Union Planters faced a quandary when it discovered that only half of its 8,000 high wealth households currently use the bank's wealth management services. The problem: the Memphis, Tenn.-based institution wanted to go after these clients, but could not divert more resources to the back-office technology and administrative services needed to maintain such accounts.
So the bank, which serves 1.6 million households overall, decided to outsource those functions to SunGard Wealth Management Services.
By September, Union Planters expects to fully migrate to SunGard's AddVantage, an asset management and core accounting system that's compatible with a number of other platforms. In addition to being Internet-enabled, real-time and scalable, the product deals with any type of asset: cash, real estate, commodities, securities and more.
But the product does more than manage the back-office. It also facilitates the setting of investment management and portal policy, leaving the bank free to concentrate on building customer relationships.
"We're rapidly trying to add additional levels of value," said Alan Kennebeck, senior executive vice president at $33 billion Union Planters.
In 1996, when SunGard set out to design a back-office wealth management service, traditional accounting systems were designed to handle specific types of assets and tasks-stocks vs. cash, accounting vs. investment, real estate, commodities, tax issues, etc. "The only accounting engines in existence at the time that could do all of it were trust management systems," said Phillip Owings, president of Wichita, Kan.-based SunGard Wealth Management. "So if you're going to build a highly flexible, all-inclusive system, use the trust accounting system as a base."
To create AddVantage, SunGard took an in-house trust accounting system, made it browser-based and ensured that it could be used with a relational database. The result was a product that can accommodate separate applications, such as a portfolio management tool that handles account managing, asset allocation, risk tolerances and asset location (categorizing assets according to whether they're taxable or not).
By relieving investment advisers of administrative headaches, AddVantage leaves them free to focus on providing objectivity, choice, advice and convenience. "The goal is to give customers a tool that allows them to be trusted advisers to their customers," Owings said.
SunGard's technology is also helping Union Planters realize organizational gains. Previously, the bank employed portfolio managers to deal with investments and trust administrators to handle documents. "That's overkill," Kennebeck said. SunGard's technology allows portfolio managers to perform both functions.
Union Planters is using AddVantage under a five-year agreement that "lets us...grow our asset base without a significant increase in costs," Kennebeck said. "In years two through five, we'll be able to increase our asset size probably at about half the expense as if we did it ourselves."