JPMorgan Investor Services announced Wednesday that it has expanded its outsourcing team to sell managed account administration to other financial companies.
Virginia Meany, a global fund services product executive in the New York-based division of J.P. Morgan Chase & Co., said the unit plans to sign up its first clients in 2005 and be among the leaders in outsourcing services to other financial companies within five years.
"We are very much looking at the marketplace where we have historically played in, and there is a lot of interest on the part of the small and the regional banks," Ms. Meany said.
"There are a lot of people looking for more efficient, well managed solutions for their managed account back offices," she said. "We are very actively engaged with a number of prospects and a number of existing clients about expanding their business with us."
The company said Wednesday that it has hired Steve Boyle to be the director of managed account operations and Brett Rainey to be a vice president of managed account operations.
Mr. Boyle, who is based in Brooklyn, N.Y., is responsible to develop and direct the operational infrastructure supporting JPMorgan's managed account servicing platform. His more than 20 years of financial services experience includes the past seven years as director of operations for Bear Stearns' managed account program.
Mr. Rainey, who is based in Boston, is responsible for the operations that support the managed account business. He had established the operations department for the new managed account servicing team at MFS Investment Management in Boston.
Ms. Meany said she expects to hire 15 to 30 more people as customers are signed up.
"In 2005 we expect to have our first two to three clients," she said. "Our goal is to get those clients on board and to build out the team led by Brett and Steve. There is a tremendous pool of talent in Boston and New York to draw from."
Ms. Meany said many financial services companies, including asset managers and banks, are reconsidering their managed account strategies. "We are finding that there are a lot of inefficiencies in the marketplace," she said. "Asset managers have invested considerably in technology, and now they are considering outsourcing."
JPMorgan Investor Services has been developing its outsourcing platform for six to nine months. It crafted a strategic alliance with Vestmark to help create the managed account platform.
Ms. Meany said the new service will let asset managers offer managed accounts without having to invest in the building and maintenance of their own platforms. "There is a lot of interest in this offering, and we are talking with a lot of people," she said. "There is a need for a strong third-party solution in this marketplace."
Ms. Meany said JPMorgan Investor Services would expand aggressively with the new platform.
"Ultimately, we see ourselves as being a leading provider both in terms of assets and clients in this space," she said. "Five years out, we expect to build this business out and be among the top three providers."
State Street Corp., Citigroup Inc., and Mellon Financial Corp. are the top outsourcers of this type of managed account service. Analysts said JPMorgan Chase's large customer base should help it quickly gain market share.
"JPMorgan may have some catching up to do, but that is ground that they can make up quickly," said Kevin Daniels, a Boston analyst. "They can gather assets and customers quickly now that they are focused on a line of business that is rapidly growing."
