When the founders of technology start-up MuniWorks Inc. were selling municipal bonds on the retail trading desk at UBS PaineWebber Inc., they said it sometimes took up to two weeks to get the operations department to analyze the accounts of the firm's high-net-worth individual investors.
So two years ago, after leaving PaineWebber, the three -- Martin J. Dickinson, Nancy G. Hawkins, and James S. Bucko -- began developing a Web-based interactive portfolio management system that can, at the click of a mouse, analyze thousands of accounts for bond-selling opportunities. The venture, christened MuniWorks, is beginning to bear fruit.
In November, the municipal retail bond-trading arm of St. Petersburg, Fla.-based broker-dealer Raymond James & Associates Inc. signed up for a subscription to the MuniWorks service to use with its high-net-worth accounts. MuniWorks, which is based in Maitland, Fla., said it recently signed another deal with a regional broker and is close to signing with a third.
"We are making an intangible tangible, making portfolio management interactive," said Hawkins, MuniWorks' chief financial officer and former senior vice president at UBS PaineWebber who ran its New York muni trading desk until 1998. "Most firms have developed some kind of proprietary products, but municipal bonds have never been a priority."
MuniWorks has pieced together a number of functions into a Web-based product that helps manage the burgeoning sector of high-net-worth individual bond accounts, which many brokerages like Raymond James call an important growth area for them.
Using the Internet as a platform, the start-up has developed an application that integrates the analysis of individual portfolios with a Web-based reporting system that allows wealthy investors to access real time updates on their accounts.
The product is significant because it offers technology to broker-dealers whose firms may have not devoted the resources to develop the different functions internally. However, the company faces the task of proving there is a market.
"It all depends on the firms," said Dennis J. Ceru, director of retail brokerage and investing at TowerGroup, a research and advisory firm based in Needham, Mass. "It depends on their strategy and the integration of their products, services, and technology."
Indeed, the municipal market is littered with the remains of technology start-ups, many of which in the last two years rushed to sell new electronic trading applications and failed.
If there is a track record for a concept like MuniWorks, it is on the institutional side of the business. Vendors like InvestorTools Inc. have for years been selling portfolio management and credit analysis systems -- one is called PERFORM -- to the institutional arms of broker-dealers and to mutual fund companies.
Richard Tribolet, first vice president and manager of the retail sales and trading operations at Raymond James, said the applications for institutional trading do not necessarily translate well for retail operations. He said he initially tried to get Raymond James to develop its own Web-based portfolio reporting system for his muni group, but in the end opted for MuniWorks.
The size of the individual municipal accounts at Raymond James begins at $500,000. The firm has 15 muni bond traders and marketing professionals at its headquarters, and uses a network of 4,500 brokers -- called financial advisers -- who sell to retail investors.
Raymond James accesses the MuniWorks platform through Internet subscriptions, and the site is secured and customized for the broker-dealer, with the Raymond James name on each of the account profiles. All of the muni department's high-net-worth accounts are loaded into the system, and a program developed by Andrew Kalotay Associates Inc. is used to perform the portfolio analysis.
Tribolet said he is launching the site to his traders and brokers this month, and individual investors will also have access to it. "Hopefully we can use it as a tool to bring in additional assets," he said.
MuniWorks said it is almost ready to expand its platform to include Treasuries and taxable corporate bonds.
