Broadridge Hunts Big Clients for Its New Wealth Platform

Broadridge Financial Solutions is looking to develop its new Wealth Platform into a third major core business and expects to expand its current client base for it beyond just UBS, according to Jim Young, its chief financial officer.

The company’s overall strategy is to “strengthen our governance franchise,” grow its capital markets franchise and also “build our wealth franchise,” he said Wednesday at the D.A. Davidson Fast Connections Technology Conference in New York.

Although it’s offered some individual wealth solutions over the past few years, it recently launched a “bigger initiative to have a full end-to-end platform” that it runs with UBS, he said, adding: “We’re in the process of onboarding that activity.”

He was referring to the strategic partnership announced late last year under which UBS Wealth Management USA is serving as the anchor client on the new Broadridge Wealth Platform. It’s a “next-generation open platform that will solve a key financial services challenge by creating a modern, industry-level wealth management best-in-class technology solution,” the companies said in their joint announcement at the time, adding the platform allows wealth managers to “drive their business to the next level while mutualizing investments in technology, innovation and security.”

The platform provides an “integrated and modern front-to-back office solution that optimizes Financial Advisor productivity, creates a richer client experience, and digitizes enterprise-wide operations,” the companies said.

One challenge Broadridge faced with its platform was that it lacked “name recognition,” Young conceded Wednesday. But he said: “The day we announced UBS was like Christmas for our sales team because the inbound calls were flooding in and large clients — very sophisticated clients — wanted meetings on this.”

Wealth platforms like Broadridge’s had been promised in the industry before and were never pulled off successfully before, he said. Sales processes are “underway” now, he said, guessing that other companies are likely sitting back for now and will measure the platform’s success before opting to support it. But the platform was “built with the notion that this is a truly industry utility [and] the top 20 are all in play as possible clients,” he said.

The company’s governance business, meanwhile, is “performing really well” and has been “complemented by a lot of investments we’ve made around digital,” including its purchase of Israeli technology company ActivePath last year, he said. After completing that purchase, Broadridge said ActivePath’s “unique technology enhances the consumer experience associated with consumer statements, bills, and regulatory communications” and the acquisition “extends Broadridge’s ability to transform and accelerate the pace of digital adoption, further strengthening” its governance and communications businesses.

Broadridge’s capital markets business, meanwhile, is benefiting from the “long-term trend towards strong mutualization in adopting technology in the middle of a network, specifically around post-trade management — equities and fixed income,” Young said Wednesday. That business has been “growing tremendously” and there “continues to be a really big greenfield opportunity for us to grow” that business, he told attendees.

The overall fintech space is now the “beneficiary of a lot of investment” from private equity and other players also, he also said. Broadridge is “absolutely participating” in the fintech boom on multiple fronts, including with robo-advisors and “next-generation” brokerages, he said.

The company has also been on the forefront of “innovation” by using blockchain for annual meetings in Europe and is using that technology for “repo transactions” in the U.S., he pointed out. Broadridge is also “launching a blockchain offering for private equity transactions,” he said.

Broadridge and Northern Trust announced June 26 that the latter firm agreed to transfer its distributed ledger technology platform for private equity asset servicing to Broadridge, marking what they called a “significant step toward delivering an industry-wide PE blockchain solution.” Following the agreement, Broadridge will develop the platform leveraging blockchain technology developed by Northern Trust, the companies said. The technology will provide data and analytics tools connecting the PE lifecycle “for all market participants, they said, adding: “Through the platform, PE firms can manage, communicate and engage with investors with greater efficiency.”

Broadridge is, in general, “chasing [a] $40 billion market opportunity,” Young went on to say. Less than 10% of the market has been “penetrated” so far and “there is a long-term play that’s going on right in front of us” in which financial services firms that have “relied heavily on their own in-house IT” are going to increasingly start outsourcing more, he said, predicting Broadridge will be a “prime recipient” of that.

Broadridge is also looking to offer “some interesting next-generation things around artificial intelligence to make better informed buying decisions on securities,” he said without elaborating.