Yet another national record keeper is reported to be up for sale. Citing unnamed sources, Bloomberg Business reported June 3 that Bank of Montreal (BMO) is planning to sell its U.S. Retirement Services division, hoping to get $100 million.
BMO’s website lists 1,000 plans, 500,000 participants and $100 billion (although other sources put that figure closer to $30 billion).
Purchased in 2011 by BMO with the acquisition of M&I Bank, BMO Retirement Services has garnered a good reputation, focusing on select industries and receiving many industry service awards. But at $30 billion, they have never come close to achieving the scale to claim one of the top nine seats at the advisor sold DC table. Sources indicate that BMO had looked to attain that scale through acquisition. But sometimes, if the price to buy is too high, it means that you might want to sell. If the Bloomberg report is true, that may have been what BMO has decided to do.
Who’s the natural acquirer? Though BMO is not as big as NYLife Retirement Plan Services, which had just under $50 billion, the two record keepers have similar profiles — both are focused on the mid and larger markets, partner with a limited number of advisors, and are not widely distributed through wire houses. So look for a big record keeper on the bubble, perhaps stuck in the small market and working primarily with emerging advisors, to take a close look at BMO — similar to what Hancock saw when it decided to pursue NYLife. There are two major insurance company record keepers that fit that profile.
But before advisors with clients using BMO panic or take precipitous action, it would be wise to confirm the facts one way or the other. It wouldn’t be the first acquisition rumor to fade because the price or timing wasn’t right.
