Morningstar Office shutdown a stark reminder

Portfolio management is central to the business of most financial advisory firms, and systems that facilitate the portfolio management process have long been one of the three core parts of advisory firms’ tech stacks (along with CRM and financial planning systems). Given the importance of those tools to an advisory firm’s business, then, it would seem to follow that most advisors would be focused on using the portfolio management software that works best for them. However, the reality of the advisory industry is that inertia often gets in the way of using the “best” tools.

The most recent Kitces Research on Advisor Technology found [design: please change link to “The most recent Kitces Report on advisor technology”] found that only around 2.3 percent of advisors planned to change their portfolio management systems within 12 months, even as some systems rated only a 6 or 7 on a 10-point satisfaction scale (particularly low numbers given the overall importance of the software to an advisor’s business). A switch rate that low means the typical advisory firm’s tenure with any particular portfolio management system will often be “the entire career of their advisors with the firm.”

The main reason why advisors tend to be so slow to switch to new software (even if they aren’t all that happy with the software they’re using) is that it can be a real pain to switch from one provider to another. This is especially true in the “all-in-one” portfolio management category, where the software transition can be especially complex: Reams of historical client data must be ported from the old platform into the new one to ensure accurate historical performance (which, even with modern migration capabilities, doesn’t always replicate historical performance consistently); data connections must be re-established for each client for custodial and held-away accounts; and custom trading rules and billing structures must be flagged and transferred into the new system.

And so, even though many providers offer support in aiding the transition from the advisor’s existing platform, the migration process can still be arduous for advisory firms and their staff. As a result, they often stay with their current technology, even if they are somewhat unhappy with it, until they’re truly forced to make a move – either because the old software simply becomes incompatible with the advisory firm’s needs in continuing to serve their clients or because another event comes along to force the issue.

One of those events occurred this month with Morningstar’s announcement that it plans to shut down its Morningstar Office portfolio management platform at the beginning of 2026. Advisors currently on the Morningstar Office platform will need to decide whether to move to Black Diamond – which cut a deal with Morningstar to offer streamlined migration support, discounted platform fees, and continuing access to Morningstar’s investment research capabilities in exchange for a cut of Black Diamond’s revenue from the advisors who move to its platform – or find another solution to switch to in the next 12 months before Morningstar Office is officially sunsetted.

Morningstar’s decision to retire Morningstar Office is somewhat surprising in that it’s rare for a major technology provider to simply shut down a longstanding offering. However, it’s been clear for some time that Morningstar wasn’t investing the resources into Office that were necessary to keep up with the competition in the portfolio management space.

Office’s satisfaction ratings have significantly lagged behind other providers’ in the latest and several prior versions of our Kitces Report: The Technology That Independent Financial Adivsors Actually Use and Like. Also,  anecdotal (albeit anonymous) evidence shows that at least some advisors were noticing the low level of investment that Morningstar was putting into its product. For its part, Morningstar has made several recent moves to refocus on its core business of providing investment data and research tools, including the sale of its TAMP business to AssetMark and the launch of its new Direct Advisory Suite portfolio analytics tool. So, cutting bait on Morningstar Office was less of an out-of-the-blue decision than a continuation on a theme of getting back to the solutions that Morningstar is best known for.

For advisors on the Office platform, the offer to move to Black Diamond will prove tempting, given that it reportedly includes sweeteners such as a 50 percent discount on Black Diamond’s first-year fee, a waiver of the usual implementation fee for supporting the conversion of client data, and a conversion period where advisors can use both platforms in parallel without paying fees to both platforms.

The caveat, however, is that Black Diamond is reportedly requiring advisors to sign a contract that locks them into the platform for five years in exchange for those incentives. This requirement is perhaps not as big of a downside as it seems given that once advisors go through the ordeal of switching to a new portfolio management platform, they aren’t likely to want to jump to another one within a few years anyway. However, it still provides Black Diamond with some assurance that it will recoup the cost of the incentives it’s offering (and the share of revenue it’s giving up to Morningstar in exchange for being designated the default “incumbent” platform for Morningstar Office advisors).

But for Morningstar Office advisors who are being forced to make a change either way, it likely makes sense to consider all the portfolio management software options that are on the table, many of which are rolling out their own offers to peel off a share of Office advisors from Black Diamond and other competitors.

Advyzon, for instance, has made a case to be considered the natural successor to Morningstar Office, given that it was founded by the people who originally built Office (and then left to create the product that they thought Office could have been once it became clear that Morningstar wasn’t investing the resources necessary to improve enough on the product they had). But there are numerous other options as well, from fellow all-in-ones –like Orion, Envestnet | Tamarac, CircleBlack, Addepar, Blueleaf, AdvisorEngine, Panoramix, and d1g1t – to portfolio management platforms built as extensions to other advisory services like Altruist (which is free for advisors on Altruist’s custody platform).

Ultimately, while Morningstar Office’s shutdown may prove disruptive for advisors who hadn’t planned on a major technology switch in 2025, hopefully the fact that so many advisors were unhappy with the platform to begin with means that the outcome will prove to be positive in the long term – an impetus for advisors who already weren’t satisfied to make the change that they were reluctant to make due to the now-inevitable switching costs.

At the same time, it can serve as a reminder to those same advisors of why it’s worth evaluating the whole portfolio management landscape in order to find the “right” platform to transition to. While incentives and discounts from providers might help to ease the transition to a new platform, it’s likely that most advisors will remain on their next portfolio management platform long after those incentives expire, at which point it will be better to be on the platform that actually works best for serving clients instead of being “stuck” on another one that isn’t up to par.

Ben Henry-Moreland is a Senior Financial Planning Nerd at Kitces.com, where he specializes in writing and speaking on financial planning topics including tax, practice management, and technology. He also co-authors the monthly Kitces #AdvisorTech column. Drawing from his experience as a financial planner and a solo advisory firm owner, Ben is passionate about fulfilling the site’s mission of making financial advicers better and more successful.

Michael Kitces is the Chief Financial Planning Nerd at Kitces.com, dedicated to advancing knowledge in financial planning and helping to make financial advisors better and more successful. In addition, he is the Head of Planning Strategy at Focus Partners Wealth, the co-founder of the XY Planning Network, AdvicePay, New Planner Recruiting, fpPathfinder, and FA BeanCounters, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View.