Next-gen portfolio management tool from Schwab is now live
Firm describes new tools as "easy button" for small advisers.
Schwab Advisor Services is moving ahead with its next-generation portfolio management technology, bringing Portfolio Connect out of the test phase and on to the market.
Schwab is positioning Portfolio Connect as a simpler, cost-effective alternative to tools like Orion Advisor Services, Advent’s Black Diamond or Envestnet Tamarac (which recently acquired Schwab’s older portfolio management software, PortfolioCenter). While Portfolio Connect only works with Schwab accounts and lacks many of the customization options provided with other software, it is deeply integrated with Schwab’s custodian platform and will be free for advisers.
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“When we took a look at the overall landscape of portfolio management options that advisers have today, there are a lot of third-party options providing multi-custodial, sophisticated systems,” said Lauren Wilkinson, Schwab’s vice president of digital adviser solutions.
Portfolio Connect provides an option for smaller firms and newly formed breakaways looking to minimize costs and focus on growth, Ms. Wilkinson said. “They are looking for an easy button.”
Advisers can use the technology to get performance information about individual accounts and the entire firm. It also can automatically calculate fees and deduct them from a Schwab account, helping new firms save time.
Citing Schwab’s 2018 benchmarking study, Ms. Wilkinson said firms with less than $100 million assets under management are adding clients and assets faster than their peers. By helping with that growth, Schwab is hoping it remains the custodian of choice as the small advisers get larger.
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The technology has traveled a long road to make it to the public. Portfolio Connect was first announced in 2010 as part of an initiative to build a cloud-based, multi-custodial portfolio manager to compete directly with third parties. The firm changed course in 2018 under Andrew Salesky, Schwab’s senior vice president of digital adviser solutions.
Now the firm is focused on integrating with third parties to support advisers with more complex needs, Ms. Wilkinson said. Before onboarding, Schwab is making sure advisers know exactly what Portfolio Connect can and cannot do, and recommending third-party options when appropriate.
The final product was guided by advisers in the test program. Ms. Wilkinson said feedback made the product more useful, such as improving workflows, expanding the amount of historical data available on the dashboard, and adding more flexibility in how advisers accept fees.
Eric Henderson, chief investment officer of East Horizon Investments, was one of the advisers in the test program, and he said the process was an ongoing conversation with Schwab’s developers.
“We can be a little persnickety about data and numbers,” Mr. Henderson said.
Overall, he applauded the “slick feel” of Portfolio Connect, adding that it feels more modern than other portfolio management tools he’s used. The biggest improvement for him is that data automatically updates from the brokerage platform, meaning he doesn’t have to do daily downloads or manual updating of client data.
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