December 13, 2007

Schwab and Etelligent Make a Deal

Adding back office services for RIAs

Registered investment advisors will have the option to outsource more of their back office tasks, including "portfolio data management and performance reporting," after the back office service provider Etelligent Consulting, Inc. is acquired by the unit of Charles Schwab Corporation that provides portfolio management and accounting systems for RIAs. Schwab Performance Technologies has agreed to buy Etelligent Consulting, based in Overland Park, Kansas, for an undisclosed amount, with the deal expected to close "in the first quarter of 2008," according to a December 13 announcement.

Calling the deal a "strategic acquisition," and recognizing that the RIA segment of the market is growing rapidly, Charles Goldman, executive vice president and head of Schwab Institutional, added in the announcement: "Removing back office challenges is especially critical as more advisors leave established firms and strike out on their own."

Currently, over 100 RIA firms outsource back office tasks to Etelligent Consulting, but that number will undoubtedly grow, since more than 3,000 RIA firms use Schwab Performance Technologies' PortfolioCenter software for portfolio data management, and Schwab Institutional custodies $581 billion in assets, as of September 30, for about 5,500 RIA firms.

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