Outsourcing to advisory firms has become a huge success for FIS and paying $110 million to add a true advisor-friendly back-office provider to the platform demonstrates how serious they are about taking it to the next level.
Today’s acquisition of Atlanta-based Reliance Financial is evidence of how fast FIS Global is evolving out of its massive traditional bank and payment systems footprint.
But while some Trust Advisor readers may now be wondering whether the new corporate umbrella will compromise the famous independence of advisor-friendly trust company Reliance Trust, early indications are good that life will go on as normal for Reliance clients.
“It’s too early to get into the details, but it’s business as usual for both firms as we move through the approval process,” says Jeff Bloedorn, vice president of business development at FIS Wealth Management Solutions.
Bloedorn’s piece of the $15 billion FIS empire is technically where Reliance will sit when today’s $110 million acquisition closes – perhaps as early as July – and he’s spending a lot of time reaching out to Reliance customers as well as his own.
“We’re actually in the process of calling all of them today,” he says. “We’re making sure clients on both sides of the transaction understand what’s going on.”
A strategic affair
Part of the charm for FIS here is the traditionally relationship-oriented Reliance market base synchs up nicely with its own dominant position in processing-driven banking and payments systems.
In addition to the trust company, Reliance has grown its fiduciary operation to provide back-office services to about 1 in 20 U.S. retirement plans and quite a few intermediaries as well.
The $138 billion on its platform is a nice enough prize in terms of bolt-on scale, but the real boost here for FIS is probably the ability to integrate Reliance’s value-added outsourcing services into its own transactional platform.
To stretch the analogy a little, it’s like FIS is bringing expertise in working with advisory business models into its banking-heavy business, rather than pushing retail banking services into the fiduciary channel.
As it happens, senior management was talking just last week about how great the advisory world has been for them, noting that a trial outsourcing relationship with an advisory firm has been so successful that the business has doubled in size over the last year.
And with a second “large strategic outsourcing engagement” materializing in the last month, it’s clear that working with advisors is becoming a key piece of the company’s strategic road map.
The money quote from today’s press release is proof of that. As executive vice president of North American Financial Institutions, Anthony Jabbour clearly knows the big picture for FIS, and he’s the one who gets the quote:
“Wealth management remains a strategic growth and investment area for FIS, and this acquisition demonstrates our commitment to delivering the most flexible outsourcing solution set in the trust, wealth management and retirement industry.”
The conclusions are pretty obvious. High-touch wealth management is the future and independent advisor-friendly trust services are an integral part of that future. We’ve been saying that for years.
The real question is whether we’ll see more consolidation in this space.
More for the clients
Firms that work with either piece of the merged company will naturally get the chance to order from both sides of the menu.
Reliance customers may not have much immediate need for payment services, but as their own clients actually retire, they’re going to need more robust cash management systems. FIS can provide that.
The company’s push into online and especially mobile transactional tools is also going to be interesting for Reliance partners hoping for a better way to send account statements to trust beneficiaries’ tablets and phones.
But while Reliance currently supports Sungard’s Addvantage accounting platform and FIS has its own system, there are no immediate plans to require anyone to switch, Jeff Bloedorn tells us.
FIS is an added option now, not anything that people are going to be forced to adopt.
On the FIS side, customers are getting access to Reliance’s famous full-service outsourcing bureau as well as its existing relationships in the retirement and trust markets, Anthony Jabbour explained in the press release.
That’s a sweet opportunity in itself, as Jim Maxwell, head of Reliance, points out.
“There is continued growth in market demand for a full-service trust operations BPO solution,” he says. “This resulting combination will be uniquely qualified to capitalize on these opportunities.”