Financial Management Turns Over Its Clients To Others

Having announced its withdrawal from the portfolio management business (IMT, Feb. 21), Boston-based Financial Management Systems Inc. has recommended three alternative vendors to its clients. It's now up to customers to decide whether to act in concert or individually in their search for replacements to FMS's Datavestor system.

"I think it's not unreasonable that [FMS's clients] could be an attractive package to a vendor," says Jim Barker, FMS president. "I think there might be some leverage that our clients could gain."

FMS was once a major industry service bureau, serving nearly 30 clients around the country. But as in-house systems became more popular, FMS's fortunes declined. It lost clients and revenue.

In an effort to stem the defections, the company offered an in-house system. The system, based on a Hewlett-Packard Co. HP 3000 server with access via dumb terminals, offered some analytics and trade-routing functionality. But FMS wasn't ultimately capable of sustaining the client base necessary to stay in business.

In a letter sent to 12 or so users in February, FMS said that it could no longer guarantee support for its in-house and service bureau-based Datavestor product. After hearing from at least five users that FMS's move would be highly disruptive, FMS decided to recommend a vendor or vendors who would best fit the needs of its customers.

FMS sent out a 25 page specification sheet to 20 or more vendors, and narrowed the field to 12 that appeared to have the required functionality. From the 12, FMS invited three to demonstrate their systems to some of its users at a private showing at its Boston headquarters last week.

The three vendors that exhibited were New York-based Data Exchange Inc., Toronto-based Financial Models Inc. and Boston-based Thomson Financial Services Inc.

FMS executives say that the ball is in the users' court: they have to decide whether they want to pursue separate solutions individually or to use the leverage afforded them by acting as a group.

FMS will continue to support users for up to a year. But FMS executives are emphatic that the company is aiming to withdraw from the business. These executives believe that the portfolio management market is too crowded at this time, and that resources necessary to build the next generation of products won't justify the reward for most vendors.

Instead, FMS executives say the firm is looking around for "new technologies" in greener pastures and may build a product that would provide services for one portion of the portfolio management process, such as a trade support or order-routing system.

The three vendors FMS selected provide a range of hardware/software platforms and functionalities. Data Exchange's DX/V portfolio management software operates on a Digital Equipment Corp. VAX minicomputer running VMS (IMT, Nov. 29, 1991). Data Exchange has built highly customized systems for about 50 large institutional clients. DX/V, which forms the core of these customized installations, includes front-end software that allows traders to enter trade information into the system instead of via handwritten tickets. Data Exchange is currently porting its system to a UNIX platform.

Financial Models is known for its service bureau solutions. The company provides more than half of Canada's money managers with some sort of portfolio management services, mostly via service bureau. But Financial Models also has an in-house version, currently residing on a DEC VAX, which users access via dumb terminals.

Thomson's Portia portfolio management system currently runs on DOS-based PCs (IMT, Feb. 15). The system, introduced in 1987, provides real-time portfolio reporting, trading, accounting and investment analysis. The system includes a report writer and allows users to add terminals and processing power as customer accounts grow. Like Data Exchange, Thomson is porting Portia to a UNIX platform.

In addition to these vendors, others are trying to interest FSM's clients in their services. While FMS sponsored its in-house exhibition of Thomson, Data Exchange and Financial Models systems, salesmen from Advent Software Inc. were busy setting up demonstrations of their own. Advent, the country's largest provider of PC-based portfolio management systems running DOS, has been working on an international version of its system called Geneva (IMT, Feb. 21).