Advisor Applications
Advent Software's Black Diamond Division Inks Deal With Raymond James RIA Division
Wednesday, March 27, 2013 12:56

Tags: custodians | Portfolio Management Software

Advent Software, Inc., a leading provider of portfolio management software and services, has announced an agrement the Investment Advisors Division (IAD) of Raymond James Financial. Advent's Black Diamond reporting platform will be available to independent registered investment advisor firms that use Raymond James as their custodian.

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IAD was established by Raymond James in 2001 to provide comprehensive custodial and support services to independent, fee-based Registered Investment Advisors, portfolio managers, financial planners, trust companies and accountants. It's a relatively small part of Raymond James' advisor business, and a fraction of the 6200 advisors affiliated with Raymond James use IAD's custody services.

"The RIA firms affiliated with our division have the opportunity to choose from a wide variety of technology tools and resources," said Mike DiGirolamo, managing director of IAD. "We are committed to providing advisors industry-leading technology solutions and this latest announcement reinforces our commitment to offering choice to the RIA firms who work with Raymond James through the Investment Advisors Division. We are pleased to collaborate with Black Diamond to make this performance reporting and allocation tool available for their consideration."



Income Discovery, A Retirement Income Planning App, Fills A Niche In Software For Financial Advice Professionals
Monday, March 25, 2013 17:26

Tags: competitors | Financial Planning Apps

Filling a gap in retirement income planning software for professionals, Income Discovery (ID) is a noteworthy app. ID puts advisors in control of a powerful toolset for forecasting income streams of bond ladders and annuities as well as broadly diversified securities portfolios, a practice area where professionals must focus on more often as Baby Boomers require safe withdrawal strategies.

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Software For Our Times

With 90% of ID’s features available from your home page, the web-based app is extremely easy to use. At the same time, ID offers more detailed modeling capabilities than traditional financial planning software apps because its sole purpose is optimizing retirement income plans.

Manish Malhotra, founder, CEO, and chief architect of the software, argues persuasively that his app fills an important niche in the professional financial software market. “It’s giving you the guts of a plan that you can run trades against versus a pie in the sky financial plan,” says Malhotra. “It builds an implementation plan for retirement income portfolios rather than a high level financial plan.”

In addition to filling a professional’s need for an app devoted to income strategies, Malhotra has stumbled into a solution to the challenge to advisors posed by growing competition from online apps. By giving an advisor control over a superior toolset for optimizing retirement income portfolios, ID highlights the value of professional experience and judgment in retirement income planning. The software enables such sophisticated modeling that a self-directed investor is unlikely to know how to use it. In contrast to black box programs that spit out impressive reports for clients, Income Discovery empowers human intelligence to guide its models. This highlights the competitive advantage of advisors over online apps.

For example, the app offers a pull-down list of economic scenarios. It also optimizes Treasurys in a bond ladder to design a broadly diversified income stream down to the CUSIP. Moreover, it does the same for many (but not all) annuities. (Fopr easy browsing, The video below is divided into "chapters" displayed across the bottom of the screen.)


The Trend Toward Specialty Software
D is part of an accelerating trend toward specialization of software for financial professionals. In recent years, new categories of apps have sprung up that never before existed. Client portals, tax rebalancing, social CRM, financial-product suggestion engines are new apps spawned in just the past decade. Because these apps focus on doing one thing great, they can succeed in improving the quality of advice and service level offered by a financial professional.

The use of specialty apps has been fostered by growing use of the Web. Interfaces that push client data from one app to another make it easy for an advisor to add an app to his practice management pallet. While traditional financial planning apps like MoneyGuide Pro or NaviPlan could add a specialty app to their software, doing so would complicate the user interface and retrofitting a database with new tools is never as easy as building a new app.


For advisors to compete effectively in the years ahead, they will need to rely on specialty apps more.  An advisor app store will be the new "silver bullet" in practice management.


In ID’s case, the program specializes in retirement income planning. For example, the program includes an overlay for changing Social Security benefits in any retirement income plan. It makes it easy to decide to postpone starting Social Security benefits at age 70 and shows you impact this will have on an income stream. This is not a feature in traditional financial planning software.

A Different Perspective
Professional financial planning software addresses retirement planning from a wealth manager’s perspective, but not necessarily from the retirement income planning angle. For example, ID’s main graphical report displays sources of a client’s income stream over the length of his retirement. That captures the retirement income plan in a one easy to understand picture.

In addition, traditional financial planning software is focused on achieving your goals in life or projecting a client’s cash flows over a long period. Since the only goal of ID is solving for retirement income, its toolset is more fine-tuned for that challenge. So it makes it easier to build forecasts for income streams using single premium immediate annuities, guaranteed life withdrawal benefit (variable) annuities, and bond ladders as well as a diversified securities portfolio.

Bond Laddering
In addition, ID lets you add in a bond ladder to make up for an income shortfall suffered if you should postpone Social Security benefits. So you can easily see whether postponing Social Security benefits until age 70 and using a bond ladder for to replace the missed benefits is a better strategy in the long run than taking the benefits starting at age 62 or 65. Moreover, when you choose to create a bond ladder, the program will give you the CUSIP numbers of the bonds used in the model.

Income Discovery also includes an integration with Income Solutions, an online service providing prices quotes for income annuities. So an advisor can plug in a specific annuity and use its monthly income to generate a retirement income plan. Traditional financial planning apps do not enable design of bond ladders, but they are a reliable, low-cost way of plugging holes in a retirement income plan.

Multi-Period Planning
ID lets an advisor create multi-period plans. While this is not a feature commonly requested by many advisors, it is powerful. A multi-period plan allows you to make one set of risk, reward, and portfolio assumptions for one period in a client’s life and make different assumptions for another period in your forecast. Traditional financial planning apps have enabled clients to make two sets of assumptions, one for pre-retirement and another for post-retirement.

By allowing an advisor to model one set of assumptions for a client who is in his 50s, and another set of assumptions for the same client when he is in his 60s, and yet another for his 70s and 80s, the advisor can make the plan more realistic. The plan can accurately reflect that, as a person ages, she is willing to take less risk, and her income stream in her 80s can be reflected more realistically by creating a plan and income stream more attuned to that period.

A Different Spin At Monte Carlo
ID uses Monte Carlo simulation to show the results likely to be experienced by using different plans, but it makes an important distinction from other programs in the way it explains the results. ID does not reduce a retirement income plan’s chance of success down to a single number. Nowhere will you see terms like a “90% probability of success” or “70% confidence rate,” which are commonly used in traditional financial planning apps to explain risk of failure. Instead, ID reports Monte Carlo results in full sentences.

Not reducing retirement income success to a single number, Malhotra says, allows investors to better understand what failure is likely to mean. Malhotra says academic research has shown that expressing a client’s success rate in a single number makes her think of retirement income planning as a win or lose game when it’s actually more nuanced.

ID expresses Monte Carlo results in a short phrase: “Out of 1,000 people, 660 received full income.” The brief Monte Carlo results report also provides a client with the results achieved by the most unfortunate investor of out the 1,000 simulations. The ID reports results telling you that the most unfortunate of 1,000 investors received an income stream for 17 years and then 13 years of partial income. (“Partial income” in ID is 65% of the full stream sought by a client.) That’s a real improvement in helping advisors explain the risk of failure to clients.

Who Is ID?
After receiving an undergraduate degree in engineering at Indian Institute of Technology, India’s equivalent to MIT, Malhotra, 37, received an MBA at XLRI, a business school in India. Malhotra worked briefly as a corporate banker in India before moving into IT at Dresdner Kleinwort's subsidiary in India. In 2001, Malhotra moved to America.

After designing and implementing IT systems for global risk management at Nomura Securities and Bank of America, Malhotra went to Citigroup’s Global Wealth Management division, where he became a Senior VP responsible for IT strategy and architecture for Smith Barney and Citi’s private banking business. According to his bio, Malhotra led a team responsible for building the IT architecture of an integrated desktop for financial advisors and private bankers at Citigroup.


Malhotra will be speaking at a webinar at 4 ET on Friday, March 29. The webinar is free to A4A members and offers one CE credit for CFPs and IMCA credential-holders. If you are not an an A4A member, join here

Malhotra says he has priced ID expensively to establish deep market penetration before a rival app could be built, and ID has  $39 and $79 a month pricing plans. Brokerages can probably get much lower pricing. So far, 450 advisors have signed up, Malhotra says

Summing Up
ID is the right solution for these times. While Malhotra has plans to sell into enterprises and a broad market of advisors, my guess is fiduciaries will be the most important market segment ID will serve for the next few years. CFPs, CFAs, CPA/PFSs, CIMAs, CPWAs, CLUs, ChFCs, and other professionals are under increasing pressure to differentiate themselves from those without professional designations and offer value to clients beyond what’s offered by online apps and “robo-advisors.” They’re also the advisors with the smarts to use a sophisticated tool like this.

Junxure CRM Announces Schwab OpenView Gateway Enhancements And Envestnet Integration
Friday, March 22, 2013 09:43

Tags: CRM

Junxure, a CRM used by 1,500 RIAs, today announced its latest release, Junxure Version 9.5, which enhances user experience, promotes workflow management and extends business development support to the company's desktop-based solution.

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According to a press release, the following enhancements have been added to Junxure, which is widely recognized as a powerful CRM tool:


  • Schwab Advisor Center Alerts that automatically generate workflows, including pre-built, Schwab Advisor Center workflows.
  • An at-a-glance update of comprehensive account balance and "buying-power" information on clients, without needing to separately access Schwab Advisor Center.
  • Statements, tax-related and trade confirmation documents stored in Schwab Advisor Center are now available for download from Junxure via Schwab OpenView Gateway.
  • A Schwab Account Number Import that imports Schwab Advisor Center account numbers, matches accounts by SSN and by client, and excludes accounts.
  • An asset import tool to bring assets and accounts from Envestnet into Junxure.
Advent Software Says It Will Remain Independent After Reviewing Its Options, But What’s Really Going On?
Monday, March 18, 2013 13:57

Tags: advisor technology | Portfolio Management Software

Advent Software, which makes portfolio management software (PMS) for RIAs, says it has decided to remain independent, sending its stock tumbling today. It's unusual for a company to issues a press release saying it plans to stay independent when no one has announced intentions to buy it. So what’s really going on here?

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Advent had hired an investment banker recently to explore a sale of the company, Reuters reported six days ago. That sent the stock soaring on March 12 by abnout 10%. 

Advent decided it had to issue a statement before the openning of trading today saying its board of directors decided to remain independent, which knocked the stock for a 12% nosedive before it began to rebound.

"We engaged in a thorough process and carefully considered various alternatives," said Pete Hess, Advent's Chief Executive Officer said in today's press release. "The Board believes we can best maximize shareholder value through pursuing our current strategic plan and our strong balance sheet and competitive position will allow us to continue to pursue strategies we believe will enhance shareholder value."

You can't expect a company with no announced buyer to say anything but that it is planning to remain independent. So today's surprise should not have been a shocker that it should send Advent shares plunging. Yet it's 

By most financial metrics, Advent has done a great job of competing over the past five years. But the company's best days may be behind it. “Many of its customers, including mutual funds, hedge funds and investment advisers, have been reluctant to spend,” Reuters reports today. “The company has embarked on a cost-cutting campaign to improve margins as revenue growth slows.”

Advent is seeing a more difficult environment than ever before in its history because financial technology changes so rapidly. With a $1.4 billion market cap, Advent is a big company in the portfolio accounting software business, and big companies in this space are finding it difficult to compete. Unburdened by legacy databases, an entirely new crop of competitors with better features surfaces every three years.

Meanwhile, investment advisors can do more on their own without Advent. Why do they need Advent to create custom performance reports or handle of a slew of tech tasks that their own staff should be able to handle? In these days of tight budgets, companies demand PMS apps with lower costs that they can manage on their own.

Advent’s most profitable business comes from hedge funds and institutions. A4A readers—RIAs serving the private wealth —only become good clients for Advent if they’re managing at least $200 million, and advisors managing less than that amount. RIAs still using Advent’s old Axys performance reporting system—and there are hundreds of firms like that—might consider Advent’s Black Diamond platform, which Advent purchased several years ago. However, many Axys users are looking for less expensive alternatives than Black Diamond. For these RIAs, today’s report is bad news.

In a cost-cutting environment, Advent is unlikely to compete for the business of small RIAs who require more support to make performance reporting work right and who are not willing to pay much for consulting. Advent’s competitors, small portfolio management software companies that are hungry, are simply too difficult for Advent to compete against at the low end of the RIA market. Small portfolio management software vendors can carve out a niche of working with small RIAs and have a very successful small private business, which will keep Advent from innovating and aggressively pricing a product to gain market share with small RIAs.

inStream Solutions Previews Integration With Redtail CRM; Innovative Financial App Adds Top Executives
Monday, January 21, 2013 21:26

inStream Solutions previewed its integration with Redtail CRM today, marking the startup company’s first major step in integrating with other applications and threatening to disrupt the market for financial planning software.

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The integration, which could be released as soon as next week, essentially provides Redtail users with a free personal finance application, according to Alex Murguia, inStream’s founder and CEO. “Whoever is on Redtail has no reason not to do goals-based financial planning now,” says Murguia. inStream is free because it is integrated with a financial services supermarket and vendors paying for shelf space offset the cost of the software to advisors.
The integration pulls data from Redtail, the most popular CRM system used by independent financial advisors, into inStream’s goal-based financial planning system. Demographics, such as the name, age, job, and contact information of an advisor’s client and family members, as well as data about the family’s securities holdings and other assets, are pushed into inStream using a Web service. Without any downloads or imports, a financial advisors client data populate inStream’s goal-based financial planning tool.  
Once a client’s data is stored in inStream, an advisor will receive alerts whenever the client’s plan is failing. For example, an advisor can set up an alert to inform him whenever a plan falls below a 75% confidence rate based on a Monte Carlo simulation.  inStream will update the data feed from Redtail and run the Monte Carlo forecast nightly, Murguia says.  
Since last March, when A4A first wrote about inStream, Murguia has added big names to inStream’s executive team, adding John Wotowicz as executive chairman and Peter L. Corsell as a member of its board of directors. Wotowicz, a managing partner at Concentric Capital Partners LLC, previously served as head of global business development at Dimensional Fund Advisors and before that launched Europe’s leveraged finance industry while at Morgan Stanley. Corsell is a managing partner at Concentric and chairman and founder of GridPoint, a cleantech company. MIT’s Technology Review recognized Corsell as one of the world’s top innovators under age 35 and the World Economic Forum named him a Young Global Leader in 2010.  
In addition, inStream recently hired Zohar Swaine, formerly the managing director of institutional strategy and products at TD Ameritrade Institutional, as President of inStream. At TDAI, Swaine led practice management and his team created an open access architecture allowing technology vendors to access TDAI’s brokerage system data for financial planning, CRM, rebalancing, portfolio accounting and other advisor applications. The move made TDAI the first brokerage serving RIAs to embrace open architecture instead of creating proprietary bundles of apps.
“I will drive the growth agenda of the firm which includes completing the technology build,” says Swaine, 42. “and create the marketplace of financial products for advisors that will provide a level of transparency allowing them to meet their fiduciary responsibilities.”
inStream's approach to financial planning is more proactive than traditoinal apps used by advisors. Financial planning apps currenlty create a plan and then update it once a year. In contrast, inStream uses data to rigger alerts about a client's personal finances. For example, while a traditional financial planning app would not collect informaton about a client's mortgage, inStream will collect that data and use it to tell you it is time for a client to refinance and refer an advisor to mortgage products in its marketplace that could provide a solution. This would enable the avdisor to proactiely alert clients about such opportunities. Similarly, says Swaine, when a client's child turns eight, inStream will inform the advisor, since that is the most popular age for a parent to establish a 529 plan.  
Swaine says about 1300 advisors are now signed up to use inStream.
“This is not just play in new technology,” says Swaine. “It’s a play in changing the way advisors do business.”


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