SEI Investments, long a provider of back-office and investment management services to banks and advisers, is gearing up to move into the data aggregation business.
The goal of its new product, as yet unnamed, is to help advisers make the increasingly complicated financial pictures of wealthy people more comprehensible and thereby deepen client relationships, said Robert Crudup, executive VP of investment systems and services at SEI in Oaks, Pa. The product is designed to help advisers better focus on relationship management, he said, which will probably become the most important factor in attracting and retaining high-net-worth baby boomers.
The program, planned for a launch in the second half of next year, will enable advisers to collect data on a client's finances from banks, brokerages, mutual funds, insurance companies, and other sources and thereby offer more comprehensive financial planning, Crudup said.
The ability to better understand a client's total financial picture could be particularly useful to bank brokers and advisers, Crudup said. Citing a U.S. Trust study, he said that only about one-third of high-net-worth individuals and families feel comfortable going to a bank for investment advice. In order to expand on this, banks should consider outsourcing more of their investment management and financial advice, he said, and focus at least as much on building and maintaining relationships as they now do on asset management.
Mark Samuels, the senior VP of corporate marketing at SEI, said that wealthy baby boomers tend to have more complex financial situations than their parents'. For example, rich boomers tend to invest much more widely than past generations and to spend more freely. "This group will indulge themselves," Samuels said.
As a result, an adviser who can reduce this complexity has an advantage in obtaining business, Samuels said. Wealthy boomers are "willing to give up more aspects of their financial planning to others in return for time" saved, he said.
Crudup said an advantage he expects SEI's aggregator to have over other products - like that of the Redwood City, Calif.-based Yodlee Inc. - is that the adviser will get broad leeway in managing and arranging the data.
For example, properly segmenting the client's data will help the adviser control capital gains taxes when the client either sells or donates securities, Crudup said. If a client holds stock in a single company but in the custody of several institutions--which is not uncommon among wealthy people, he said--the adviser will be able to see which shares were bought at the lowest price in order to reduce capital gains taxes.
SEI is also planning to push further a separate account program it started this month for the bank market. The program, an updated version of one started last spring for independent advisers, will probably have $50 million by yearend, Crudup said. It is up and running in nine cities and has several bank clients, he said.
The separate accounts program for advisers had $1.3 billion of assets under management at Sept. 30, Crudup said.
The bank-oriented platform requires a minimum investment of $250,000, and it offers a full-time tax counselor to help bank advisers deal with the tax consequences of switching from mutual funds or other investments into a separately managed account program, Crudup said. This feature is particularly important because many high-net-worth people are reluctant to switch programs for fear of incurring taxes, he said.
About 60% of SEI's investment management business comes from banks, Crudup said. It supplies back-office and trust technology to almost half the banks in the United States, including seven of the 10 largest. As of Sept. 30, SEI had about $74 billion of assets under management.