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Looming Larger


                                                                Looming Larger
                                        Schwab’s PortfolioCenter and Advent’s Axys aren’t the only portfolio-management
                                       programs available. Plenty of smaller vendors also offer impressive software packages

                                                                                        Ed McCarthy

                                          ORTFOLIO - MANAGEMENT SOFT-                                                     and 25 percent used Axys. Financial
                                          ware is a critical component in                                                 Computer Support’s dbCAMS+ pro-
                                          any financial adviser’s business.                                               gram was a distant third at 9 percent.
                                   Some advisers, though, have a love-hate                                                   About 6 percent reported using
                                   relationship with the industry’s domi-                                                 Techfi, which was acquired by Advent
                                   nant vendors, Schwab Performance                                                       in July 2002. According to Roame, that
                                   Technologies in Raleigh, N.C., and Ad-                                                 acquisition only served to strengthen
                                   vent Software in San Francisco. Surveys                                                Advent’s and Schwab’s hold on the
                                   show that even though advisers are very                                                market. “Fee-only advisers are getting
                                   satisfied with Schwab’s PortfolioCenter                                                caught with fewer choices,” he says.
                                   (formerly Centerpiece) and Advent’s                                                    “Some had moved from Advent to
                                   Axys software, they are often dissatis-                                                Techfi only to see Advent buy Techfi.
                                   fied with the firms behind the products.                                               Meanwhile, Schwab has restricted use
                                       Some, for example, resent Schwab’s                                                 of Centerpiece to users of its custody
                                   move to limit the distribution of PortfolioCenter to only      services. As a result, advisers unwilling to custody at
                                   those advisers who have a custodial relationship with          Schwab or use Advent have limited choices.”
                                   Schwab. In their view, the software seems increasingly like       Still, alternative portfolio-management software programs
                                   an in-house product that only a committed, Schwab-forever      with satisfied users do exist. Some, such as dbCAMS+ and
                                   adviser would want. Advent is independent, but its pricing     Captool Professional Investor, have been around for years.
                                   policies and perceived arrogance annoy advisers. “Advent       Others, like eWebPortfolio, are relatively new or, like Optima
                                   gets rough feedback from industry participants,” says          Technologies’ Interactive Advisory Software, redesigned of-
                                   Charles “Chip” Roame, managing principal with Tiburon          ferings. StatementOne, which provides Web-based portfolio-
                                   Strategic Advisors, a strategy consulting firm in Tiburon,     management software to financial-services firms, has signed
                                   Calif. “When we interview financial advisers and investment    on more than 16,000 adviser-users at almost 50 firms since
                                   managers to get feedback on products such as this one, gen-    launching its service in 2000. What follows is a review of
Illustrations by Sibylle Schwarz

                                   erally what we hear about Advent is incredibly consistent:     several of these programs and a look at some of the emerg-
                                   it’s a fabulous product and has great functionality, but the   ing trends in the marketplace.
                                   people are arrogant and the product’s expensive.”                 Financial Computer Support Inc. (FCSI) of Oakland,
                                       Despite these perceived drawbacks, Advent and Schwab       Md., and its dbCAMS+ program have a long history with
                                   continue to attract and retain customers. Tiburon’s Decem-     financial advisers. The firm was founded in 1981 by Dave
                                   ber 2002 survey of about 300 fee-only advisers found that 33   Huxford Sr., a pioneer in developing automated data links
                                   percent of the respondents used PortfolioCenter/Centerpiece    for portfolio-management software. When Huxford died in

                                                                                                                                        BLOOMBERG WEALTH MANAGER   35
         1994, his son, Dusty, assumed leadership of the firm. About       program, Captool Professional Investor, has approximately
         10,000 advisers now use the dbCAMS+ program, and the              750 adviser-users.
         firm continues to evolve. In December 2000, it acquired Na-          Jeffrey Mehler, a financial planner with his own practice in
         tional Datamax, developer of ProSource software, a sales          Centerbrook, Conn., uses Captool Professional Investor (CPI)
         and contact-management program, and in January 2003,              to track a range of client assets, including stocks, bonds, an-
         FCSI launched Wealth Management Technologies in part-             nuities, cash values of life insurance, and employer-sponsored
         nership with C3Financial in San Diego. The new venture            retirement plans. He values the program’s ability to handle
         aims to provide Web-based portfolio-management tools to           both automated downloads from custodians and manual in-
         small- to midsize broker-dealers.                                 puts of assets that aren’t traded on an open market. Ron
            John Henry and Constanza Low, owners of Knicker-               Miller, owner of Plaatsdale Investment Advisors in Branford,
         bocker Advisors in Pine Plains, N.Y., started using dbCAMS+       Conn., uses CPI with clients’ accounts that are in custody at
         10 years ago. Although they monitor other vendors, they           Schwab and Vanguard. Although he has looked into other
         haven’t yet found a program compelling enough to make             portfolio-management software programs—he’s currently re-
         them switch. To begin with, notes Henry, the dbCAMS+              viewing PortfolioCenter, for example—he hasn’t found any
         database was developed using Micro-                                                        to match CPI’s ability to produce cus-
         soft’s Visual FoxPro instead of a pro-                                                     tomized output for clients. “We can
         prietary database code. This makes it      “We have even called up                         create just about any kind of report in
         relatively easy for a skilled program-                                                     Captool that we can dream up,” he
         mer to retrieve data from the database      with a specific request,                       says. “One of the first ones I de-
         for custom reports or transfer to an-                                                      veloped was what I call my IRS Sched-
         other program. “The single most valu-        and FCSI delivered it                         ule D, which shows tax information in
         able physical asset in our practice is                                                     the same format as Schedule D. Our
         the data in our client portfolio-          because we’ve used them                         clients take this page and give it to
         management database,” he says. “If                                                         their accountant, who can just hand it
         we decided to leave FCSI, migrating          for so long and were                          in as part of the tax return.”
         that data elsewhere would be relative-                                                         Few programs have enjoyed the
         ly straightforward because dbCAMS+
         is written—and our data is stored—in
                                                         so desperate”                              user loyalty that has kept Interactive
                                                                                                    Advisory Software (IAS), formerly In-
         the Visual FoxPro format. When you                                                         teractive Financial Services (IFS), alive.
         use the closed architecture of proprietary database systems,      The software bounced from one developer to the next during
         such as those that Centerpiece and Advent have traditionally      the ’90s, but instead of giving up on the program and chang-
         employed, migrating out of those systems may be more of a         ing platforms, a core group of adviser-users put up their own
         challenge. You may still legally own the data, but it’s our un-   money to buy the source code. The program now resides with
         derstanding that from a technical perspective your freedom        IAS, a subsidiary of software developer Optima Technologies
         with that data is more limited.”                                  in Marietta, Ga.—and it appears poised for a comeback.
            Low points to the added benefit of working with a smaller         These advisers stuck with IFS because it combined portfolio-
         software vendor. If she has a problem with the software or        management, comprehensive financial-planning, and client-
         could benefit from a customized feature, her complaint or re-     relationship-management tools. This combination was data
         quest doesn’t get lost in a bureaucracy. “FCSI can be pretty      nirvana: enter information once, manually or electronically,
         flexible,” she says. “We have even called up with a specific      and it was available to each subapplication, eliminating the
         request, and they delivered it for us because we have used        need for multiple entries of the same data. The most recent
         them for so long and were so desperate. I don’t think that you    product merges the IFS financial-planning and portfolio-
         find that flexibility at the larger software companies.”          management functions with Optima’s contact-management
            Captools Co. in Issaquah, Wash., introduced its first          software in both a Windows-based desktop version and a
         portfolio-management software product in 1985. That pro-          Web-based version. According to IAS president David Grace,
         gram, known as Captool, was designed for individual in-           at of the end of February, 35 advisers were using the Web ver-
         vestors, and the company continued to serve the retail            sion and 40 had installed the software. It’s too early to predict
         market until the early ’90s. By that time, revenues from its      how IAS will fare over the long term, but advisers who
         adviser software had begun to grow, explains president            provide financial planning in addition to investment man-
         Robert Hobbs, and the firm began shifting its focus to the        agement may want to track the software’s progress.
         investment-adviser market. Today, the company’s flagship             Advisers may also want to keep an eye on eWebPortfolio

         in Houston, which launched its Web-based
         portfolio-management service three years ago.
         As Doug Hohertz, the firm’s president, ex-
         plains, the company spent its first 18 months
         beta testing its product. Like Techfi, eWeb-
         Portfolio is hoping to carve out a niche among
         firms and advisers that prefer the application
         service provider model to locally installed
         software. As of early February, a handful of
         advisers had signed up, and the company had
         established data links with two custodians.
         Hohertz says additional links to custodians
         will be available soon.
            StatementOne in Lawrenceville, N.J., is a
         thriving survivor of the dot-com meltdown.
         The company provides Web-based wealth-
         management technology, including portfolio-
         management software, to 16,000 advisers at
         about 50 financial-services firms. Michael
         Kresh, owner of MD Kresh Financial Services
         in Happauge, N.Y., has recently been evalu-
         ating StatementOne’s technology for use in
         his office. He has access to the service
         through his broker-dealer, Royal Alliance As-
         sociates, which provides a privately labeled
         version of StatementOne to its reps. Kresh,
         who currently uses Advent’s Axys, is worried
         about the steep upcoming price increase his
         firm faces when its assets under management
                                                                “We can create just about any report
         move above $50 million. As Kresh explains,             in Captool that we can dream up, including
         “When we cross the $50 million mark, there’s
         a substantial increase in our onetime licens-           one in the same format as IRS Schedule D”
         ing fee, plus a doubling of our annual main-
         tenance cost. That will provide us with the basic Advent                Roame also believes that developers are moving away
         platform but not the ability to have Web-based report avail-         from offering stand-alone portfolio-management software;
         ability to our clients.”                                             instead, their products will contribute to integrate multiple
            So far, Kresh has been pleased with how StatementOne              functions that advisers need. For example, Schwab now sells
         matches up against Axys, although he admits concern about            the PortfolioCenter Relationship Manager (formerly Junx-
         storing his data with the broker-dealer. Still, the potential cost   ure), which it promotes as “a contact-management and office
         savings are hard to overlook. “My cost to get portfolio per-         workflow automation system.” IAS is perhaps the ultimate
         formance reporting from StatementOne, or as Royal calls it,          bundled package. It includes a full range of financial-
         OneView, would be approximately $1,200 a year. For the               planning features in addition to client-relationship-manage-
         equivalent service from Advent, I’d have to pay an extra             ment and portfolio-management software. “We are starting
         $25,000 up front plus approximately $3,500 to $5,000 a               to see a shift among the developers from thinking purely
         year,” Kresh says.                                                   about portfolio-management software to a broader under-
            Will the movement toward Web-based portfolio-                     standing of an adviser’s office,” Roame says.
         management software continue to accelerate? Roame, for                  Will any of these firms eventually dethrone Advent
         one, believes it will. “Although much of the portfolio-              or Schwab’s PortfolioCenter? It’s possible but unlikely.
         management software is still box-and-ship software that              Both firms have survived previous challenges—just think of
         you load onto your PC or server, I think that’s seen its day.        Techfi’s unexpected arrival and subsequent popularity—and
         Web-based technology systems are the trend,” he says.                they’re not about to let their market shares slip without a

           CAPTOOL PROFESSIONAL INVESTOR                        (                       CONTACT INFORMATION:;
           DEVELOPER: Captools Co., Issaquah, Wash.             PLANNED ENHANCEMENTS: tax-lot accounting      800-821-7355
           NUMBER OF YEARS IN BUSINESS: 18                      for dbCAMS+, improved graphical               NUMBER OF LINKS TO CUSTODIANS: 15
           NUMBER OF ADVISER-USERS: about 750                   capabilities, and new suite of products       PRICING: first year, Web-based version,
           CONTACT INFORMATION:;               for entry-level advisers                      $458/month for first user; installed version,
           800-826-8082                                         OTHER PRODUCTS: dbLITE data viewer,           $7,500 (one to five users). Subsequent
           NUMBER OF LINKS TO CUSTODIANS: about 50              ProSource Premiere, Mutual Fund               years, Web-based version, $458/month
           PRICING: first year, $1,999 (single site and         Manager, Stock and Industry Monitor,          for first user; installed version, $3,750
           business, up to three users/workstations);           and Variable Annuity Manager                  (one to five users)
           subsequent years, $800                                                                             WEB-BASED FEATURES: available as Web-based
           WEB-BASED FEATURES: encrypted PDF report             EWEBPORTFOLIO                                 software
           generation                                           DEVELOPER: eWebPortfolio, Houston             PLANNED ENHANCEMENTS: Monte Carlo simula-
           PLANNED ENHANCEMENTS: Captools/net                   NUMBER OF YEARS IN BUSINESS: 3                tions and portfolio modeling
           (Microsoft SQL database product with                 NUMBER OF ADVISER-USERS: N/A                  OTHER PRODUCTS: N/A
           Web interfaces for advisers and clients)             CONTACT INFORMATION:;
           OTHER PRODUCTS: Captool Pro 3 and 4                  713-739-7702                                  STATEMENTONE
           (pooled/hedge funds accounting added)                NUMBER OF LINKS TO CUSTODIANS: 2              DEVELOPER: StatementOne, Lawrenceville, N.J.
                                                                PRICING: first and subsequent years, varies   NUMBER OF YEARS IN BUSINESS: 10
           DBCAMS+                                              with requirements                             NUMBER OF ADVISER-USERS: 16,000
           DEVELOPER: Financial Computer Support Inc.           WEB-BASED FEATURES: system is entirely Web-   CONTACT INFORMATION:;
           Oakland, Md.                                         based                                         609-806-0227
           NUMBER OF YEARS IN BUSINESS: 22                      PLANNED ENHANCEMENTS: additional custodian    NUMBER OF LINKS TO CUSTODIANS: 25
           NUMBER OF ADVISER-USERS: about 10,000                links, additional graphics capabilities,      PRICING: variable
           CONTACT INFORMATION:;                   and improved account reconciliation and       WEB-BASED FEATURES: Web-based solution
           877-432-2267                                         billing features                              PLANNED ENHANCEMENTS: enhanced asset
           NUMBER OF LINKS TO CUSTODIANS: more than 150         OTHER PRODUCTS: N/A                           management features; additional perfor-
           PRICING: first year, $3,585 (for first workstation                                                 mance, management, Trade Blotter, and
           and three teleconferences); subsequent               INTERACTIVE ADVISORY SOFTWARE                 data-mining reports; automated data
           years, $1,440 (for first workstation)                DEVELOPER: Optima Technologies,               transfer from other portfolio-management
           WEB-BASED FEATURES: adviser and clients can          Marietta, Ga.                                 programs to StatementOne using TransPro;
           view reports on-line, and B/D Enterprise             NUMBER OF YEARS IN BUSINESS: 11               XML data integration with advisers’
           Web-based suite is available from sister             NUMBER OF ADVISER-USERS: Web version, 35;     other applications
           company, Wealth Management Technologies              installed, 40                                 OTHER PRODUCTS: TransPro

         fight. The difficulty of moving data between portfolio-man-                  the transition would take four to six weeks, says Tom Batter-
         agement software systems also constrains advisers, even if                   man, president. But it wound up taking almost four months.
         they believe another vendor has superior technology. Jim                       There are also risks associated with changing systems.
         Starcev, a managing principal with Etelligent Consulting in                  Roame emphasizes that a clean data transfer between pro-
         Overland Park, Kan., confers with advisers on portfolio-                     grams is critical to the changeover’s success. “In portfolio-
         management software and other technology issues. He has                      management software, the fundamental issue for advisers is
         observed that the cost of staying with a relatively high-                    that they have data going back x number of years, and
         priced vendor is usually less than the cost of converting to a               they’ve got to retain that data,” he says. “So a company
         lower-priced one after you factor in the training time re-                   may have the greatest new technology product on the block,
         quired to master it.                                                         but unless advisers can transfer their data into that product
            The time needed for the conversion is also often difficult to             easily, they won’t switch.”
         estimate accurately. Not long ago, Vigil Trust & Financial Ad-
         vocacy in Wausau, Wis., decided to switch from Advent to                     Ed McCarthy, CFP, is a freelance writer who reports on fi-
         Schwab’s PortfolioCenter. Originally, the company estimated                  nance and technology.


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