Tuesday, December 13, 2005

Morningstar Picks up Ibbotson for Asset Allocation Expertise

While the image of the online investor has tended to center around macho tools to help daily traders of securities and aggressive fund-pickers, the truth of the matter is that most of today's investors are oriented towards keeping long-term nest eggs in good shape through well-reasoned asset allocation management. So the announcement of Morningstar's acquisition of the privately held asset allocation services of Ibbotson Associates for $83 million in cash seems like a very well timed deal to bolster Morningstar's already powerful online presence for individual and professional investors. Ibbotson's provides investment consulting for asset allocation and fund research as well as and investment management capabilities to institutions that will complement Morningstar's professional products and services. According to the announcement this acquisition will make Morningstar one of the largest independent providers of managed retirement accounts in the industry, making for easier decisions in the workplace for 401(k) plans and other investment vehicles that are the most frequent points of investment management for most individuals.

Morningstar's acquisition of Ibbotson positions them more powerfully as a full-service provider to retail investment advisors and managers. It's a move that meets consumers at their real point of need for goal-oriented long-term investing rather than stopping where traditional financial trading and investment management content and technologies leave people short of those goals. But it's also indicative of a broader trend of content providers building execution value through enhanced services that meet the multi-faceted needs of their audiences. This helps to diversify revenue streams away from the traditional sources found in advertisements, subscriptions and events. Maximizing the ability to execute transactions via the context of a content service is the key to content offerings in most any environment where a high involvement with content leads to sales of products and services. It's as important for content providers to understand what people want to buy and how they want to buy it as it is for their advertisers and channel partners, so that they can add as much value as possible to the execution of a transaction with a user.
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