Schwab's Portfolio Connect tops 1,000 users, still trails competitors

Charles Schwab Corp.'s portfolio management technology Portfolio Connect, which it touted as an “easy button” for advisers when it launched in April of last year, has topped more than 1,000 independent advisory firms on the platform, but is still chasing competitors in terms of adviser adoption.

Schwab positioned Portfolio Connect as a simpler and more cost-effective alternative that was designed to go head-to-head with other portfolio management providers like Orion Advisor Services, Advent’s Black Diamond and Envestnet Tamarac, which acquired Schwab’s older portfolio management system, called PortfolioCenter, for an undisclosed sum in February 2019. 

While Portfolio Connect only works with Schwab accounts and lacks many of the customization options provided by other software, it is deeply integrated with Schwab’s custodian platform, which is a huge potential advantage to the more than 7,500 independent RIA firms that use Schwab for operational, practice management and trading functions.

Most of Portfolio Connect users are small to midsize firms with average assets under management of $40 million, according to a release. The platform provides performance, billing and reporting, and there's no additional cost to RIAs that custody with Schwab. It's also automatically available to all newly formed RIAs with under $100 million in assets, according to Lauren Wilkinson, vice president of digital advisor experience at Schwab. 

“We introduced Portfolio Connect as a solution to appeal to smaller, growth-minded firms who want an efficient, scalable and cost-effective portfolio management solution for serving their clients,” Wilkinson said in a release.

However, Portfolio Connect trails its competitors in terms of market share, according to the 2020 T3 Technology survey. The Schwab tool served 3.83% of the 5,175 respondents, while competitors like Albridge and Morningstar Office had 17.55% and 14.11% of market share respectively. Other tools like Orion Advisor Services (12.37%) and Envestnet (9.37%) were also more likely to be used by financial advisers than Portfolio Connect. 

More than eight out of 10 advisers use at least one portfolio management tool, according to the survey, and such tools are the second-most-used software category available to the adviser community. 

It’s also the most competitive adviser tech segment, according to the research.

Schwab intends to push further updates to the software later this year. Next up, the low-cost brokerage plans to roll out flexible user permissions that allow firms to grant user-level access to selected client accounts while restricting others, according to the firm.