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Technology > Marketing Technology

Uphill Climb

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Amid today’s challenging market conditions, using the proper technology, especicially the right portfolio management software (PMS), can make a difference in your clients’ bottom lines, and yours.

So what have the PMS providers been doing? In a nutshell, they are offering more services, improving the way that their applications talk to other applications and handle data from multiple sources, and easing Web access to view multiple client accounts.

This year, the buzz surrounding portfolio management software companies has seemingly revolved around everything but the technology. For instance, Schwab announced this spring that it would cease selling and supporting Centerpiece, the PMS offering from Schwab subsidiary Performance Technologies Inc., to advisors who didn’t custody their client assets with Schwab Institutional. In June, Advent Software announced it would acquire TechFi, the provider of portfolio management and advisor outsourcing technology.

One could conclude that Schwab was pulling in the wagons, creating a closed system. And one could also conclude that the TechFi acquistion was another example of an old-line technology company gobbling up a promising competitor.

But such conclusions could be misleading, and maybe just wrong.

Warren Mackensen, the fee-only proprietor of Warren Mackensen & Co. Inc., in Hampton, New Hampshire, doesn’t feel that Schwab’s move with Centerpiece reflects any “narrowing,” but rather is a “business and marketing” move that has “nothing to do with the technology.” He points out that PTI is planning to move Centerpiece to a Microsoft SQL database platform.

Mackensen is no technology-challenged babe in the advisor woods, he’s a plain-spoken planner who thinks for himself and has used Centerpiece for 10 years, but he is a true believer in Schwab and its technology. As one example, Mackensen recently agreed to participate in the Schwab Advisor WebCenter program, under which advisor Web sites are hosted on secure AT&T servers, serviced and supported by PTI staff. “At the end of the day, after we do all our portfolio accounting, we will upload an XML file to the server, and then our clients can get online account access to their accounts.” Such online accees is available from other custodians, he points out, but says the “exciting” part is that the client can have multiple accounts at various custodians and brokerages and banks, and those accounts “will all be seen through the Web site, and not just the accounts we have in Centerpiece.”

“Once again, Schwab is at the leading edge,” argues Mackensen “and you’re better off being on their bandwagon than not.”

Mackensen’s comments are music to the ears of Dan Skiles, VP of the Technology Consulting Group at Schwab Institutional. In referring to the account aggregation feature of WebCenter, Skiles points out that since this is a “Schwab product showing non-Schwab accounts,” it would hardly fit into the category of a closed system.

Skiles is quick to describe several other Centerpiece features in the pipeline that don’t fit into the “Schwab’s creating a closed system” accusation. First is moving Centerpiece to the SQL database, which Skiles notes should provide faster performance and allow more scalability. That version should go into beta in September and be released in the first quarter of 2003. The other planned upgrades? Coworker, a service bureau for advisors that will prepare and deliver client reports, pulling data from multiple custodians. It has the same release schedule as Centerpiece, and will be shown at the Schwab Impact 2002 conference in Washington, D.C. in October. The final upgrade of note: building a DTC interface; a network that will allows advisors to tap into buys and sells of equities and fixed income and download those transactions to Centerpiece.

As for Advent’s acquisition of TechFi, Collin Cohen, executive VP at Advent, disputes the “big bad company buys good small company” characterization (As of this writing, the deal had not closed due to a Justice Dept. review, but Cohen said it should happen “any day.”) Cohen says the TechFi products will continue to be offered, and that there is only a slight overlap of customers, if any, between TechFi and Advent. Cohen says Advent thinks of its customers as “asset managers,” while the typical TechFi customer is more of a broker/dealer rep or financial planner. Cohen also notes an agreement Advent’s made with Microsoft to develop a “collaboration platform” called WealthLine that would allow an advisor to “communicate dynamically with their investor client.” Advisors would have their own Web site that clients could visit to view their holdings and recent transactions. The site could provide research, analysis, and “a consolidated view across [a client's] different accounts.”

Percy Bolton is a longtime Advent user. The proprietor of Percy E. Bolton Associates, in Pasadena, California, Bolton, like Mackensen, is comfortable with technology. But he points out that “I am not in the software business.” He’s also not in the data collection or data presentation business. He is, however, in the data analysis business. That’s why Bolton outsources his Advent reporting to a third party, a company that creates performance reports and mails them to clients. That allows Bolton to save money that would otherwise be spent on having one or two staffers create and mail quarterly reports. Bolton thinks of the money he saves by outsourcing as insurance against the day when he might have to shift PMS vendors and hire someone to reenter client data into a new program, as M-Plan users experienced after CheckFree announced in January that it would no longer sell or develop its M-Plan software. But Bolton doesn’t particularly think less of CheckFree for that decision; he’s a user of M-Watch, a performance reporting and evaluation system that he uses for clients who have large positions in separate accounts.

When asked if having two separate software packages isn’t inefficient, Bolton relates a seminal experience he had when he was getting his start in the financial services field. He was a heavy seller of life insurance policies, and used one insurer for those policies. Said insurer went belly-up, and Bolton can say with the humor made possible by a distance of decades that “I didn’t eat for six months,” due to the loss of those commissions. Thus he doesn’t keep all his technology eggs in one basket, outsources whenever he can so he can focus on servicing clients and marketing, and puts away the savings against the day when he may have to quickly find a new PMS partner.


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