Bloomberg has quietly pulled the plug on its new wealth management business BloombergBlack just months after the financial data company began offering investment advice for individuals.

Last updated: July 26, 2013 2:39 pm

Bloomberg pulls plug on wealth management business

By Tracy Alloway in New York

Bloomberg has quietly pulled the plug on its new wealth management business just months after the financial data company began offering investment advice for individuals. “We weighed the future prospects of the business against the ongoing resource investment and concluded that it wasn’t in our best interest to continue moving forward,” a Bloomberg spokesman said. “We remain optimistic about the idea and open to the possibility of pursuing a similar business in the future.” Discussions about shutting the web-based service, which took more than three years to develop, were already in advanced stages as early as June, according to people familiar with the business.Bloomberg began a trial of the service, called BloombergBlack, only months before, billing the new business as a “premium wealth management service” and sending out private invitations to potential clients.

Bloomberg’s exit from its brief foray into one of the most traditional of financial services comes amidquestions about the company’s ambitions after recent scandals.

Under chief executive Dan Doctoroff, Bloomberg has branched out from its financial data and news information business into operating trading platforms for equities, bonds, currencies and derivatives. It also owns a broker-dealer.

This expanding scope is taking it into territory that is often directly regulated, and which comes with obligations to protect against conflicts of interest – obligations that on some occasions Bloomberg has fought to water down.

Bloomberg apologised in May for allowing its news reporters to snoop on terminal clients, following a complaint from Goldman Sachs. The financial data company also announced a number of new appointments to lead an independent review into how it handles client information.

BloombergBlack costs $100 a month for customers. That is far below the $20,000 annual fee for a Bloomberg terminal, but still more than what many other online investment advisories and wealth management services ask for.

The service applied to the US Securities and Exchange Commission to become a “registered investment adviser” three years ago. It had since hired professionals from competing retail brokerages, wealth management companies and investment advisers such as TD Ameritrade, Fidelity and Schwab.

Unlike those brokerages, however, customers using BloombergBlack were not able to execute trades on the platform. Instead BloombergBlack helped clients keep track of their portfolios, and also suggested adjustments based on market shifts.

Despite Bloomberg’s exit from the wealth management market, many Wall Street banks are seeking to increase their own presence in the intensely competitive business. Wealth management is seen as a business that generates stable revenues. Morgan Stanley and Bank of New York Mellon, for example, have been growing their own wealth management units.