Byron Vielehr has an enourmous project ahead of him. He is in charge of the largest outsourcing deal ever undertaken at Merrill Lynch. As chief technology officer of Merrill Lynch Private Client Group, Byron manages 2,000 employees, which include consultants and developers in India.
His group supports approximately 35,000 employees, including 15,000 brokers and another 6,000-7,000 support personnel in the field. Byron supports brokerage technologies, back-end technologies, the bank, mortgage company, insurance business, annuity business, mutual funds, etc. - basically, the front to back support of the private-client business.
Last year, Merrill signed a $1 billion, five-year deal with Thomson to outsource its broker workstations. These workstations will be integrated with the firm's Siebel customer-relationship-management system, as well as integrate with other applications that will be purchased or developed. Some of the recent developments include asset-allocation, goal setting and plan management tools, with more applications in the works. WS&T Editor-in-Chief Kerry Massaro recently discussed these projects with Byron .
Wall Street & Technology: I understand you're managing high-net-worth technology and the newly outsourced broker workstations?
BYRON VIELEHR: That is correct. One thing you have to understand is that they are very integrated. Our approach is different from a lot of others. Historically, we've had a lot of applications that sit outside the workstation. They were not tightly integrated. The path we are going down now is very tightly integrated between the wealth-management component and the new desktop, and in particular Siebel - the CRM solution.
We've built out multiple components over the past year. It was evident early on that one of the issues we had was being able to sit down and do reviews with clients, so we built a review center online. That was all homegrown.
We also put in place, last year, a platform called 'Assessing Your Goals'. If you look at the broader wealth-management practice - there is goal setting, setting strategies, implementing solutions and reviewing progress. Everything falls into those four major buckets. We deployed 'Assessing Your Goals' - that was largely built in-house. We released the second component - 'Allocating Your Assets', which we deployed in December. We created that in partnership with a company called Financial Profiles - based in California.
WS&T: Why did you choose to develop the other two rather than outsource or use an existing system?
VIELEHR: Well, because the reporting components were really focused on our proprietary-data repository, but we did use some reporting tools to help drive it. There wasn't a standard reporting package that you bring in and 'Voila, you have your report!' There wasn't anything available that would save us time and money.
We also deployed, last year, Premier Wealth Plan -a service to the financial adviser (FA) and it is run out of our Wealth Planning group in Princeton. They provide that fee-based service to FAs.
We've been partnering with people to build as many components as we can, but the real magic to the whole thing is in the integration of the broker workstations and the Siebel deployment.WS&T: Is this just for high-net worth?
VIELEHR: Yes it is. If you look at our business, we are focusing on $1 million plus accounts, so our business is moving more upscale. We've moved from more of a broker business to an adviser business.
WS&T: Are these the broker workstations, that have been widely publicized, where you have chosen Thomson?
VIELEHR: Yes, we are using Thomson. Thomson is the general contractor, but we are driving a lot of the Siebel efforts. (Thomson) is responsible for desktop management and integration at the desktop, but there are a lot of different vendors involved in building that out. It supported their core strategy of offering more than just quotes, news and market data, which is becoming a commodity.
WS&T: All of the technologies that you just mentioned - Siebel, Thomson, goal setting, allocations - will all be integrated?
VIELEHR: All integrated. Siebel is the cockpit that you operate from. From Siebel you can seamlessly launch into the wealth-management process. You can start the wealth-management process with prospects or clients and all of that profile information pulls through to account-opening applications, straight through to helping you select products for the clients. It also allows you to set up what type of service commitment you would like.
One of the things we are trying to do is free up their time from doing routine work to help them service their client. Give them time back in their lives to make them more productive.
WS&T: It sounds like that is one of the biggest problems, for firms that are implementing CRM solutions, brokers haven't been willing to use them, are you facing this problem?
VIELEHR: There are challenges with it. There are fewer challenges with us because of our higher-end clients than our competitors - they have been demanding a higher level of contact and reporting historically.
Where it is more of a problem is if you are more downstream - selling stocks and moving to an adviser-based business. Advice has been a big part of our heritage.
WS&T: Are these very high-end clients, who are demanding more reporting, also demanding to be connected with the technology and make it more of an interactive experience?
VIELEHR: Absolutely. We did a Forrester study in the fall (with) our FAs and 98 percent said it was important to their clients to be able to access their accounts online. Over 90 percent said it was important to their clients that they are technologically enabled. ...This was one of the reasons we outsourced the desktop and the Web site at the same time. The information that is on the Web site and desktop will come through a single middle tier at Merrill Lynch and it facilities that ability to collaborate.
WS&T: The high-net-worth clients - are they able to create their own reports? Or do they have to wait for an FA to create a report for them?
VIELEHR: At this point, the reports are all run via the FAs. Right now, there is not much in the way of client reporting. We think a lot of the reports need some level of discussion or collaboration with the FAs. I think we will experiment. We can open up more and more of the technology to the client, but we have to understand how they want to use it and make sure that it is valuable to both parties.
WS&T: How much have you invested in all of these technology initiatives that you have mentioned just over the past year.
VIELEHR: That's a difficult question. We are spending tens of millions of dollars on these components - It's a big platform. The new broker workstations will be $1 billion over five years. There are a lot of components integrated into it - You have the Siebel and the CRM application out there, but you have a lot of wealth-management components integrated into it.
WS&T: What is your technology budget?
VIELEHR: Sorry, I can't tell you that.
WS&T: What firm do you find yourself watching the most from a competitive standpoint?
VIELEHR: What firm do I worry about? Or compare myself to? Um ... I'm not sure. I don't have a good answer. I'm actually not that concerned about any of them. From talking to others on the Street and other CTOs, I don't see others making the level of commitment to wealth management as we are - whether a tech commitment or an organizational commitment.
WS&T: Do you worry more about, perhaps, a boutique firm or nontraditional competition ... a new player?
VIELEHR: There are clearly boutique operations that do a great job - Bessemer Trust and Northern Trust - at very high-end asset management and wealth planning. The issue is they don't do it on the scale that we do. ... But when you look at the folks that have done a good job, they tend not to be the big players, they tend to be the boutiques and the processes tend to be manual, so it is hard to scale that.
WS&T: What do you find is the toughest part of your job?
VIELEHR: The toughest issue is keeping everyone focused. We have an incredible amount of things going on - We have the largest outsourcing initiative in Merrill's history with the desktop. We've got a lot of different and very important technology deliverables. So keeping people focused, week in and week out month in month out, on getting the job done, continues to be a challenge.
The other challenge is as the priorities of the business changes, keeping the organization flexible and malleable enough to move with changes on the business side is a challenge. Those are the toughest challenges - technology challenges would be third on the list.