While many vendors selling into the wealth management space experienced hard times in the economic downturn of the past two years, SunGard found its business expanding as companies turned to technology to help them stay in shape.

While many vendors selling into the wealth management space experienced hard times in the economic downturn of the past two years, SunGard found its business expanding as companies turned to technology to help them preserve assets under management and cut costs.

SunGard is one of the world's largest software and technology services companies and its Financial Systems arm serves institutions in virtually every segment of the financial services industry. At present, the firm has 20,000 employees in 70 countries, with revenues of more than $5 billion.

SunGard systems support the accounting and management of assets worth more than $25 trillion and process more than 5 million trades each day. The firm provides integrated wealth management platforms for trust and accounting, financial planning, asset allocation, client relationship management, trading, compliance and client reporting, and online client tools.

Taking a long, hard look at costs

Blaine Maxfield, chief operating officer of SunGard’s wealth management business, said that he saw wealth managers reach a new level of understanding about the costs of running IT and how using a third-party provider rather than keeping it all in-house could make a difference.

“We found the credit crunch accelerated things. When things are going well, as they were pre-2007, everyone is happy and no one wants to talk about making changes,” Maxfield told WealthBriefing in an exclusive interview. “Now there’s a laser-like focus on retaining assets and cost containment… and companies are very willing to have discussions about what technology can do to help them meet their goals in those areas. They are also much more open to using our outsourcing and consulting services.”

The wealth management practice within SunGard found itself poised to capitalise on that new trend in early 2007. At that time, the company began a transition from being product-focused to solution-focused, and decided to segment itself according to like-kind economic buyers, as Maxfield described them. Products within the company’s Financial Systems business that touched wealth managers were therefore rolled into one division.

Integration is key

“The concept of building a platform has arrived,” said Maxfield. “Wealth managers are less willing now to just cobble together systems. They want complete workflow systems with front, middle and back office functions that work seamlessly. Data aggregation and system integration are top issues.”

“One client of ours organised an offsite meeting to go through all their products, trying to identify the best-of-breed. They really worked at it… had Post-It notes on all the walls and everything, doing their best to get the big picture. They concluded after two days of this exercise that it wasn’t about the products, because they had so many and there was plenty of overlap in functionality. They concluded that the most important thing was integration.”

Changes and future trends are being driven by more than just the race for AUM and cost reduction, according to Maxfield. He points to other factors such as constantly changing regulation, increased demand for risk management, savvier clients who want more advice and more transparency, and the advent of software as a service (SAAS) and cloud computing.

The trickle-down from the UHNW segment

Furthermore, it is the needs of ultra high net worth clients that are paving the way for the development of SunGard solutions for all tiers of wealth management. For example, client reporting is in the spotlight at present because new regulations come into force in the US in January 2011 that will require more detailed information to be gathered and included in reports.

“We find the UHNW space has some unique features and what we come up with there tends to flow into the other tiers. We have a number of family office and upper-tier wealth managers as clients, so we understand what that market is looking for,” Maxfield said.

He further notes that keeping up on current trends enables SunGard to ensure its solutions are cutting-edge, and provides the firm with a distinct competitive advantage. A team of analysts tracks global developments in the wealth management space, ranging from local regulations to changes in the population that affect the number of wealthy individuals. The information gathered by this team then creates a road map that the firm uses to determine where to put its resources.

International expansion

“What we see indicates that Asia is coming up as the wealthiest region in the world and we are there, particularly in Australia and China. We’ve also entered Europe and India. Latin America is another market we know is growing, particularly Brazil, and we’ve recently entered that region as well,” Maxfield said.

“Our domestic (US) business is healthy because we had a broad base of customers when the economic crisis hit, but we do know the big growth for us over the next few years will come from international business,” Maxfeld said.

SunGard also offers a Wealth Management University, which provides a comprehensive catalogue of classes on topics affecting wealth managers, ranging from the annual changes in ERISA laws in the US to asset allocation and best practice for advisors. Internal staff and external personnel – being a SunGard client is not a prerequisite – can access these classes, which are delivered live in cities around the world or via interactive multimedia presentations hosted online.

Overall, Maxfield reckons that SunGard is able to offer something for all players in the wealth management arena.

“We believe we are in a unique position, given the breadth of our overall solution set. We don’t have a sweet spot – we scale up or down very well. AUM is what everyone is after, and the key differential is superior service. The right technology can go a long way to enabling a firm to deliver that and pull ahead of its competitors.”