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Why Morningstar's purchase of ByAllAccounts might be a bigger deal than its paltry $28-million price tag shows

The Chicago firm becomes the king of charging for held-away assets facilitation and has a view into the data of its competitors

Author Brooke Southall April 2, 2014 at 5:49 AM
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Joe Mansueto sees the buy 'particularly bolstering our offerings that support an advisor’s workflow.'


Julien Mordecai

Julien Mordecai

April 2, 2014 — 12:46 PM

Kudos to Morningstar. ByAllAccounts has provided a great value to independent RIAs, taking on the difficult task that helped replace tedious and error prone manual entry for wealth managers and investment consultants. The value of the data alone could be well worth the acquisition price. In the niche of transaction based data flow for performance accounting, ByAllAccounts has nearly been a monopoly, though Aqumulate does offer a solid alternative.

At least it was Morningstar buying ByAllAccounts, rather than a financial services company. ByAllAccounts has been a good partner to the RIA niche, as is Morningstar, so there is an ongoing win/win/win opportunity for the company, the RIAs it serves, and their clients. As a portfolio accounting and reporting partner to ByAllAccounts, we will be hoping to see some additional cost savings and innovation arising from this deal…

Pete Giza

Pete Giza

April 2, 2014 — 2:46 PM


Morningstar got a great deal on a great company that manages a really dirty job. If Mike Rowe was into technology he would have done a “Dirty Jobs” expose’ at ByAllAccounts:) For BAA this is an even better deal from a growth perspective. This isn’t about a flip of a company with flat growth. For M* his is the acquisition of a critical data management resource. For BAA it is the move from ubiquity to commodity for the aggregation market. Ubiquity means it’s out there and available. Commodity means everyone is using it. This same principle holds true to other technologies like rebalancing and online trade order management. It’s out there and logic would say everyone should be using it – but they are not.

The RIA market is a disproportionately difficult market to sell to. The time and effort invested in closing 100 RIA firms is probably as difficult as closing M*:) Seriously though BAA will move from ubiquity to commodity as fast as M* pushes aggregation out to its client base as part of their core offering. I have known James since the late 1980’s and he builds solid, profitable and desirable companies and that is what M* recognized in their due diligence.

It will be interesting to see how this deal and offerings from Intuit will come together and present it as the next generation of custodial data feed access points. Advent ACD has dominated this field of opportunity for well over a decade. In my opinion ACD has been that “big gun” in Advent’s arsenal when closing a complex firm deal. Having your data feeds available at a single source is oh-so-powerful. The amount of work and vendor interaction aggravation saved is almost without measure. I for one will be very interested in watching M* as it rolls BAA into its platform.

To both M* and BAA I say congratulations! And to RIAs I say take advantage of the technology developments made over the past 3 years and take them from ubiquity to commodity. Many of these developments have ROI that vastly outstrips the initial cost and in many cases the cost is net zero.



Pete Giza | VP Business Development | WealthSite Inc.
WealthSite – Concierge Accounting & Reporting for UNHW Managers

Mike Jones

Mike Jones

April 2, 2014 — 6:41 PM

VC-backed and only sold for $28 million? its a profitable exit —- but not really a win.

Stephen Winks

Stephen Winks

April 2, 2014 — 6:51 PM

The BAA acquisition tells us of the very positive evolution of leading RIA support firms in the industry. The industry is moving aggressively toward advice (not flipping mutual funds) and more modern lower cost approaches to portfolio construction. It is not5 possible for brokers to add value unless they can make a recommendation in the context of all a client’s holdings—thus the value of BAA type aggregation technology. No major brokerage firm acknowledges or supports advice which precludes the use of aggregation technology as its purpose is to support advice. Literally the premise of Morningstar and Envestnet is they support advisory services, not possible in a brokerage format (as the associated fiduciary liability has been deemed unacceptable. As the difference between brokers selling advice products.and advisors addressing and managing investment and administrative value on behalf of each client in the client’s best interest become more clear, aggregation technology becomes an important differentiator.

Of course that revelation places even more emphasis on prudent process and managing institutionalized inefficiencies counter to the investors best interest and the advisors professional standing, which will redefine advisory services.

It is becoming clear who is serious about professional standing and restoring the trust and confidence of the investing public and the advisors who serve them..

Great play by Morningstar, watch for Envestnet’s response, especially if it entails prudent process which is Morningstar’s Achilles Heel. Flipping mutual funds is very profitable business for the broker/dealer and Morningstar, not necessarily very effective for the consumer.


Peter Giza

Peter Giza

April 2, 2014 — 7:31 PM

Mike Jones Commented: “VC-backed and only sold for $28 million? its a profitable exit —- but not really a win.”

I suppose that depends on how you look at it. Maybe is you are looking for 10X sales, but our industry doesn’t support that. Even BlackDiamond couldn’t pull that while it was biting Advent in the leg at every sales prospect.

Aggregation is an ugly business and it has yet to reach commodity. If it had then I am sure the valuation would have been greater.

I certainly think its a win for this industry and certainly for M* clients. Where is the downside in that story except for M*'s competition?

It’s not always about the money (yes I realize the irony in that statement:) )


Pete Giza | VP Business Development | WealthSite Inc.
WealthSite – Concierge Accounting & Reporting for UNHW Managers

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