SAN FRANCISCO — Seizing an opportunity to exploit the perceived integration problems of Advent Software Inc.’s offerings to financial advisers, 19 technology companies have formed YourSilverBullet.net.
The consortium’s pledge to advisers is that if they license software from participants, linking systems will be straightforward.
While Advent of San Francisco has by far the largest market share in back-office software for registered investment advisers, it may be vulnerable to a competitor that can eliminate the difficulties in integrating systems designed for that niche, according to industry observers.
Those difficulties in integration are the reason that software companies such as Emerging Information Systems Inc. of Winnipeg, Manitoba, for
financial planning; CRM Software Inc. of Palm Beach Gardens, Fla., for customer relationship management; and Orion Advisor Services LLC of Omaha, Neb., for
portfolio management, are paying $4,000 a year to participate in YourSilverBullet.net.
“Everybody in the industry has been burned by being with a single platform,” said the founder of YourSilverBullet, Gregory Friedman, president of Friedman & Associates, a Novato, Calif., firm with $220 million under management.
“It’s basically Microsoft [Corp. of Redmond, Wash.] all over again,” he said. “As an adviser, I don’t want to be in the hands of one company.”
Although Mr. Friedman was careful not to mention Advent by name, the effort is a clear attempt to compete with Advent for back-office business, according to financial advisers.
Integration barriers
“Anyone who has used Advent knows how difficult it is to integrate new technologies,” said Rick Alpert, principal of Target Investment Services Inc. of Gaithersburg, Md. He said that Target is highly unlikely to seek an alternative to Advent in any case, because his firm thinks that Advent’s software is still the best that is available.
Mr. Alpert declined to provide his Target’s assets under management.
Likewise, vendors find integrating with Advent an uphill battle.
“Point blank: Advent doesn’t like to work with other companies,” said Jim Starcev, principal of Overland Park, Kan.-based Etelligent Consulting Inc., which sells portfolio management software and is a charter member of YourSilverBullet. “They don’t even notice us.”
Not surprisingly, Advent sees itself differently.
Advent’s reputation in this regard is ill founded, according to Bill Penney, the company’s senior director of product marketing.
“It’s a myth that our products are difficult to integrate with,” he said.
Instead, Advent’s software can’t be pre-integrated with all vendors as a matter of practicality, Mr. Penney said.
“We have an alliance program, but we’re conservative before we take on an ally,” he said. “The due diligence is time and resource intensive.”
The discrepancy in views about melding with Advent’s software can be reconciled, said Denise Valentine, New York-based senior analyst of the securities and investment group with Celent LLC of Boston.
“Advent’s Axys portfolio management software is linear and proprietary,” which is “two strikes” against it, because it is implicitly unfriendly with other technologies, she said.
But Advent’s software has been around for so long that the company has “somewhat compensated” for this shortcoming by finding ways to mesh well with a broad array of other technologies over the years, Ms. Valentine added.
But the ability to integrate with whatever new technology comes down the pike is important — at least psychologically, said Peter Delano, senior analyst for The Tower Group Inc. of Needham, Mass.
“What’s important about institutions like YourSilverBullet or industry standards is that it doesn’t confine an adviser to a decision,” he said. “They don’t have to worry that they have to rip out [existing software] as their business grows.”
An all-in-one solution could help advisers avoid having to replace their systems, according to other industry observers.
“There’s a lot of disjointed point applications that do a great job but don’t talk to each other,” said Bob Skea, New York-based chief operating officer of NorthStar Systems International Inc., a wealth management software provider in San Francisco. “Stitching [applications] together from the start produces a better end-user experience.”
That is the direction in which Morningstar Inc. of Chicago is headed with its Advisor WorkStation software, according to chief executive Joseph D. Mansueto.
“It’s absolutely part of our plan,” he said.
“The powerful vision is that you don’t have to integrate,” Mr. Mansueto said. “It’s like Microsoft Office for advisers.”
But advisers such as Ronald W. Mumenny, president of Starfire Investment Advisors Inc. of Southfield, Mich., have their doubts. “Obviously, it’s the Holy Grail of the financial planning world to have one software suite that all worked together,” said Mr. Mumenny, whose firm manages about $180 million.
“But it’s a fantasy to expect that to happen, considering that nobody’s even come up with financial planning software that works with a portfolio management system.”
Even talking about software integration and interoperability at all is a red herring of sorts, according to analysts, industry executives and advisers.
“There’s something [to be said for SilverBullet’s concept], but [consistent] data makes the biggest difference” in keeping various applications working in sync, said Dan Skiles, Denver-based vice president of technology for Schwab Institutional in San Francisco.
But YourSilverBullet expects to create common-sense solutions, such as a status page to let advisers know the progress of integration efforts between firms.
“Clearly, the trend is toward great applications that share data,” Mr. Friedman said. “YourSilverBullet is designed to speed that along.”
