As wealth managers seek technology fixes to challenges from turmoil, one firm that can claim a long track record is Advent Software. This publication caught up with its founder and CEO recently in Vienna.

As wealth managers hunt for technology fixes to conquer challenges from the credit crisis, one firm that can claim a long track record in delivering the goods is Advent Software. It is a seasoned business in the US market and has more recently flexed its muscles further afield.

An expected wave of new regulations, restoring trust and keeping up with exacting client demands are some of the challenges that the wealth industry faces. Stephanie DiMarco, founder and chief executive of Advent Software, is undaunted.

“It is a very competitive industry and there are lots of players in this market. We have been doing it (providing mission critical solutions for investment managers) for so long, more than most of our competitors, and we are really good at it. We have a good reputation. Nobody is going to lose their career by buying Advent,” DiMarco told this publication at a recent Advent conference in Vienna.

“We can provide a well integrated, full range of products and it’s our responsibility to make sure it all works together. We spend 19 per cent of revenue on R&D - $45 million. It is important we do this to help our clients keep on top of market developments, regulatory changes and industry trends,” said DiMarco.

Advent, along with its peers, is looking at a fast-moving regulatory world to provide the impetus for some of its software. It was notable, for example, that one of the panel sessions at the conference featured a discussion of UCITS 4 funds and what they will mean for financial services in the European Union. (The author of this article was a panellist at the event).

A rapid ascent

DiMarco founded Advent back in 1983 when some of the technologies that wealth managers now take for granted were not even a gleam in any private banker’s eye. Advent, while still a predominantly US company, has internationalized since it held its IPO in 1995. The firm now has a solid presence in Europe and opened an office in Singapore – a vital financial hub for wealth management – only a few days ago. The company boasts more 4,500 clients in 60 nations.

It has made a number of recent acquisitions: the US-listed firm has, for example, acquired Goya, a privately-owned Norwegian software provider. Last year, meanwhile, it pointed out that it saw rapid expansion potential in the Middle East region . Its clients in that part of the world are located across the Middle East’s major financial centres - Dubai, Abu Dhabi, Bahrain, Qatar, Kuwait, Riyadh and Cairo - and include asset managers, wealth managers, private banks and family offices. 

Results, meanwhile, have held up well against an uncertain background and where clients have been understandably keen to control spending. Earlier this year, it reported revenue from continuing operations of $66.7 million for the first quarter of 2010, compared to $66.3 million in the first quarter of 2009.  
 
A certain perspective

Advent’s business gives its executives a ringside seat in viewing some of the trends in the wealth sector, DiMarco said, highlighting issues such as need for greater investor scrutiny and risk management after the $65 billion Bernard Madoff Ponzi scam and the bankruptcy of Lehman Brothers.

“There is an enormous focus on transparency, operating efficiency, operational risk and due diligence post-Madoff,” she said.

On hedge funds, for example, she notes that the shakeout to the sector – suffering a poor 2008 and then recovering last year – has had its healthy side.

“The table stakes in this business have risen. In some ways it is quite good, there has been a bubble in hedge funds and we went up at one point from about 1,000 funds to more than 11,000 in about six years. What has happened [in terms of the pullback] is healthily cathartic.”

But as a lot of other wealth technology firms have told this publication – such as Bravura – the rise in regulation, and the consequent need to make improvements to systems, is good news for a firm such as Advent, she said.

She cited the example of Advent’s Tamale product, an investment research package, as the kind of cutting-edge product that Advent has, and which can be fine-tuned to meet the specific needs of clients. (Tamale was purchased in September 2008).

Advent, DiMarco said, not only provides services and products, it also acts as a consultant, providing clients with ideas on how to operate their businesses more effectively and get a stronger return on their investment in Advent’s solutions.

Longevity and stability

In a fast-moving technology world, Advent claims its clients are reassured by the fact that many of the senior Advent managers had been in post for many years. More than 130 of its staff have been in the firm for more than 10 years. More than half of the executive management have been at the company for more than a decade. There is a pleasing lack of a revolving-door culture at Advent, she said.

But while the firm prides itself on stability in terms of key personnel, stability is not the same thing as complacency. True, for many years, Advent was able to grow rapidly in its vast domestic US market but has more recently looked to expand abroad.

In 1998, Advent Software was established in Europe, serving new markets in Europe, the Middle East, and Africa. Initially set up as a number of franchises which were brought fully into the Advent Inc structure in 2004.

“We have done all the hard work; we are now actively looking to scale internationally. Europe and the Middle East are growing very nicely and Asia is developing,” DiMarco said.

Advent expanded into Asia about two years ago and has recently opened its second office in the region in Singapore after opening in Hong Kong in 2008, she said. The Singapore office opened at the start of May.