Fidelity Investments has started a joint venture with SunGard Data Systems Inc. of Wayne, Pa., to enhance its back-office offering to bank trust and third-party administrator customers.
The venture, announced Tuesday, integrates the brokerage services from the Boston investment company’s registered investment adviser group with SunGard’s transaction processing capabilities.
SunGard’s 600 financial intermediaries, which manage $100 billion of assets, and Fidelity’s 170 bank trust and third-party administrator customers can now access an enhanced set of services through a single platform, the companies said.
William C. Carey, the president of Fidelity’s adviser group, said Tuesday on a conference call that the venture would provide economies of scale and significant cost savings for customers.
SunGard and Fidelity will jointly market the platform to other registered investment advisers and trust companies, Mr. Carey said.
“Baby boomers are moving out of accumulation mode and into distribution mode over the next 25 years, and we are seeing extraordinary growth in the trust market, because … [trusts are] the critical and preferred vehicle in estate planning,” he said.
Mr. Carey said that he expects the trust market to expand from $3 trillion of assets on June 30 to $7 trillion by 2010, and that the joint venture will let both companies take advantage of that expansion.
Fidelity will provide brokerage, custody, and clearing services for SunGard’s customers, and SunGard will provide trade automation, systems integration, and software solutions.
Kevin Rafferty, the president of SunGard’s transaction network, said during the conference call that the improved efficiency and economies of scale created through the venture would provide significant growth opportunities for the two companies and improve client services.
“There has been a dynamic shift of assets as clients approach retirement,” Mr. Rafferty said. “Companies are reworking their service models to work with clients that want a wider variety of investment options.”
Fidelity has been providing clearing, custody, and brokerage services to bank trust departments and third-party administrators for 15 years. It had $210 billion of assets under custody for the adviser group’s bank trust and third-party administrators as of June 30.
