A Tale of Two Firms

Convergence is the name of the game, and the time to play is now. The financial services company of the future will offer everything-brokerage, investment management, insurance, etc.-and everyone from staid commercial banks to even more stoic insurance companies are jockeying to be the premier firm of the next century. Most recently, the Equitable companies, renamed AXA Financial, and H&R Block have entered the fray, looking to technology to push them into the investment management arena.

AXA Financial, is looking to Candle Corp.'s flagship middleware product, Roma, and FileNet's imaging and workflow system to link client information stored in a number of disparate legacy systems. Equitable, recently acquired by the $390 billion global investment powerhouse AXA Financial, is looking to offer a competitive customer service package, as well as to more effectively cross-sell its insurance, investment management and broker/dealer services.

"From a strategic standpoint, this is a directive to make our customer service a competitive advantage," says Don Buskard, senior vice president of technology at AXA. "We decided that we have a nice embedded system in our legacy systems, and we don't want to replace them."

Buskard sees no reason to replace the various client database and accounting systems-some proprietary, others from vendors like CSC and SunGard Insurance Systems-because they still accomplish the tasks they were created to do. As he puts it, "the systems used by the insurance industry today are the same ones that were used by our parents."

Enter middleware. AXA looked at a number of vendors like NEON, but decided to go with Candle because of its extensive relationship with Equitable.

"We determined pretty early on Roma was one of the best in class," Buskard says. "But, most importantly, we have a longstanding relationship with Candle as a vendor ... They've been a good partner, and that's a very important aspect when it comes to working with middleware. It's a new concept, and it's technology that you're not going to buy out of the box and have it do everything you need it to do."

The firm was set to roll out in December the first component in a three year, multi-phase plan. This first phase includes tying together all the in-house client information for its life administration operation business.

The next step is to rollout Roma and FileNet to the pension and annuity area, a project that is expected to be completed by the end of next year. Equitable will then look to tie in its investment management and broker/dealer operations.

The project comes at a time when Equitable is retraining most of its 5,000 member sales force to be complete investment advisors, rather than supporting three distinct groups of insurance salesman, brokers and money managers.

In the same manner, H&R Block is looking to grow beyond its tax preparation services into the ever-lucrative investment management arena. The tax services firm, hoping to leverage its relationships with nearly 18 million clients, is hooking up with MoneyStar, the financial sales solution provider, to provide financial planning and electronic access to a repository of mutual funds and annuity products.

According to Don Steele, CEO of MoneyStar, H&R Block began piloting the system in a few remote locations at the end of last year. "We were on a four month pilot with them which validated the technology and the concepts," Steele says. H&R Block elected to go with the MoneyStar system and will be opening this year over 84 financial planning centers, a la Schwab, that will be located in the "vicinity" of their tax preparation offices. If all goes well, H&R Block hopes to open up another 120 planning centers next year, Steele says.

For financial planning, H&R Block will use MoneyStar's LifeScript system, a financial planning tool that enables money managers to graphically chart client's investment resources and goals. The financial planning tool will connect with the MoneyStar Financial Network, which houses mutual fund products from companies like GE Capital, Franklin Templeton and AIM Investment Management.

The firm will also make use of MoneyStar networking technology that will allow client information to flow back and forth between offices, from tax accountant to financial consultant. The MoneyStar products will be integrated with a host of other systems, including Clarify, a customer relationship management application.