goes by Bob, said in an interview last month. “I know the business so well.”
By expanding the retirement business, Reynolds is adding stable and recurring revenues and the possibility to sell more products to savers, a rationale that helped Fidelity diversify as clients scaled back purchases of traditional active mutual funds. His ambitious plan puts Reynolds in direct competition with Boston-based Fidelity, which he left in 2007 after being passed up for the top job at the family-owned retail-investing giant.
“If you are cast out of Eden you cannot ever be dispassionate about the choices you make,” said Don Putnam, chairman of PL Advisors, which advises money managers on mergers and acquisitions. “He sees the strategy through the lens of his own experience, which was brilliant and searing.”
Reynolds graduated from West Virginia University College of Business and Economics in 1974 with a bachelor’s degree in business administration. Reynolds, whose career at Fidelity spanned more than two decades, was once considered a potential successor to Fidelity Chairman Edward C. “Ned” Johnson III, who in 2012 named his daughter Abigail Johnson as president, making it clear she would be his successor. Since his departure, he has been running Putnam Investments LLC, another Boston-based asset manager, for the past six years.
In March of this year, he was named head of the U.S. subsidiary of Canadian insurer Great-West Lifeco Inc., which owns Putnam. The U.S. businesses sell insurance and investment products as well as recordkeeping for employer plans. As Reynolds took the helm, the company merged the retirement businesses of its Putnam and Great-West Financial units underneath him.
“I had the top job at Fidelity, but not the top job,” Reynolds said in a 2008 interview. “And when I asked my parents, they wouldn’t let me change my name to Johnson.”
Firms including Putnam and Fidelity sell employers recordkeeping services including sending out statements and providing online tools for workers. They also have money- management units that sell investments such as mutual funds to the plans.
Fidelity, which controlled $1.37 trillion in retirement assets as of March 31, is the behemoth in the industry with about a quarter of the market share by assets it maintains records for, or triple its closest competitor. Meanwhile, Putnam wasn’t among the top 20 administrators as of 2012, according to research firm Cerulli Associates, and Great-West was the seventh-largest recordkeeper of defined-contribution plans by assets in 2012.
Americans held $5.9 trillion in defined-contribution retirement plans as of Dec. 31, of which $4.2 trillion was in 401(k)s, according to the Investment Company Institute.
To be a contender in the market, Reynolds said he knew he needed more scale. So he devised a plan about a year ago to merge Putnam’s retirement-plan business with its sister-unit at Great-West Financial, which generally administered accounts for small and mid-sized employers with 401(k)s and public entities or nonprofits with the similar 403(b)s and 457s.
As he was putting the two businesses together, Reynolds caught a break. JPMorgan approached Great-West with the desire to sell its recordkeeping business, which serviced large employers with 401(k)s such as Cisco Systems Inc. and Walgreen Co., Reynolds said.