So the speed and ease with which newly married PlanSponsorExchange Inc.'s and Asset Strategy Consulting L.L.C.'s brass adopted a new name and business model is notable. What remains to be seen is whether the company's daring gambit will work.
Less than two months after buying Asset Strategy Consulting, Plansponsorexchange, an institutional investor portal, last week took a new name: InvestorForce.
Malvern, Pa.-based InvestorForce will begin consulting institutional investors, building on PlanSponsorExchange's content-only model. This creates a first in the multitrillion-dollar institutional investor business: a Web company that concentrates on content but also has a consulting repertoire.
The changes come as heavyweights Fidelity Investments and State Street Global Advisers have struck deals with InvestorForce, bringing the number of asset management companies that have sections on the site to nearly 30. Fidelity and State Street, both Boston-based, will go live on the portal next month.
InvestorForce is a portal where institutional investment executives do research, chat and conduct online meetings. Users also can visit sections maintained by asset managers. This content model was pioneered by Plansponsorexchange, which was backed by Internet Capital Group and formed last May. Asset managers, including Barclays Global Investors and Bear Stearns & Co., pay between $10,000 and $30,000 or more to maintain a presence on InvestorForce.
More than 1,000 institutional investors overseeing in excess of $3.5 trillion use the portal. It costs them nothing to do so. Participants include pension giants such as General Motors Corp. and U S West.
InvestorForce's new advisement business reflects Asset Strategy Consulting's forte. Asset Strategy Consulting advised pension clients, including American International Group and the city of San Francisco.
Previously, Asset Strategy Consulting charged up to $400,000 annually for its services, such as flying consultants to advise clients in person on short notice.
In a huge and untested gamble, InvestorForce will slash Asset Strategy Consulting's fees -- and service -- and charge institutional investment clients retainer fees between $25,000 and $50,000 annually. Clients will be expected to do most of their research on InvestorForce on their own, instead of relying on consultants to do it for them. Online sessions with InvestorForce will be available, but in-person meetings will cost $10,000 each.
InvestorForce will continue consulting to Asset Strategy Consulting's existing customer base, but will not pursue new consulting clients, said Lawrence Davanzo, Asset Strategy Consulting's founder and now an exec VP with InvestorForce. Instead, InvestorForce will focus primarily on developing content for consultants and institutional investors that use the site.
To these existing customers, InvestorForce's way of doing business is fundamentally different, reflective of the consumer shift from expensive full service to do-it-yourself Net brokerages in the late '90s. Some Wall Street insiders say the model could flop with existing institutional investors, which are used to lots of hand-holding.
Davanzo said the model will succeed. "We see the Net as a platform to change how institutional investors oversee their assets," he said. "It's become apparent that many of them are looking for answers on the Internet."
Key InvestorForce employees, including stalwart Frank Minard, former chief marketer of Morgan Stanley Dean Witter & Co. and now InvestorForce's president, will help keep customers happy, said John Grady, State Street Global Advisors' principal.
"The Internet really is a catalyst. This will change the industry," Minard said.
Indeed, InvestorForce is snapping up vets well known in investment circles, including Nina Lesavoy, formerly marketing director at fund giant Invesco Inc. By the end of the year, InvestorForce plans to have 200-plus employees, up from 121 today.
InvestorForce's executives would not say how much venture capital the portal has attracted or whether the company is planning to go public, but in today's IPO-mad environment, it's likely they will try.
Lesavoy, InvestorForce's head of sales, said the company wants to build content, and users -- she predicted it will have 4,000 institutional investors by year's end, a 300% increase.