SAN FRANCISCO — In an about-face, Schwab Institutional has reconciled with a former technology partner in an effort to upgrade its customer relationship management tool for financial advisers.
Six years ago, Schwab decided to go with its own CRM solution, PortfolioCenter Relationship Manager, cutting ties with CRM Software and no longer using Junxure, the Palm Beach Gardens, Fla.-based firm’s product.
CRM Software will regain much the same role it played in 2001, because Schwab officials decided resources are better spent upgrading its back-office accounting software, said Dan Skiles, vice president of technology.
“We approached [Gregory Friedman, chief executive of CRM Software] and said: ‘Can we both focus on our core competency?’” Mr. Skiles said.
Schwab will upgrade all Relationship Manager clients to Junxure 7 at no additional cost. The San Francisco-based asset custodian will support Relationship Manager until June 30, 2008.
When told about the deal, Isabella Fonseca, a New York-based analyst for Celent LLC of Boston, said competitive forces likely helped push Schwab to reconcile with its old tech partner.
“Junxure was customized to Schwab, and it made sense to continue using the system rather than starting from scratch again,” she said. “Of course, seeing the Fidelity/Oracle deal contributed highly to this decision.”
“That’s not true,” Mr. Skiles said.
Fidelity Investments said early last month that it collaborated with Oracle Corp. of Redwood Shores, Calif., to customize its Siebel CRM software for advisers doing business with the Boston-based custodian.
The new software is being piloted by a handful of Fidelity advisers and will be rolled out to all of them by yearend, according to Steve Austin, a company spokesman.
“We chose Oracle because they’re the leader,” he said.
CRM has come to the forefront of adviser technology because of the industry’s switch from the straightforward task of managing assets to the complex task of managing wealth, according to industry analysts.
To that point, Merrill Lynch & Co. Inc. of New York announced last month that it will make new CRM software from San Francisco-based salesforce.com inc. available on the desktops of 25,000 brokers.
These pressures aside, Schwab’s 180-degree turn back to CRM Software was remarkable considering the split six years ago, industry observers said.
“I was surprised” that Schwab put Mr. Friedman back in the catbird seat, said Jim Starcev, principal of Etelligent Consulting Inc.
of Overland Park, Kan., which helps advisers choose and install software.
“I don’t know how Gregory [Friedman] pulled it off, but he pulled it off,” Mr. Starcev said.
“It tells you that both Schwab and Greg are looking past the personal issues in the past and doing the best for their users,” said Deena Katz, chairwoman of Coral Gables, Fla.-based Evensky & Katz Wealth Management, which manages $600 million. Her firm uses Schwab as a custodian and Junxure for customer relationship management.
The dispute in 2001 was that Schwab wanted to invest substantial capital in making Junxure work hand in glove with PortfolioCenter, its portfolio accounting software, according to Schwab’s Mr. Skiles. To reflect that financial commitment, it wanted to keep the technology exclusively for its clients, he said.
Mr. Friedman said that that was not an acceptable deal for him.
“That was a little different than where I was at,” he said.
The salt in the wound for Mr. Friedman was that Schwab used his technology in its in-house product, according to industry observers. Schwab does not dispute that it used his technology, according to spokeswoman Lindsay Tiles.
Mr. Friedman said he never sued Schwab. Many of his customers — and his own firm, Friedman & Associates — are Schwab custody customers. The Novato, Calif., firm manages $220 million.
Preferable terms
Clearly, the terms of the new deal are preferable to Mr. Friedman, who doesn’t need to cede exclusivity to Schwab — or even offer a group discount to its advisers.
In fact, after a one-year grace period, advisers using Schwab’s software will need to pay an additional $50 per seat to switch to Junxure. CRM Software charges $500 for the first seat and $300 for subsequent seat, but they have a three-seat minimum. Schwab charges $500 for the first seat and $250 per seat for any others, with no minimum.
David Firth, director of operations and client services for Opes Advisors Inc. of Palo Alto, Calif., which manages $80 million, isn’t quibbling about being switched over.
“It’s a positive development,” he said. “Schwab was good to realize they couldn’t maintain and upgrade” Relationship Manager to make it competitive with Junxure.
