The three PMS programs we reviewed this month, Schwab PortfolioCenter, Advisors Assistant, and dbCAMS, are desktop applications, but desktop applications are becoming less common. Most of the new PMS products becoming available are Web-based now–Albridge Solutions (formerly StatementOne), Integrated Decision Systems, Investigo. While desktop applications won’t become extinct overnight, forces shaping the industry and the fragmented nature of the independent advisor market make it likely that many more advisors will migrate to a Web-based PMS system over the next few years.
Not all advisors feel comfortable with Web-based PMS applications, however. In fact, most RIAs whom I’ve asked about it say they would prefer to keep their data on their own desktops. However, broker/dealers are embracing Web-based systems for their reps and that trend is influencing PMS vendors in the RIA market.
Companies like Albridge and Investigo are vying for enterprise-wide deals with broker/dealers. To B/Ds, the Web-based PMS vendors are compelling. Until now, the vast majority of reps affiliated with independent B/Ds have provided no portfolio performance reports to clients, instead relying solely on monthly account statements provided through clearing firms and fund companies. So the Web-based systems, while in some cases not offering the varied features, reports, and customization of a desktop PMS application, are a giant leap forward in providing rep clients a better account statement and making reps more competitive.
Business reasons are also spurring B/Ds to adopt Web-based PMS systems. Compliance is much simpler when a B/D can see all of the positions a rep puts clients into. Also, a B/D can negotiate much bigger discounts on the price that reps pay, since a Web-based PMS vendor maintains just one installation if its application is on a Web server and is not distributing and servicing hundreds of individual installations of a desktop application. In addition, having all of a rep’s client account data on a B/D’s server supports the firm’s business goal of discouraging reps from switching to competitors.
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The enterprise deals are lucrative for the PMS vendors. Till now, for the most part, they were forced to sell one license at a time to succeed. As a result, the new PMS applications coming to market are almost all Web-based and not on the desktop. For these reasons, B/Ds and, to some degree, custodians are cutting deals with Web-based PMS vendors.