Giant of the broker-dealer tech world takes aim at Advent

Vestmark, which provides the technology behind big name companies like LPL Financial and UBS, is taking its time-tested platform directly to RIAs. Approaching its 10-year anniversary, the broker-dealer tech giant is gearing up to join the cohort of companies competing with Advent Software for business in the RIA sector.

Advent has typically dominated in providing portfolio management to the larger RIAs and asset managers, but companies like Black Diamond Performance Reporting, Schwab PortfolioCenter, Orion Advisor Services, LLC and Morningstar Office have been coming on strong.

Privately owned and financed, Vestmark was largely built by employees and technologists with experience at Portia and Advent, giving Vestmark a strong mix of the two kinds of expertise. Thomson Reuters PORTIA is an investment accounting system for more than 300 money managers in 45 countries, managing more than $15 trillion in assets.

Stats

Vast and growing

Heeren Pathak, Vestmark’s chief technology officer, declined to disclose how many engineers work for Vestmark, but said that it’s a small number relative to the company’s size. Pathak expects the Wakefield, Mass-based company’s current 600,000 accounts and $120 billion assets to double by next year as the focus continues to broaden to include other sectors, like RIAs.

So, with the vast (and growing) number of technology and software choices for RIAs—as evidenced by our reviews and the huge showing at this year’s T3 conference— why would you choose Vestmark?

If you are a larger RIA firm looking to grow, can afford a premium priced portfolio management and trading solution, and are considering a technology switch, keep reading.

Vestmark provides portfolio management, trading capabilities, reporting tools and backoffice solutions using a hosted, entirely web-based, relational database system. Vestmark specializes in dealing with unified managed accounts (UMA) and goal-oriented household accounting — the latter being particularly useful for RIAs working with multi-custodial household accounts.

Adhesion Wealth Advisor Solutions Inc., a TAMP, uses Vestmark as the underlying technology for its UMA platform. See: Little-known Adhesion’s big RIA wins less surprising when underlying pedigree is considered.

Michael Stier, CEO of Adhesion, says that VestMark could be a great candidate for some big firms.

“Inherent with its sophisticated capabilities, Vestmark is a complicated system most appropriate for RIA firms with the requisite resources and experience to invest in the technology, to integrate the technology with the firm’s other systems and data sources, configure the work flow, and manage its day-to-day operation. As such, I very much see larger asset managers as great candidates who should give the Vestmark technology a close look.”

Vestmark is certainly good in the areas where it specializes, according to Stier.

“I would be hard pressed to name another commercially available technology solution that could handle all the complex portfolio management tasks for multi-sleeve UMAs as Vestmark does,” said Stier. “That is why Adhesion chose to utilize the Vestmark system to support the overlay portfolio management services that are part of Adhesion’s investment management and UMA platform.”

UMA strategy tools; simple interface, dynamic
graphs, on-the-fly strategy testing, etc.

Pathak and Rob Klapprodt, president, explained that while they are still getting their first direct RIA clients up-and-running with portfolio accounting, some RIAs like Freestone Capital Management of Seattle, Wash. have begun to use its trading and rebalancing tools. Other companies focused on rebalancing include: iRebal, Tamarac and RedBlack Software.

Vestmark trading tools are touted as
the initial draw for RIAs

Pick-and-Choose Functionality and Pricing

Vestmark is a modular platform, making it easy for advisors to customize it with the tools and functionality they need. “We view ourselves as a tools suite. We’re not going to dictate how you do business with us. You use the tools you think are most appropriate,” says Pathak.

Modular offerings also give RIAs the ability to integrate Vestmark products with their current platforms. “We really pride ourselves on not limiting how our clients do business,” says Klapprodt, speaking to the emphasis Vestmark has placed on providing seamless integration with a range of third-party providers, custodians, and other software systems.

Pricing is based on modules, with several exceptions that use a combination of account and asset based pricing schemes. Vestmark declined to disclose its pricing but allowed that it would be considered “premium.” It deals mainly with larger RIA firms of $500 million of assets under management or more that have the scale to afford the technology.

Web-based Benefits

The entirely web-based system provides access from anywhere and a completely hosted solution ideal for small firms. Being web-based also allows quick interface customization, and the ability to create different ‘views’ — most notably, a client view — so multiple parties have online access to pages tailored to what they need to see.

Pushing software updates and new functionality directly to users is simple on a web-based platform, and can be customized to individual clients if necessary.

Vestmark currently runs in several browsers, but Internet Explorer is recommended. Pathak also mentioned that Vestmark will run via Safari on the iPad, but a native Vestmark app is not a top-priority item.

Data can be exported to Excel from the web-based system for offline work.

What You See and How You See It

Dashboard view gives an overview of
accounts, trades, and trends

The user-interface (UI) includes a new standard: a “dashboard” of widgets for a quick overview of accounts and holdings. The top navigation bar is simple and visible, with intuitive icons for easy skimming. Live links in the interface also simplify navigation to account-specific pages. The latest release of the product includes a completely customizable user interface, which allows advisors to change widgets, views, icons, and the overall look-and-feel.

I particularly liked the ‘heat map’ UI element on the ‘Accounts’ page, which provides a creative visual representation of a firms’ entire book of business, regardless of size. This clickable map offers quick access to a range of information, and can be generated for various account metrics such as drift, value, and performance.

Heat map UI features gives a
quick color-coded overview of accounts; clickable,
dynamic, and visually appealing

Standing Out

A few key differentiators that Klapprodt and Pathak pointed out were Vestmark’s communication network and its order management system. The communication network that Vestmark provides allows direct communication with (multiple) custodians, avoiding time-consuming data uploads/downloads and trade confirmations.

It supports the FIX protocol used by several other portfolio management systems like Advent APX, but Vestmark also supports multiple trade processes through automated trade generation and allocation. The underlying goal for Vestmark is to allow flexible integration with other communication networks and software platforms.

Vestmark’s order management system was touted as picking up where other trading platforms leave off. After the re-balancing and trade approval process, all orders are entered into the order management system where routing, execution, and communication with various executing brokers and/or custodians takes place.

“It is an institutional quality trading system, so a lot of the things you would expect it to perform such as working orders, handling limits, trailing stops, and multi-day trades among other functions are all supported,” says Klapprodt

The Bullet List

• Vestmark’s platform includes capabilities to track changes over time, complete audit trails for simplifying compliance procedures, and role-based access and trade approval hierarchies.

• The relational database backend also allows for customized queries, filters, and searching capability; see your data any way you want to slice it.

• Basic platform includes customizable report generation tools and rebalancing capabilities.

• Advisors can designate ‘alerts’ on specific accounts or groups of accounts for high-cash, low-cash, drift, client restrictions, etc.

That’s a wrap

While it is clear that Vestmark has a broad and complex set of tools for advisors, the company needs to make clearer what differentiates it from its competitors. The technology seems solid and the usability seems fluid, but there are always challenges to being the be-all-end-all solution for every client sector. Vestmark is setting its sights on RIAs, and as its first RIA clients go live with the software, RIABiz will be waiting to hear if Vestmark is as versatile as it claims.