McKinsey Buys PriceMetrix, Advisor to Firms on Pricing Strategies
(Updated throughout with comments from McKinsey and PriceMetrix executives, adds details of McKinsey acquisitions in third paragraph.)
McKinsey & Co. said Tuesday that it has purchased PriceMetrix, a data-collection and software firm founded in 2000 that helps some of the largest North American brokerage firms set pricing and sales-relationship policies for brokers to use with clients.
PriceMetrix’ CommissionCheck, FeeCheck and other benchmarking products will help McKinsey expand the data and analytical tools it has begun offering wealth and asset management clients as they mine reams of their own customers’ data and develop responses to new regulations, McKinsey partner Jill Zucker said in an interview.
While New York-based McKinsey is best known for its management consulting and corporate strategy services, the consultant has acquired seven data and analytic firms in the past five years as it expands its software and information systems services to clients.
PriceMetrix is the firm’s first acquisition in the North American Wealth Management practice, said Zucker, who heads the unit.
The companies did not disclose financial details of the transaction.
Doug Trott, the president and cofounder of PriceMetrix, said all of the firm’s approximately 50 employees have accepted McKinsey’s offer to remain with the unit. PriceMetrix will operate as a McKinsey subsidiary with its brand and management team intact, Zucker said.
The acquisition comes as brokerage and advisory firms, large and small, are struggling to develop strategies for selling and pricing retirement products and services to comply with the U.S. Department of Labor fiduciary rule that begins taking effect in April. The rule has been a boon for firms like PriceMetrix that are advising brokerage firms on how to make their compensation and sales strategies conform with the impending rules.
One of the greatest challenges for firms under the DOL rule is gauging whether their fees and commissions meet the “reasonable” standard that the rule mandates, Trott said. “They can’t rely on surveys, which are hearsay, and we are a full source for books-and-records information to help them make decisions on list prices as advisors make pricing and other decisions on fees and transactions.”
PriceMetrix, which describes itself as a manufacturer of practice management analytics software, maintains a database representing 500 million retail transactions and 10 million investors with more than $5 trillion of investment assets that it uses to validate its strategies. It has long recommended practices such as wealth management teaming and “book” triage (so brokers focus on only their most profitable customers) that are becoming commonplace at many firms.