Black Diamond joins price war for PortfolioCenter advisors

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Advisor technology providers are in a price war, attempting to entice RIAs using Schwab's PortfolioCenter software to switch into their offerings. Up for grabs are potentially dozens of long-term and lucrative contracts.

Black Diamond is the latest firm to slash prices on its version of portfolio management software after a handful of its competitors, including Morningstar and Orion Advisory Services, discounted similar products in recent days. The PortfolioCenter software was purchased by Envestnet | Tamarac in February from Schwab after the custodian decided to focus on an updated platform.

“We have multiple solutions to help advisors serve their clients and grow their business, regardless of firm size or complexity,” says Bob Conchiglia, vice president of advisory sales at SS&C, Black Diamond’s parent firm. “We also have a range of short- and long-term transition options.”

The post also alluded to the potential for the price of PortfolioCenter to increase and that firms may have less options regarding portfolio management service in the future. “We welcome comparison of our solutions and services on their own merits,” according to the Black Diamond blog post. “That’s the antidote to uncertainty.”

For Black Diamond, RIAs with $100 million or more in client assets will receive a year free, according to the blog post. Firms with less in assets are offered a one-year subscription to ModestSpark, the firm’s client portal and reporting tool. To date, the subsidiary of SS&C Advent says it has transitioned more than 400 firms previously using the PortfolioCenter software.

Due to the cost and inconvenience of a transition, advisory firms tend to stick with the same portfolio management software for decades, according to experts, meaning big opportunity for technology providers.

The result of the PortfolioCenter sale has been a feeding frenzy from technology providers looking to transition RIAs onto their own platforms. While Schwab will no longer provide updates, Envestnet | Tamarac says it has no plans to discontinue the software and is signing up firms for multiple-year contracts.

Black Diamond did not respond to a request for additional details about the offer.

Competitors have not sat on their hands. Leading technology providers, like Orion Advisor Services, Morningstar and even Envestnet | Tamarac itself, have all slashed prices for similar offerings in recent days.

Orion CEO Eric Clarke called the sale a once-in-a-lifetime opportunity. “We want to try to help as many advisors as we can right now,” says Clarke. “Once advisors make these decisions they will typically stick around and form long-term partnerships. We’re helping as many as possible take a look at us.”

The Omaha, Nebraska-based firm is offering nine months of access to the firm’s Eclipse trading platform for free when firms sign up for what is typically a three-year contract. Firms that sign on will get access to the entire Orion suite of advisor technology, says Clarke. “We’re highly motivated to win as many of these advisors as possible," Clarke says.

Not to be outdone, Envestnet | Tamarac offered bundled deals that would offer discounted rates for premium services — if advisors are willing to lock into long-term deals. The world’s leading TAMP floated four- and seven-year deals for the firm’s upgraded package, Outsourced Solutions, according to advisors who discussed the terms with Financial Planning. Those deals offered a year of Outsourced Solutions for free if advisors sign a four-year deal, or two years free if advisors sign a seven-year deal.

Envestnet expects to add $10 million in revenue once the deal closes later this year, according to executives during an earnings call when the purchase of PortfolioCenter was announced.

“It’s a really big opportunity for us,” says Andina Anderson, executive managing director at Envestnet | Tamarac, adding that the move will help the firm gain traction with smaller RIA firms on the Schwab network. “We’ve talked for years about being able to focus on the smaller end of the market and this is going to jump start us getting there.”

But will technology providers be able to lure advisors away from Envestnet | Tamarac or has the TAMP offered enough incentives to entice advisors to stay onboard? The answer might come down to the lengths of the contracts, say experts.

According to one advisor, the ballpark example presented by a representative of Envestnet | Tamarac was for a firm with 200 accounts and $200 million in client assets, Outsourced Solutions costs approximately $16,000 a year. The basic PortfolioCenter package — which does not include the added on tools — costs upwards of $3,000 per year depending on size, according to multiple advisors.

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The lengthy deals may have dissuaded some advisors looking to upgrade. “For your home mortgage, lock yourself in,” says Erika Safran, of the New York-based Safran Wealth Advisors. “But, in terms of technology, being locked in for long periods of time just doesn’t make sense. Seven years would have been a lifetime.”

Safran Wealth ultimately decided to continue using PortfolioCenter on the Tamarac platform, but did not take advantage of the offers for premium services. For Safran, Outsourced Solution did not offer significant return on investment for her firm. Envestnet | Tamarac agreed to honor the terms of her current deal.

“Envestnet wasn’t buying the legacy technology as much as they were buying the right to reach out to those advisors on the platform,” Clarke says. His firm is in talks with dozens of PortfolioCenter advisors about a potential switch, Clarke says, without offering further detail.

Craig Iskowitz, CEO of the consulting firm the Ezra Group, says the lengthy deals probably had little effect on whether or not an advisor stayed on the Envestnet | Platform. “A lot RIAs have been using PortfolioCenter for 15 or 20 years. So, what's 4 or 7 more?” Iskowitz tweeted using the handle @craigiskowitz. “We're not talking about a new iPhone. You don't replace your portfolio accounting system because they added facial recognition.”

Others disagreed. Johnny Sandquist, ‏owner of the publishing firm Three Crowns Copywriting and Marketing, took to Twitter to express his displeasure with the terms. “Wow … those contract terms mentioned. Seven years?” Sandquist said via a Twitter handle @johnellert. “Tech ages a lot like dog years and that's about 100 of them.”

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RIAs Portfolio management Practice management software Asset management Envestnet SS&C Technologies