FundQuest's chief executive says he hopes the Boston wealth management arm of BNP Paribas will spur growth with a turnkey platform of investment products that brokers and registered investment advisers can use to retain customers after retirement.
The company's Retirement Management Services platform, introduced Thursday, combines a financial institution's investment and product platform with best practices for the administration of retirement assets and income.
"We want to help banks and broker-dealers and advisers retain customers as they move from accumulation to distribution," said Robert Del Col, FundQuest's president and chief executive officer.
Mr. Del Col said the platform blends guaranteed-income products, goal-specific analytics, tradeoff testing, and ongoing reporting and monitoring of assets "earmarked" for retirement.
He said he expects the platform, and new cross-selling opportunities internationally through BNP Paribas, will increase FundQuest's assets under management by 20% annually for the next five years. FundQuest has $10 billion under management.
"Having this platform will be essential to our growth," Mr. Del Col said. "We have made a corporate commitment to this emerging opportunity of developing and managing wealth after retirement. This is the biggest thing that will happen over the next 15 years. It is inevitable as boomers retire that trillions of dollars will be in play."
FundQuest has hired John Curry from Putnam Investments to run the new platform. Using this platform should let advisers differentiate themselves by giving better advice and delivering a better retirement plan to clients, he said.
"At the highest level, we wanted to offer a platform that would enable banks and brokers to quickly enter the retirement marketplace," Mr. Curry said. "We wanted to provide them with tools so that they could compete for clients after they retire."
As 76 million baby boomers head toward retirement, many companies have begun preparing. In April, Wachovia Corp. announced plans to create a retirement and investment products group to help customers plan for and live in retirement. Fidelity Investments said it had spent $700 million on technology in 2004 to create a platform for advisers that would let them smoothly transfer customers from asset accumulation to asset distribution mode.
"Fidelity has been the industry leader in this whole thing," Mr. Del Col said. "They have, quite frankly, stimulated the industry. They have anticipated this. We have just built a platform to provide advisers the ability to service this segment."
The most difficult consideration for advisers is how they will get paid as customers retire and begin drawing down retirement account balances. Mr. Del Col said the key is to use fee-based products such as managed accounts and unified managed accounts. FundQuest introduced a unified managed account platform late in October.
In April, Fidelity launched the first open architecture unified managed account through a partnership with Chicago's Envestnet Asset Management Inc.
Burton Greenwald, an analyst at BJ Greenwald Associates in Philadelphia, agreed there are huge challenges coming as people move into retirement.
"It is going to be difficult for advisers and financial planners because until now they have been focusing on accumulating wealth, and now that accumulated wealth has to become an income stream," he said.
FundQuest will offer its turnkey platform through white-label partnerships with financial institutions. Mr. Del Col said FundQuest has relationships with 40 banks and he expects to roll out the platform to two or three banks a month.
Mr. Curry said FundQuest will offer asset allocation and guaranteed-income products that advisers can use when customers want to roll over assets from 401(k) plans or IRAs. More important than products, banks and advisers want guidance on how they should manage accounts after individuals retire, he said.
"The program we have developed gives banks a track," he said. "It teaches banks how to continue selling products and managing assets after retirement."
"The solution could be mutual funds, or managed accounts, or unified managed accounts," Mr. Curry said. "But it could also be annuity products, long-term care, or life insurance products. Frankly, the answer could be some things that have not been invented yet. I think there will be a lot of product development in the next five to 10 years. The key is to have a platform that is flexible."
Mr. Del Col said most banks have been so focused on wealth accumulation that they have not realized the amount of wealth that will be distributed from 401(k) plans and IRAs during the next five years.
FundQuest plans to sell the platform initially through large banks and then "work its way down" to smaller institutions, he said, and Mr. Curry is to meet with 16 banks in the next 60 days to discuss the platform. U.S. Bancorp, SunTrust Banks Inc., and ABN Amro Holding NV are among FundQuest's bank clients.
The company has been developing this platform since before Paris-based BNP Paribas bought it in July, Mr. Del Col said. FundQuest, which was founded in 1993, is a turnkey asset management provider that sells wealth management solutions through more than 60 financial institutions, mainly banks and insurance broker-dealers.
