[5 Technology Adoption Tips for Portfolio Management Platforms].
Whether you’re still managing client data using spreadsheets, legacy systems or multiple point-based solutions, it you’re like most RIAs you can’t delay modernizing much longer. Just the risks, alone, are considerable. “For instance, with spreadsheets or legacy systems, rebalancing becomes a major issue,” points out Alexander Camargo, an analyst with Boston-based Celent. “If underlying data is wrong, then a firm may be out of compliance or at risk of making an incorrect trade.”
To reduce risks, while simultaneously streamlining operations and vendor relationships, RIAs are turning to suite-based solutions. Typically, these solutions include core functions, like portfolio management, compliance, client reporting and billing, with the capability to integrate other solutions.
“Frequently, the vendor provides the integration services for adding on other tools,” Camargo explains. “This gives RIAs ‘one throat to choke’ if anything isn’t running properly.”
In fact, consolidating onto integrated suite-based platforms is a trend consistent across the wealth management industry, Camargo continues. “Firms desire to reduce the number of vendor relationships and improve the accurate flow of information across systems,” he says.
Just such risks and inefficiencies weighed on Art Zaske, as his organization’s legacy solution grew increasingly unsustainable.
“Years ago, when site licenses became prohibitive, we began maintaining the legacy platform ourselves,” recounts Zaske, president and founder of the Troy, Mich. RIA firm AZA Capital Management.
“By 2008 it was becoming incompatible with new systems, like Windows Server 2008,” he recalls. “And, because we outsource IT, fixing the resulting issues -- like crashed work stations -- became expensive.”
Modern Yet Traditional
For all its flaws, the legacy system was adaptable and interactive, which AZA sought to replicate in a new platform. AZA also wanted to incorporate some of the custom applications developed for the legacy system.
"Change can be hard," Zaske asserts. “Some of our staff members have been with us for 20 years. So, we needed a partner that would help us integrate our legacy functionality, be responsive and make the end result as easy and seamless as possible.
To start, AZA looked at the major players. “Some were too inflexible because they’d pre-defined asset classes and security types,” says Zaske. “Others didn’t sufficiently integrate with multiple custodians.”
After considering a dozen solutions, AZA settled on PowerAdvisor by Cornerstone Revolutions of Portland, Ore. “In addition to all the features and vendor support, PowerAdvisor is cloud-based,” notes Zaske. “That really suited us because our Chicago satellite could finally have full access.”
With a deal inked by late 2010, the transition journey began in early 2011. “We began implementing in parallel with our legacy system in the first quarter,” recounts Zaske. “We ran our legacy solution as the primary system until September and then PowerAdvisor as primary until the end of the year.”
During the process, Cornerstone provided all of the IT service. Still, AZA’s contributions were significant. “It’s not like buying a car, turning the key and driving to where you want to go,” deadpans Zaske.
At the outset Zaske set the tone with his staff, telling them “we’ve listened to all your input, selected a system and now we’re going to do it. Let’s all put our oars in the water and paddle in the same direction.”