March 29, 2004
Institutional SMA Services To Reach Northern Masses
Institutional managed account provider GlobalBridge has agreed with Northern Trust Co. to offer its products to a network of trust companies that are correspondents of the Chicago banking company.
Northern Trust is to offer GlobalBridge's Open Custody SMA managed account platform to 140 bank trust departments that use Northern Trust's Trust/Rite accounting system, the company said last Monday. This is the first offering of managed accounts to these customers by Northern Trust.
"Managed accounts are something our smaller banking customers are interested in and something we had to find a way to provide them," said Bruce Letten, a senior vice president who runs Northern Trust's correspondent banking business.
Letten said that GlobalBridge's managed accounts give correspondent banking clients the ability to offer this product while retaining custody of client assets and full control of the client relationship. This quality separates GlobalBridge from its peers, Letten said.
"Having assets in a managed account with a broker creates a confusing message for clients and prospective clients," Letten said. "Clients want to know whose program is in charge, and it creates a lot of operational complexities. We were searching for a platform that allowed us to keep the assets under custody and kept operations simple."
The Minneapolis vendor introduced its Open Custody SMA product in February. The platform handles model processing and trading but, unlike other third-party managed account platforms, lets banks' trust departments manage the assets.
The product gives banks an alternative to traditional mutual funds. Small banks that offer GlobalBridge's private-label managed account program can compete with large ones and wirehouses without having to devise their own platforms.
"A lot of small trust departments offer managed accounts that are focused on large-cap growth, large-cap value, or large-cap blend companies, and very often these asset managers do a terrific job there," said Ross Rogers, president of GlobalBridge. "But what we found is, clients are filling in the cracks in the portfolio with mutual funds. There is a demand for small-cap, multicap, and international managed accounts. We can fill these gaps."
The Open Custody SMA application lets correspondent banking clients maintain custody at Northern Trust and integrate with the Trust/Rite statement-issuing function, so that customer statements can come seamlessly from one provider.
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