The ambitious acquisition strategy centers around Wachovia’s marketing of its WySTAR recordkeeping platform and its goal to add two to three “significant” outsourcing relationships to the system per year, according to Joseph Ready, managing director of Wachovia Retirement Systems. Ready said Wachovia currently serves 19 full-service users and five ASP clients through WySTAR with about 1 million participants. The bank has a goal of putting another 2 million people onto the system within three years, he said.
“This is a continuation of our existing strategy to take advantage of consolidation in the industry and to increase scale,” Ready said of the deal announced Wednesday in which Wachovia picked up operations from BoNY’s Employee Investment Plans Division. Because BoNY has been on WySTAR since December 2002, there won’t be a required platform change because of the deal, details of which were not revealed.
Having BoNY has a WySTAR user came about through a series of agreements involving BoNY, PFPC and Wachovia. BoNY announced in December 2002 that it had turned to PFPC tohandle the technology end of its recordkeeping, including loading payroll tapes and recordkeeping software out of PFPC’s Bloomington, Minnesota facility. However BONY staff out of its Purchase, New York facility kept on managing the recordkeeping process (see BoNY Goes After Large RK Clients With New Tech Platform ).
Through a deal announced in April 2003, Wachoviaacquired source code rights to Wystar along with its acquisition of the retirement plan recordkeeping and third-party servicing business of PFPC Inc. last year (see Wachovia Brings PFPC Recordkeeping and TPA Business On Board ). Ready said Thursday that the former BoNY Purchase, New York facility continues to operate.
Also, Ready said that Wachovia expects American Express Retirement Services to say in the WySTAR fold, despite American Express’s recent RFP for RK services for middle-market plans. “They’ve demonstrated their long-term commitment to the system,” he said about American Express “I think they’re comfortable with the (WySTAR) platform.”
Wachovia will now service more than 4,400 retirement plans with 1.3 million plan participants and pensioners, encompassing nearly $62 billion in assets under administration, according to the announcement. The Bank of New York acquisition contributed about 120 to 130 plans, 60,000 participants and $2 billion in assets to those totals, according to Dow Jones.
The Wachovia expansion strategy comes as some in the RK field are pushing for a consortium of vendors to develop a common platform that will keep each from having to foot millions in development costs but allow the vendors to customize the platform to each client’s needs (See Common Ground ). Officials at some RK players – including Ready – assert that their own platform offering could be the basis for that industry standard.