Tamarac shuts out Black Diamond from integration
The Seattle-based software company says it's a data issue but Black Diamond says it'll expend resources to serve mutual clients
Envestnet nabs Dani Fava to cross-pollinate semi-autonomous units and reap 'financial wellness' as the end product
The Chicago outsourcer has a massive, partially disconnected arsenal of products that CEO Bill Crager is rationalizing into 'wellness' with yet another new unit.
July 23, 2020 – 1:42 AM
Oisín's Bits: Wealthfront drops old mission statement, declares war on institutions and emphasizes banking future • Seeking Utah charter, Edward Jones may become largest bank in US by branch count • After Advent chief leaves, Black Diamond head steps up
Andy Rachleff cans the old 'democratizing' mission statement at his robo; The 14,200 one-man Ed Jones branches may become branch banks; Steve Leivent consolidates power at SS&C.
July 3, 2020 – 1:12 AM
Addepar hires Advent genius then launches 'Advent Converter' to court the RIAs still on Axys and APX ; PortfolioCenter 'easy button' comes next
The tactic by the Mountain View, Calif. firm and Advent co-founder and code avatar Steve Strand comes a decade after Orion, Black Diamond and Tamarac began feasting on the legacy corpses, but Addepar insists meat remains on the bone.
March 3, 2020 – 5:05 PM
Pete Giza and Damon Deru go for Holy Grail of portfolio rebalancing with software that shuffles stocks, bonds... and asset classes; Believe it?
The RedBlack and TradeWarrior executives see old systems as 'archaic' yet know that the Black Diamonds, Morningstars, Orions and Tamaracs see rebalancing as a loss leader
June 11, 2019 – 9:49 PM
Envestnet | Tamarac
Portfolio Management System, CRM Software, Trading/Rebalancing
Top Executive: Stuart DePina
I am not sure I even understand the point of discussing open versus closed “architecture” in this context. Most platform architecture are being built using “open technology”. The issues related above have nothing to do with technology; it has all to do with business strategy.
Vendors chose to work with one another – or not. Sure, there are instances where the cost to integrate is too costly or the ROI is just not there in the long-term. This has everything to do with what’s good for the vendor – not the advisor or the industry as a whole. This means that advisors are the ones that “bear the brunt”.
Black Diamond will compete in the rebalance arena, but that will not affect the integration relationship between Black Diamond and RedBlack. In fact Black Diamond and RedBlack are continuously enhancing the relationship including working on streamlining the integration further.
I think it is important for advisors to understand what integration means and implies depending upon the route taken. Here is a definition:
A definition of integration is “an act or instance of combining into an integral whole.”
A couple of questions arise:
1. What is the whole?
2. How are they coupled?
Two models of integration follow: Tightly coupled; Loosely coupled.
Advantages and drawbacks of each model:
Tightly coupled (Orion, Tamarac and Custodial et. al.) systems often:
• require a strict governance model encompassing all components within the entity
• are less sensitive to the operating environment
• limit local adaptation due to governance model over integral systems
• require sub-systems integral to the whole to be fail-safe
• limit self-determination by actors is significantly by external actors
Loosely coupled systems (Black Diamond, RedBlack et. al.) often:
• allow the entity to persist through rapid environmental fluctuations
• improve the entity’s sensitivity to the operating environment
• allow local adaptations and creative solutions to develop
• allow sub-system breakdown without damaging the entire entity
• allow more self-determination by actors
What I read in this article is:
1) Advisors are making choices based upon their perceived needs and wants for their firms’ business operation model. They either decide to keep their technical independence and choose applications ala carte that best serve their needs (Black Diamond + RedBlack + SalesForce) OR they choose an all-in-one platform (Tamarac + MSFT DCRM).
2) Vendors are making it harder on the advisor by locking out other vendors from their “open” platforms. This is a strategic decision and has little if anything to do with technology.
3) Advisors need to take control of their technology destiny. Voting with their dollars is only part of the solution. Advisors need to lobby the industry and that means speaking out to the vendor and custodial community through a central voice.
2012 should prove to be an interesting year especially with the APIs and advanced systems the custodial platforms are touting and the regulatory required enhancements.
Perhaps a better question that nobody seems to be asking is WHY is Tamarac unable or unwilling to accept data from Black Diamond. The fact that Black Diamond is not really a tax lot portfolio accounting system is one of the technical reasons we’ve seen that they don’t work together. Be sure not to confuse a “Performance System” (e.g. Black Diamond) with a “Portfolio Accounting System” (e.g. PortfolioCenter, Axys).
For performance and reporting purposes, Black Diamond might be good enough for an advisor’s reporting needs, but it’s not good enough to seed a system like Tamarac that generates trades and through its decisioning engine can effectively put the RIA’s reputation and capital at risk. To feed a system that does rebalancing, the source platform must do full tax lot, position, cost basis and cash reconciliation. And it must be able to this for transactions that not only occur today, but also ones that have a historical impact on the share quantity or cost – like corporate actions, trade corrections, cost allocations, repricing, restatements, etc and recompute today’s portfolio’s lot structure given all these changes in the past. If any of this is not done, then the data export being sent to the rebalancing tool is fundamentally flawed as it may have the wrong cost, lot structure, gain/loss, etc…thus causing the rebalancing output to be invalid.
I don’t think this is an ‘integration’ problem per se. I’m sure that other Rebalancing tools that are being fed by a Performance System are running into this same issue (whether they realize it or not). I’m sure if Black Diamond invested the time and resources into being a true tax lot portfolio accounting system, then Tamarac might reconsider their position. But I’m sure Tamarac was getting tired of having to defend the output of their rebalancing tools when driven by Black Diamond data. Then again, being a true tax lot portfolio accounting system is a tremendously expensive and time-consuming investment. And, it’s not what Black Diamond does as their core competency – which might make some question the value of their performance reporting as well. But I’ll leave that to another post…
Yes, I agree that semantics make matters cloudier than ideal in these instances.
Correctly or not, “closed and open architecture” is used in the industry to describe openness, or not, both as a technical matter and a term of policy.
Sometimes we rely on the context it is used to understand the users meaning.
I’ll be more mindful of not being any more confusing than need be going forward with these articles on the subject of architecture, an overused polysyllabic word. At least the technoratti hasn’t appropriated words like 'gothic’ and 'Victorian’ to go with it.
Dear Mr. Null,
Based upon your caustic assessment of Black Diamond’s capabilities and alleged deficiencies I can only suspect that you either work for Tamarac or are fierce competitor of Black Diamond. Mud slinging is rarely respected. Tamarac strategically cut off many partners that were viewed as the competition.
Your comments have just called into question all performance reporting service providers. If your assumptions and assertions are correct then there is a real problem for this industry. In fact how can anyone be assured of the quality? Are all the technology providers who depend on this data source at risk? Are errant trades being made as we speak? Perhaps you can produce proof rather than casting aspersions.
I suspect you cannot or will not. And even if you did those would be hidden by a null reference.
Semantics aside, RedBlack continues to expand its open data architecture. We currently support over different data interfaces and that list grows quarterly. Additionally RedBlack supports integration with platforms that have competing rebalancing products. As stated earlier the decision to open or close one’s integration is a matter of vendor vs vendor strategy.
I am not sure of Mr. Null’s objective, but their is validity in his statement about the challenges in feeding a trading and rebalancing system from a performance system. Performance systems are designed to calculate performance at the security level, which means they rely on daily position and transactional data from the custodian accounting system. Performance systems do not require tax lot detail and cost basis to properly calculate performance at the asset level. To execute loss harvesting or to do any tax impact analysis in a trading and rebalancing system requires tax lot detail and cost basis information from the custodian accounting system. As Mr. Null stated historical transactions and corporate actions impact cost basis and tax lot detail in the custodian accounting system and it is imperical that these changes be reflected properly in the trading and rebalancing system being used.
In any system architecture adding another layer in the data model, especially one that relies on mirroring the primary data source, the custodial accounting system, does create additional challenges.
I am sure there were many factors that went into making this decision and it was not made lightly. 3 of the 8 systems that Tamarac interfaces with are Advent Products, this seems like a risky call based on the fact that Advent now owns Black Diamond.
They may or may not use the lot info as you describe purely for performance reporting reasons. However, these systems do, by-in-large collect that data and make it available to rebalancing and trading systems like RedBlack. A larger issue faces the industry as Stephen Winks points to and that is proper awareness of other apps needs. That is what true integration is about and the only way real STP or streamling can be accomplished without a lot of DYI and patchwork. The industry is lumbering along toward that direction, but…