Hanson McClain is switching over from Schwab PortfolioCenter and Envestnet was the runner-up

September 22, 2011 — 3:03 AM UTC by Brooke Southall

0 Comments

Since Hanson McClain Advisors broke away from Securities America Inc. nearly four years ago, it has undergone tremendous changes, ranging from starting an RIA to creating a broker-dealer and shifting its fee structure.

Yet the Sacramento, Calif.-based firm with about $1.3 billion under management and advisement had one legacy aspect among its many changes — the portfolio accounting software — Schwab PortfolioCenter that it had used at the old broker-dealer.

Over the past three and a half years, Hanson McClain has moved about $1 billion to its own RIA, and the assets are held in custody with Fidelity Investments’ clearing unit, National Financial Services LLC. The firm was formerly the top producer for Securities America.

Starting a TAMP

But last week Hanson McClain announced that it is in the process of transitioning from the Schwab technology to Orion Advisor Services LLC. The move comes as the company worked to establish a new turnkey asset management platform — Hanson McClain Strategic Advisors.

“We want our advisor partners to be more efficient in their daily processes and more effective in their asset gathering initiatives,” said Steve Burnett, president of Hanson McClain in a release. “Using one system to access client information, execute trading and generate billing gives us that efficiency. Orion’s multiuser web portals let our advisors — and their clients — access account information and reports via the web.”

Sixteen of Orion’s clients currently have more than $1 billion in AUM — six RIA practices, five TAMPs and five broker-dealer affiliations. Orion is also building a significant roster of TAMPs, with 35 in total.

Outgrowing Schwab PortfolioCenter?

Alan Carlisle of Hanson McClain says that his company had literally outgrown Schwab PortfolioCenter

“PortfolioCenter is great [for a midsize practice with less than $250 million],” he says. “We have 12,000 accounts, and reconciling all those accounts is difficult in PortfolioCenter.”

Schwab Advisor Services responded in this way to that comment:

“PortfolioCenter is a great solution for both small and large advisor firms,” says Lindsay Tiles, a spokeswoman for the firm. “Currently, Schwab Performance Technologies works with nearly 700 firms who have more than $250MM in assets under management.” See: Schwab PortfolioCenter may be poised to shed its utilitarian image..

Carlisle says that he helped lead the quest for the right technology for his firm. An early contender was Trust Company of America, because it is known to have great technology for TAMPs. It was eliminated from contention because it didn’t allow for a multi-custodial arrangement. The assets needed to be held with TCofA itself.

“This is correct from a trading standpoint,” says Bob Oros, national sales manager of See: Trust Company of America adds inexpensive Black Diamond technology — in its own way.. “With our Black Diamond relationship we can now offer aggregated reporting across custodians.”

Advent and price

Scott Hansen, principal of Hansen McClain, says that Advent Software was considered about 18 months ago but dropped from consideration because of price. The company didn’t seek a new price quote more recently from Advent.

The final and major competitor for Orion was Envestnet, which Carlisle liked in all ways except one — the pricing.

“What’s compelling about Envestnet is that it’s a true end-to-end solution — especially with regard to billing. Between Orion and Envestnet, it came down to pricing,” Carlisle says.

Jim Lumberg, co-founder and executive vice president of business development for Envestnet, says in an email that his firm offered tremendous value with its proposal — and that the door is still open.

Envestnet leaves a light on

“Envestnet offered a Hanson McClain a very competitive price for what we have to offer, which is a full range of performance reports, comprehensive data management including daily account reconciliation, and full billing administration. Hanson McClain may have chosen a less robust set of solutions to meet a different price point. If in the future they find they would like to make a change, we would be delighted to talk to them again.”

“I am glad to hear we came in less expensive than Envestnet. Fortunately, we have had a 95%-plus retention rate over the years, so I like our chances in spite of what Envestnet’s thoughts are,” says Eric Clarke, president of Orion in an email.

Carlisle says that Black Diamond Performance Reporting might have been considered more closely were it not for the timing of its merger with Advent.

“Just as I started up with Black Diamond, they were acquired by Advent [Software Inc.], and that ended the conversation.”


Mentioned in this article:

Envestnet Inc.
TAMP
Top Executive: Jud Bergman



Share your thoughts and opinions with the author or other readers.

Submit your comments: