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Northern Trust’s Transitions Business Grows 50%

Four of the firm’s major competitors have dropped out of the industry in the last 10 months.
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(March 20, 2014) – Northern Trust’s transition management business has boomed as its rivals have tapped out, according to figures released on March 19.

The firm has reported more than 50% growth in the volume of transitions it has managed in the past five years.

Where many other financial services operations have shuttered transition management divisions to “focus on their core businesses,” Northern Trust has stuck by the notoriously low-margin industry for more than 25 years.  

"Northern Trust's core focus has long been asset servicing and asset management, and our transition management team serves as a very effective bridge between the two," said Steven Fradkin, corporate and institutional services president. "We remain committed to the global transition management business, reflecting its role as an integral service. Our focus remains centered on adding value to our clients by providing unique and innovative solutions to meet the evolving demands of the market."

Fradkin’s vows of commitment are not without precedent.

In June 2013, nine months before aiCIO revealed BNY Mellon was shuttering its transitions business, the unit’s CEO publically boasted of their continued success.

"We're seeing growing demand for transition management services from insurance companies and other financial intermediary complexes that manage 40 Act funds," Mark Keleher said at the time. "These complexes are increasingly recognizing the potential benefits of new ways to minimize transaction costs and manage the investment and operational risks associated with overseeing such programs."

Keleher argued that with the exit of many broker-dealer-based transition managers from the business, demand was rising for transition managers that were registered investment advisors.

BNY Mellon followed Credit Suisse, JP Morgan, and ConvergEx—all of which have exited major portions of the transition management market within the last 10 months. 

Related Video Round Table: aiCIO discusses the future of transition management with BlackRock, Citi, and Russell. Video released next month on www.ai-CIO.com and published in the European edition of aiCIO.