Bessemer Trust Partners with DLJDirect to Avoid Major Technology Enhancements

Bessemer Trust signed a deal with DLJDirect last week, which allowed Bessemer to offer its clients an online trading facility. Following on the heels of Charles Schwab & Co.’s acquisition of US Trust, Bessemer folded to the increasing pressure of the Web. While clients assets are not necessarily flowing away from money management firms – very few high-net-worth individuals would want to manage a $5 million plus portfolio – many of them have been transferring 5-10% of their portfolios to online brokerages, money that could stay at the money management firm. Rather than cope with installing all the technology in-house, and paying for the continual maintenance of its own online trading site, Bessemer partnered with an established online player, a decidedly quick and easy fix.

Mary Martinez, a senior vice president at Bessemer, and in charge of the project, says the firm has not been concerned too much with assets flowing away from the firm, but admits that Bessemer did see an opportunity in offering access to both managed and self-directed accounts from one Web site.

"We found that most of our clients wanted to have a self-directed product," Martinez explains. "If they have a managed portfolio, about 80-90% is managed, and they have 5-10% that is self-directed. This is really a convenience to show clients all of their assets. It’s very frustrating for high-net-worth clients to have to go to five different Web sites. What do I have at Schwab? What do I have at Bessemer?"

Martinez says the firm considered all the brokerages "you’re familiar with" before settling on DLJDirect because of its technological and business acumen. "We wanted to be sure that we were partnering with someone that has cutting edge technology, and someone that was committed.

Rather than sell itself – a la US Trust – and rather than invest in an online infrastructure, Bessemer did the next best thing: partner with an online brokerage and piggy-pack off their technology and innovation. When the project is complete, clients will be able to click from the typical Bessemer Web site over to Bessemer Online, which effectively moves the user from Bessemer’s servers over to DLJDirect’s. Trades are executed and settled at DLJ and statements and confirmations are sent from DLJDirect.

All Bessemer had to do was set up an RJE line over which nightly batches are transmitted from DLJ into Bessemer’s back office. According to Bessemer executives, the firm also had to enhance its reporting engine to accept this nightly batches. One, two steps, done.

Bessemer manages about $30 billion for more than 1200 clients who are required to have $5 million or more in investable assets.