Schwab PortfolioCenter will finally have a cloud option that doesn't take away an advisory firm's control of its data

October 26, 2012 — 4:01 AM UTC by Brooke Southall


The plan of Schwab Advisor Services to get as many as 3,500 RIA firms weaned off the classic desktop software of its own Schwab PortfolioCenter and onto a newfangled, cloud-based version of the same now has pilot firms lined up and pricing specified. See: Schwab moves to keep 3,500 desktop-bound RIAs from walking onto somebody else’s cloud.

Call it Take 2: The San Francisco custodian of about $750 billion of RIA assets is finding a palatable way to get advisors both convenience and comfort level in fixing something that’s not technically broken — software housed on servers in closets that have gotten the job done for decades securely and efficiently enough.

Tech nirvana

In the first take, Schwab acquired Etelligent and it also collaborated with firms like B-Ready, BOSS and Envestnet | Tamarac. There are about 200 Schwab RIAs on the Etelligent version, Portfolio Services, and hundreds more with the third-party vendors.

But thousands more have stubbornly resisted the change because they only wanted to give up control of the technology — not the data. The new iteration — positioned between the closet-server and giving up all control — is expected to hit a middle ground of tech nirvana.

“We think this will be wildly popular with our advisors,” says Brian Shenson, Schwab’s vice president of advisor technology solutions.

More data, good data

Michael Kossman, chief financial officer of Aspiriant, whose 115-employee, eight-office firm is undertaking a multiyear effort to make itself cloud based — largely by implementing SalesForce agreed in an earlier interview. See: How Rob Francais combined two giant RIAs and then added the assets of Deloitte Investment Advisors.

The big advantage of Schwab’s new PortfolioCenter hosting capability from his perspective is that the changes will allow his firm to access data from multiple custodians. Connections to Schwab Intelligent Integration had little value when only Schwab data could be accessed, Kossman says.

Michael Kossman: This has been kind of a hole in their strategy.
Michael Kossman: This has been kind
of a hole in their strategy.

“This has been kind of a hole in their strategy,” he adds. “I’m happy they’re going to reprioritize.”

High altitude

To meet what has emerged as such a crying demand, Schwab has put the cloud-ification of PortfolioCenter on one of the fastest tracks in the company’s history, Shenson adds. It’ll go from drawing board to pilot in about a year.

“Up until recently, there was apprehension about the cloud. That’s changed a lot in the last year or two.”

Schwab says that as many as 50% of its 3,500 PortfolioCenter users say they are “very likely” to adopt the new option. See: Envestnet unbundles portfolio management software for RIAs and it won’t be a sideshow.

One reason for that may be pricing that sounds competitive.

An emerging practice will pay $1,200 per quarter if it parks assets at Schwab and $1,500/quarter if it keeps assets elsewhere.
The rest of Schwab clients pay $1,800 per quarter and the rest of non-Schwab clients pay $2,400/quarter.

There is also a one-time implementation fee, but that is waived for existing PortfolioCenter users who have assets under custody with Schwab.

Advent Software has faced a similar conundrum of having the bulk of its customers stuck with partially outmoded technology. See: Advent Software is moving ahead in the RIA tech market— even if most Axys users refuse to budge.

One major obstacle cited by advisors contemplating a shift — a prohibitive cost to transitioning, something that Schwab custody customers may dodge.

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