Third-party investment-platform providers blend SMA, mutual-fund offerings. Insurance company Genworth Financial has agreed to buy AssetMark Investment Services, a third-party mutual-fund wrap platform provider with about $8 billion in assets under management. Genworth says AssetMark complements its own $3-billion-plus, third-party separately managed account (SMA) provider, known as Genworth Financial Asset Management (GFAM).

"AssetMark is an excellent fit with [GFAM] and will triple our assets under management in the rapidly growing fee-based managed money space," says Pam Schutz, president and chief executive officer of Genworth's Retirement Income and Investment business. "Each organization brings complementary asset advisory strengths to the equation as well -- GFAM in its separate account business and AssetMark in the growing mutual fund advisory services arena."

The deal

Genworth plans to pay $230 million for AssetMark up front and another $110 million over five years if AssetMark meets certain performance objectives. The deal is expected to close sometime in the fourth quarter.

It's hard to judge how this stacks up against similar deals. BNP Paribas Asset Management was mum about the price it paid last year for FundQuest, a $10-million-in-assets third-party SMA and mutual-fund wrap provider. PFPC, part of PNC Financial Services Group, was similarly close-mouthed about the price it paid for Advisorport, a slightly larger firm, in 2003. Though the Bank of New York was quiet about the price it paid for SMA provider Lockwood in 2002, which then had about $7.6 billion in assets under management, people connected with the deal said it came to about $165 million - according to contemporary press reports anyway. 

Ronald Cordes, who founded AssetMark in 1996 with Brian O'Toole and Richard Steiny, is slated to become chairman of the combined platform, with Gurinder Ahluwalia, now head of GFAM and Genworth's independent broker-dealer annuity-sales division, as vice chairman. O'Toole will become CEO; Steiny will be president.

"We believe our new combination with Genworth will deliver great benefits to our advisor and broker-dealer clients," says Cordes. "By partnering with an organization that appreciates innovation, creative thinking and an unwavering focus on client service, we are building an even stronger foundation from which to offer an expanded array of services to assist advisors in building and growing their businesses."

Bells and whistles

At the end of March this year, AssetMark was the 14th-largest mutual-fund "advisory" or wrap program, according to Cerulli Associates, a Boston-based research firm. At the same time, GFAM was the 22nd-largest SMA program sponsor. Together, Pleasant Hill, Calif.-based AssetMark and Encino, Calif.-based GFAM will have more than $12 billion in assets under management and relationships with about 4,000 independent advisors.

AssetMark also provides client-relationship management tools and business-development programs and services intended to "help advisors grow their businesses efficiently and profitably," according to a Genworth press release.

Genworth's Schutz says the acquisition of AssetMark is consistent with Genworth's plan to expand in the growing managed money and retirement income markets through independent brokers, registered investment advisors and insurance brokers. With the addition of AssetMark's investment and business-consulting capabilities "we can bring an even greater level of asset management capabilities, product innovation, wealth management and broad back-office capabilities to the independent advisor community," she says.

Investment bank Putnam Lovell NBF Securities represented AssetMark in the transaction.

Richmond, Va.-based Genworth, formerly GE Financial Assurance, was spun off from General Electric about two years ago. Primarily a life-insurance company, it also sells mortgage insurance, retirement investments and long-term-care products. -FWR

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