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Great-West Lifeco’s world headquarters is based in Winnipeg.JOHN WOODS/The Canadian Press

Insurance and investment company Great-West Lifeco Inc. has shaken up management at its U.S. subsidiaries, and now its zeroing in on retirement plans as a key way to build its business for the long term.

Denver-based Great-West Financial will pay an undisclosed sum for J.P. Morgan's Retirement Plan Services unit, the company said Thursday. It's a large-market, defined-contribution plan record-keeping business.

That means Great-West is buying the bank's plan administration, marketing and client services businesses focused on large retirement plans.

"We think this is a very strategic market place in the U.S. and around the world - as baby boomers transition from accumulation, to retirement and decumulation," said Paul Mahon, chief executive officer of Great-West Lifeco, in an interview.

The deal vaults Great-West up to having the second-most participants in the defined-contribution plan retirement services business in the U.S. It's a mouthful, but essentially the metric means that the company will now have 6.8 million plan participants with $387-billion (U.S.) in assets to serve. The market leader, by that count, is Fidelity Investments.

"Great-West's business has been more focused on the small to mid-sized market, so the JP Morgan transaction is highly complementary," Mr. Mahon said. The large market is classified as defined-contribution plans with more than $25-million (U.S.) in assets under administration, wrote analyst Peter Routledge. But JP Morgan's plans are far larger, with average assets of $835-million, he noted.

Being in the larger market is helpful for two reasons, Mr. Mahon said. First, it lends credibility that a company can do business with the Fortune 100 employers. JP Morgan is the largest bank in the U.S. by assets, so it's brand name has carried far with clients. If the deal boosts Great-West's profile in the U.S. it could help the company sell other major products, such as asset management services and insurance products.

Second, and even more importantly to Mr. Mahon, different sized corporations have different requirements from plan managers. Large corporations often demand greater flexibility and technology capabilities. The acquisition allows Great-West to offer some of those advanced systems to its smaller clients.

Great-West said the deal wouldn't "have an immediate material impact on the financial results," but did say that it would be more competitive as a result.

This record-keeping business has tight profit margins, said Barclay's Analyst John Aiken in a note to clients. "Cost savings on technology investment and potential cross-selling opportunities may accrue over time … the anticipated impact on earnings would likely be longer-term in nature," he said, adding that that kind of investment is in line with the style style of Great-West, and its parent company Power Corp.

Mr. Mahon described the move as positioning the company for future growth. That makes this move more important as an indication of Great-West's focus on the U.S. as a place to build in the coming years.

In late March, the company promoted investment veteran Robert Reynolds to head of Great-West Lifeco U.S. Inc. He took control of Great-West Financial and Boston-based asset manager Putnam Investments, where he was already president. Mr. Reynolds also has a lot of experience with previously-mentioned Fidelity, having been an employee and executive at the company for more than 20 years.

And around that time, Great-West executives said they "fundamentally view the U.S. as the largest growth engine in the overall Great-West Lifeco franchise."