This operation's amalgamation with Widows owner Lloyds TSB's Hill Samuel Asset Management subsidiary saw £56 billion of funds transferred from London to Edinburgh for management.
This move left the enlarged Widows investment business running £92bn of funds out of Edinburgh - giving it real clout and potential in terms of its scale. And it enabled Scottish Widows' asset management operation to overtake Edinburgh rival Standard Life Investments (SLI), which had funds of about £70bn at that stage, to become Scotland's biggest investment house.
However, in spite of its £20bn-plus advantage at that stage, Scottish Widows Investment Partnership's (SWIP's) position as the largest player in its sector north of the Border was not to last.
This week, Standard Life announced that SLI's funds under management had climbed to £179.6bn at September 30, from £167.7bn at the start of the year. Assets under management for third parties, as opposed to those run for Standard Life itself, climbed by £11.2bn or 13% to a record £94.2bn in the nine months to September 30.
Third-party assets, Standard Life has noted, now account for more than 50% of SLI's funds total.
In late 1998, when Standard Life at long last gave its asset management operation proper autonomy by launching SLI, this funds operation ran about £60bn, with only about £7bn of this from third-party clients.
SWIP received a £50bn boost to its funds total in March 2010, following Lloyds TSB's rescue takeover of Bank of Scotland parent HBOS to form Lloyds Banking Group. This £50bn boost came from a transfer of funds from HBOS's Insight investment management business.
Today, SWIP has funds under management of £146bn. About 80% of this total represents assets it manages on behalf of Lloyds Banking Group, predominantly its insurance business, with funds run for third-party retail and institutional clients making up only 20%.
It is a fascinating comparison because both SWIP and SLI came out of venerable Scottish life offices, and each was trying to build up a big third-party asset management business.
The journey which led to SLI's creation was not smooth. At the time SLI was formed, its then chief executive Sandy Crombie admitted the creation of a stand-alone fund management subsidiary had been four years in the planning.
During this time, Standard Life lost John Thomson, who as chief investment manager had reported to Crombie, and Thomson's predecessor, Dick Barfield. However, when SLI was launched, it was given a clear target of hiking funds under management from £60bn to more than £100bn in five years.
Sir Sandy got SLI off to a solid start. SLI enjoyed a smooth transition when Keith Skeoch took over the controls in 2004 - as a result of the now-retired Sir Sandy's elevation to group chief executive of Standard Life - and it has never looked back.
In contrast, SWIP has had a much more bumpy ride.
It looked as if it might be going places before the departure from the chief investment officer post in 2003 of Sandy Nairn. Mr Nairn, who had joined SWIP in 2000, left to set up the highly successful Edinburgh Partners.
He was said at the time to have been frustrated by the life-company culture imposed on SWIP by its immediate parent, Scottish Widows.
History has shown that you need stability in the fund management sector. And a few big-name fund managers do not go amiss.
SLI has had that stability since it was formed in 1998.
Among its high-profile fund managers are smaller companies specialist Harry Nimmo and global head of equities David Cumming.
The benefits of stability are demonstrated excellently by the success over the decades of venerable Edinburgh partnership Baillie Gifford.
This investment house's giant Scottish Mortgage Investment Trust, run by the highly-rated James Anderson,unveiled a strong first-half performance yesterday.
In contrast, SWIP has had its fair share of turbulence over the years, with rumours that it is up for sale having swirled around fairly consistently.
SWIP, while it emerged from Scottish Widows, differed from SLI in terms of being owned ultimately by a bank that had wider issues to consider, particularly in the wake of the financial crisis.
It was therefore no great surprise last week when the acquisitive Aberdeen Asset Management, run by Martin Gilbert, confirmed it was in talks about taking over SWIP in what analysts reckon could be a £500m deal.
While it is good, from a Scottish perspective, that the potential buyer is based north of the Border, the scope for cost-cutting in such a deal must not be underestimated.
It is not clear at this stage exactly how it will all pan out. But there is little doubt those in the SWIP operation will be fastening their seat belts for renewed turbulence, while their peers at SLI enjoy a smooth journey.