Every advisor, whether an RIA or independent broker, has a need for certain technology. For example, we all need a good investment research tool, performance reporting software, contact management, etc. Some custodians provide parts of the equation while others do not, leaving it all to the advisor. In this post, a follow-up to two previous posts on finding a custodian that fits your needs, we'll discuss how TradePMR's offerings merge with the needs of an advisor. More specifically, we'll confine our discussion to performance reporting and generating a snapshot of a client’s portfolio.
When I became an independent advisor in 2007, I chose Fidelity as my custodian and Morningstar Office for performance reporting, research and so forth. In those days I would download the account data from Fidelity's platform each day and upload it to Morningstar Office. However, shortly after subscribing, a problem emerged. Specifically, whenever there was a dividend, money would go from the position, to cash, and then buy additional shares in the fund (i.e.; the dividend). Because of the way Fidelity coded the data and how Morningstar Office interpreted the data, it wasn't working correctly.
After the problem was identified, a lot of manual input had to be done to correct the problem to assure the performance reporting would be accurate. At the time I recall thinking how I would never be able to monitor this on every account, every day, to catch any errors which may occur. This, coupled with a few additional issues, led me to change custodians. Therefore, in February 2009, I moved my client accounts to TradePMR (which, at the time, had its own issues with Office which have since been corrected).
NOTE: I don't want to give the impression that Fidelity was not or is not a good custodian. As far as I know (it's been quite a while since I worked with them), they do a fine job.
TradePMR has excellent technology. In fact, this may be Trade's strongest suit. One thing I like is that its performance reporting tool is built into its website, so advisors do not have to reconcile data. Of course, it is a good idea to check it periodically.
On another point, I have a need to quickly determine an account’s allocation (percentage) in stocks, bonds, cash, etc., at any time, in a non-labor-intensive manner. With Trade, this is very easy to accomplish. First, I export:
1) a portfolio;
2) a group (ex: a family, "A" Clients, etc.); or
3) all accounts from Trade's platform.
The export is in an XML format. Second, I import the XML file into Morningstar Advisor Workstation which identifies and categorizes each position. Third, I select the portfolio(s) I want to assess, generate a Portfolio Snapshot or X-Ray report in Advisor Workstation, and in a matter of seconds, I have a multi-page portfolio overview with a myriad of statistical data in a PDF format. This makes it easy to determine the broad allocation and risk, which is especially helpful when markets are in turmoil.
In closing, I would say that TradePMR has been a wonderful partner, and that's really what a custodian is, a partner. Moreover, I look forward to a long and mutually beneficial relationship.