Skip to main content

You are here

Advertisement

MassMutual to Acquire MetLife’s Retail Advisor Force

It looks like the DOL’s conflict-of-interest rule may be claiming another broker dealer victim — or at least it may get partial credit.

The two organizations announced Feb. 29 that they had entered into a definitive agreement for the acquisition by MassMutual of MetLife’s U.S. Retail advisor force — the MetLife Premier Client Group (MPCG), a retail distribution operation with more than 40 local sales and advisory operations and approximately 4,000 advisors across the country.

Previously, MassMutual and MetLife announced joint discussions Feb. 25 about a transaction. Published reports had suggested that concerns about issues that might arise if the DOL’s rule were finalized as proposed. Additionally, MetLife’s concerns about tighter capital restrictions as a designated “too big to fail” financial service company contributed to the consideration.

In late 2015, AIG, citing concerns about the proposed DOL rule, announced the sale of its BD network to a group led by private equity firm Lightyear, which had sold Cetera to RCS Capital in 2014. Early last year Transamerica sold its advisor network and BD to John Hancock Financial Services. MetLife had sold two of its independent BD firms, Walnut Street Securities and Tower Square, to Cetera when Cetera was owned by Lightyear.

On a related note, Fidelity recently said that it is suspending the sale of MetLife annuities as a result of the insurer’s announcement to sell its advisor network.

As part of the transaction, MassMutual and MetLife have also agreed to enter into a product development agreement under which MetLife’s U.S. retail business will be the exclusive developer of certain annuity products to be issued by MassMutual.

The advisor world is moving away from commissions toward fee-based compensation, and to selling advice rather than products — a shift that puts career agent insurance networks at a disadvantage. With the growing importance of retirement and the reach by the DOL into IRA rollovers, insurance BDs which had previously had little exposure in the DC plan market are now feeling the long arm of the DOL’s conflict-of-interest rule, which poses challenges for advisors selling proprietary products. MetLife also cited the high cost of running a career agent network.

On the other hand, with the convergence of benefits provided at the workplace, insurance advisors who are comfortable selling health care and other insurance products might be better positioned to make inroads than financial advisors. Indeed, the announcement states that the acquisition broadens MassMutual’s geographic reach and “provides more clients access to a holistic set of financial solutions, including life insurance, annuities, disability income insurance and wealth management services.”

Regardless of the BD type — wire house, independent or insurance — it looks like getting bigger is becoming even more important, and the DOL rule is accelerating that trend.

Advertisement