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Technology > Marketing Technology

Managed Account Tech Firm Survives The Storms

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NU Online News Service, June 6, 12:25 p.m. – Oberon Financial Technology, Inc. Sunnyvale, Calif., says its Web-based managed account system is now helping financial advisors handle $500 million in client assets.

Oberon, a 3-year-old Web services company, is giving credit for its growth to expansion of managed account programs at four client companies: Transamerica Financial Advisor Inc., San Francisco; Crowell Weedon & Company, Los Angeles; Sincere & Company, Holliston, Mass.; and C. E. Unterberg Towbin, New York.

Oberon also announced that another large advisory company, Securities America Inc., Omaha, Neb., has agreed to use the wrap account version of its managed account system.

Oberon may be one of the few investment technology startups that has good news to celebrate, given the sorry state of much of the rest of the investment industry.

“We’re certainly happy we got here in such a somber market,” says Oberon spokesman Viggy Mokkarala.

A managed account program is a modern, high-tech version of what used to be called a “well-managed brokerage account.”

Instead of putting cash in stock mutual funds and bond mutual funds, or one or two hot stocks, a client with a large asset base invests in a large, diversified collection of individual bonds and individual stocks.

Advocates say a managed account approach can offer affluent investors the advantages of diversification while protecting them from the weaknesses of mutual funds aimed at middle-income customers, such as panic selling and distributions of big, taxable capital gains payments.

Oberon’s managed account system includes a collection of model investment portfolios, asset-allocation software, sales and marketing tools, an online proposal generator, support for opening and managing accounts, and online reporting tools.

Oberon uses “proprietary” technology that is not designed to be compatible with competing managed account systems.

Forrester Research Inc., Cambridge, Mass., a consulting firm, reviewed the managed account industry in an October 2001 report and suggested that financial advisors seemed to prefer “standards-based” systems that were compatible with other managed account systems.

When Forrester interviewed advisory company representatives, “63% said that operational inefficiencies are a major hurdle in offering the product,” Forrester analysts write in the managed account report.

“Even if it’s only a handful of distributors pushing their proprietary systems, this will be a disaster,” one advisor told Forrester.

But Celent Communications Inc., Boston, another consulting firm, recently looked at the Oberon system and four other systems for managing accounts for clients with at least $100,000 in assets. Celent ranked Oberon first and described its proprietary technology as a strength.


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