In Depth: mPower, S&P Deal Sign of Tight Advice Market

May 22, 2001 ( - The Standard and Poor's announcement that it was joining forces with advice provider mPower is the latest example of a widely expected industry consolidation in the difficult investment advice market.

Driving the consolidation is the – at best – grudging interest from plan sponsors and participants in using online advice. This is despite early predictions they would flock to advice products.

Although the new joint product will still be called mPower Personal Advisor, it will include market review and analysis content carrying the S&P brand.

mPower  Optimistic

While S&P and mPower admit the deal represents an inevitable consolidation, representatives of both companies insist the joint product will be stronger then either could produce alone. The joint software is expected to be rolled out to clients of both companies over the next six to eight months.

“Given the increased sophistication of the needs (of plan sponsors and participants), it’s going to be a successful market, but it won’t be a successful market for 12 different players,” Sandy Bragg, S&P executive managing director, told “It will be consolidated into a few players and we think this (combined) platform will be one of the survivors.”

The scope of client demand for online investment advice remains unclear. On the one hand, Steve Deschenes, mPower president and CEO, says the market has picked up noticeably in the past few months. “We’re gaining a new plan sponsor every week,” he said. “(Our) underlying business model is finally proving out. (Demand) is really beginning to take off.”

UBOC Sees Lackluster Demand

But at least one S&P client, the Union Bank of California, still finds underwhelming advice demand among its 600-plus 401(k) clients. S&P sold its standalone product to plan providers who, in turn, provided it to participants.

“A lot of plan sponsors are still not embracing it,” said Jeff Boyle, the bank’s senior vice president for institutional services. “It’s not a huge impact on our side right now because, even though there’s been a lot of talk, it seems that a lot of plan sponsors have not fully gone down the path to instituting it.”

Bank representatives await more details about S&P’s role, before deciding whether to stay with the combined product, Boyle said.
“We liked the S&P product because S&P has a good cache,” said Boyle. “S&P has a good credibility type name. With the (S&P) product now and the mPower product, we will have to see what S&P has to say and what their positioning is in on this. We might take a harder and longer look at the relationship.”

In other news regarding online advice providers, TeamVest is refocusing its efforts, teaming up with Pyramid Digital Solutions to provide “re-brandable” online advice and education solutions to Pyramid clients.