Reliance Financial buys SunGard’s back-office outsourcing

FWR Staff

11 April 2006

The deal doesn’t touch SunGard’s managed acct biz – but some think it may be next up. Atlanta, Ga.-based Reliance Financial Corporation has acquired a SunGard subsidiary that provides outsourced back-office services for wealth management organizations, particularly trust banks. The acquisition expands Reliance’s outsourced offerings, which so far have only been in the front-office or investment-platform realm.

“This agreement with SunGard was a natural progression in our commitment to grow our outsourcing services,” says Reliance COO James Maxwell. “We have combined decades of operations and processing experience with an effective partnering approach to outsourcing in building this business.”

SunGard Wealth Management Services provides security operations processing, investment accounting, trust operations, employee-benefit recordkeeping, investment programs and financial planning. The outsourcing business in headquartered in Witchita, Kan., and it has processing offices in Elk River, Minn., and in Belleville, Ill.

The deal stipulates that Reliance will continue using SunGard’s AddVantage asset management, trust accounting and securities processing platform.

Next up?

Don Birdwell, head of SunGard’s wealth-management and brokerage businesses, says Wayne, Pa.-based SunGard remains “committed to providing client profiling, financial planning, asset allocation, portfolio management, securities processing, asset accounting, consolidated client reporting, and performance measurement.”

The transaction doesn’t include SunGard Advisor Technologies, SunGard’s separately managed account outsourcing platform – though a source close to the deal says it was on the table along with Wealth Management Services when talks between SunGard and Reliance began.

But SunGard spokeswoman Deborah Overdeput says the company views its managed-account platform, which it acquired from London Pacific a few years back, as “one of our strongest areas, where we feel we have some of our greatest opportunities.” The deal also doesn’t touch SunGard’s trust-tax and compliance services and software business, its retirement-market compliance business or its WealthStation workstation for advisors with high-net-worth clients.

Still, SunGard’s sale of its core-accounting systems provider could be a prelude to additional deals touching on its wealth-service units, says Kelly Thomas Coughlin, CEO of GlobalBridge, a Minneapolis-based SMA provider to the trust-banking channel. “This is the first of a number of dispositions by the new SunGard group as they realize that they value they hold in some of their individual businesses are best realized ,” he says. “Advisor Technologies will go; it may be the next one, or it may be number 20 in line, but it will be one of the groups SunGard disposes of.”

By “new SunGard” Coughlin means the new ownership put in place about a year ago when a consortium of leveraged-buyout specialists paid over $11 billion for the diversified financial-technology company. –FWR