U.S. platform provider to spearhead French bank’s global wealth campaign. Paris-based BNP Paribas Asset Management has agreed to purchase third-party separately managed account (SMA) platform provider FundQuest. BNP sees the acquisition of the Boston-based firm as a way to break into the U.S. SMA market – a segment of the industry it views as having “strong growth potential” – and to enhance its open-architecture offerings to high-net-worth investors in Europe.

“FundQuest is an integral part of the strategic vision to create a global wealth management platform based on best-in-class manager selection and superior technology,” says Gilles Glicenstein, chairman and CEO of Paribas Asset Management. “We will capitalize on FundQuest's strong position as an independent managed account provider.”

FundQuest describes the deal as an “opportunity for BNP Paribas and FundQuest to become an integrated global market leader that uses open architecture to deliver wealth management solutions for institutions and advisors.”

L'architecture ouverte

With about $10 billion in assets under management, FundQuest is the fifth-largest TAMP – or turnkey asset-management provider – in the U.S., according to Boston-based research firm Cerulli Associates. Its client base includes six of the 15 largest insurance companies and seven of the 15 largest banks in the U.S. Its third-party offerings include mutual-fund advisory accounts, SMAs, fee-based brokerage, unified managed accounts, retirement-income planning, trust integration, variable annuities, exchange-traded funds, hedge funds and other alternative investments. The 12-year-old firm has a staff of 110.

BNP Paribas, the world's seventh-largest bank, will use FundQuest as its global brand for open-architecture wealth-management in the U.S. and Europe. In the U.S., French bank says it capitalize on its “strong position in banking services” here to make a major move in managed accounts.” In Europe FundQuest will be combined with BNP subsidiary Cortal Consors Fund Management, “a European leader in open architecture and investment advisory services with $18 billion under management and advisory,” according to BNP. “[Cortal Consors’] existing multi-management solutions will be combined with FundQuest’s expertise in [SMAs] to create a global leader with nearly $30 billion under management and administration.”

BNP isn’t alone in seeing impressive growth in store for SMAs. In 2004, SMA assets increased 16% to $576.1 billion in the U.S, up from $497.3 billion at the end of 2003, according to the Money Management Institute (MMI), a Washington, D.C.-based association for SMA managers and sponsors. And the MMI expects to see SMA assets $1.3 trillion by 2008, fueled in large part by retirement-plan rollovers. In 2003 25% of the $30 billion that flowed into SMAs came from individual retirement accounts. The MMI figures that rollovers will account for 40% of SMA inflows by 2008.

Bob Del Col, FundQuest’s founder and CEO, says his firm is aggressively expanding its retirement-income planning services. But he says there’s more to the SMA industry’s growth than rollovers. In his view SMAs embody an approach to high-end investment retailing that sets new standards of “objectivity, transparency, and product neutrality.”

Putnam Lovell NBF advised BNP. Sandler O’Neill & Partners advised FundQuest.

The terms of the deal weren’t made public. –FWR

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