Thomson expands push into wealth management

SAN FRANCISCO — Thomson Financial’s recent acquisition of a Belgian software company is a clear indication of its desire to appeal to higher-end financial advisers, analysts say.
Last Tuesday, Thomson Financial of New York said it will acquire eXimius NV, the private-client investment management software subsidiary of Mechelen, Belgium-based Business Architects International NV. Terms of the deal weren’t disclosed.
“Now Thomson’s in the mass-affluent, high-net-worth space,” said Alois Pirker, senior analyst with Aite Group LLC, a Boston-based research firm. “This [acquisition] helps them push into the upper echelons of the wealth market.”
This emerging segment of the software market generates about $1 billion of revenue annually and is slated to grow by 5% to 10% each year, according to Thomson, which had $2 billion of revenue in 2006.
This technology market achieved this magnitude because big banks and brokerages are making a major move into the wealth management market, Mr. Pirker said.
But this growth emanating from banks and big brokers will be compounded by smaller firms’ acquiring similar technology in an attempt to compete, according to Thomson.
Joe Christinat, director financial communications for Thomson, did not respond to multiple inquiries.
SunGard Data Systems Inc. of Wayne, Pa., and other big players in financial technology also are putting together killer solutions that cover the whole spectrum of advisory needs in single packages, according to Jim Starcev, managing principal with Etelligent Consulting Inc. of Overland Park, Kan. This reaction of technology giants in the industry is going to make for a time of dynamic clashes and evolution, he added.
“This will be interesting to watch.” Mr. Starcev said. “That all-in-one package is an interesting topic. SunGard’s also moving in that direction. It’s hard to see” yet whether any company will develop the category-killing bundle of integrated software.
By melding eXimius’ front-office software with Thomson One — a dominant desktop solution for wirehouse brokers — Thomson will have a “unique” solution, according to the company’s press release. The eXimius combination adds to Thomson’s ability to use multicurrency, multilanguage capabilities and risk management employing re-balancing tools and performance attribution tools, according to its release.
The software could indeed give Thomson an edge, because it was developed for a demanding European market, Mr. Pirker said.
“Europe is ahead big time with private banking,” said the native of Austria. “They’ve done it for hundreds of years. The [financial adviser of the] United States is better [at serving] the mass affluent, but Europe is better with [serving] the ultrahigh-net-worth investors.”
But banks in the United States are playing a huge game of catch-up now, which is apparent in Charlotte, N.C.-based Bank of America Corp.’s purchase of U.S. Trust Corp. of New York and Merrill Lynch & Co. Inc.’s purchase of First Republic Bank of San Francisco in the past couple of months.
Yet Thomson also may gain a greater foothold among a constituency where it never has been known — independent registered investment advisers, according to the analysts. Thomson is becoming a stronger presence at RIA conferences and with certain research products in RIA offices, according to Dan Skiles, the Denver-based vice president of technology for Schwab institutional of San Francisco.
Thomson’s IndexView, which advisers use to get the necessary index information to benchmark their performance each month, has been a particularly big hit with RIAs, Mr. Starcev said. “This gives [Thomson] a foot in the door” with RIAs that could lead to deeper relationships in the future, he said.