When Advent Software bought Techfi earlier this year, many advisors viewed it as the portfolio management software marketplace turning into a one-man show.
The big question was, "What other choices does an independent advisor have left?"
Not too many, according to the experts. But when it comes to identifying companies that advisors should keep their eye on, one of the names that often pops up is StatementOne.
This Lawrenceville, N.J.-based company is also in the portfolio management applications business, but it approaches it from a different direction than Advent. Rather than marketing directly to advisors, StatementOne offers an enterprise solution that it sells directly to institutions.
Central to the company's strategy is a proprietary technology that consolidates investment account data, reconciles it automatically and makes it usable to both advisors and institutions.
"They're a big player, too. The problem is you can't independently choose them," says Jim Starcev, managing principal of Etelligent Consulting in Overland Park, Kan. "Your broker-dealer has to make the decision."
StatementOne has achieved notable growth the past two years, but it didn't start out of the gate so quickly. The company was actually founded in 1992, and incorporated as Fundscape Inc. in 1993 by financial planner Lou Gerber. (Gerber left the company earlier this year but remains on the board of directors).
For its first six years, it was basically a research and development operation. The aim was to develop a unified solution for advisors and institutions to work with investment data stored in a variety of formats. It wasn't until 1998 that the company launched its first product, a consolidation tool in the form of PC software.
A turning point for the company, however, came in 2000 when it developed a Web-based portfolio accounting product. The same year, the company raised $16.5 million in capital and had its first launch-providing services to four broker-dealers of the ING Advisors Network, comprising 8,000 advisors.
Some of the clients added since then include Capital Analysts, Cambridge Investment Research, Jackson National, Jefferson Pilot Securities, Xerox Credit Union and Wall Street Financial Group.
In September, StatementOne announced it was selected to provide data consolidation and portfolio accounting and performance reporting for the AIG Advisor Group's 9,000 advisors. In this case, StatementOne will integrate its product into AIG Advisor Group's Vision2020 platform.
"AIG is pretty significant, partly because of the deep level of integration that we have worked to develop with them," says David Orban, StatementOne's vice president of marketing.
Since the launch in 2000, StatementOne has grown to where it's handling 12 million accounts on a daily basis, for 44 broker-dealers comprising 30,000 advisors and $150 billion in assets. The privately held company declined to release its revenues, but it recently announced it achieved positive cash flow in the second quarter of 2002. The company also secured $3 million in financing from Hudson Venture Partners, a new investor, and Charterhouse Group International, one of the company's original investors, in September.
So what are the company's next milestones?
Although StatementOne has been mentioned as a player that potentially could give Advent some competition, company officials aren't looking in that direction-at least not yet.
The company's more immediate goals, officials say, involve moving into new enterprise markets. The company, for example, says it wants to make a play for banks, wirehouses, regional and super-regional brokers, and other institutions. The expansion into new markets, and expansion in its current market, could involve strategic alliances and acquisitions, Orban says.
The company also is expanding the functionality of its services. Fee-billing and tax planning are among the capabilities in the works. The company is also banking on a replication service introduced nine months ago that collects, cleans up and stores enterprise transaction data on a daily basis. "It gives them a very, very clear snapshot, at a detailed level, of what their end investors are doing," says Jakob Rohn, StatementOne's senior vice president of product development.
With the company's Transpro add-on, historical data stored in other applications can be formatted for use with StatementOne. The company can currently do conversions on Advent databases and plans to offer the same capabilities for Centerpiece and dbCams data next year, Rohn says. "This allows us to marry historical data to current data," he says.
Whether StatementOne can target smaller firms and still achieve economies of scale is less clear.
"We talk to them every day," Rohn says of the smaller independents. "One of the things we need to do on the implementation side is figure out how we can price it so we can sell to these guys."
Observers note that Advent's application is clearly superior to StatementOne's when it comes to flexibility and scope of reporting capabilities. StatementOne, meanwhile, says its application should be appealing to advisors because of its reconciliation capabilities and price. The company's standard monthly subscription rate ranged from $150 to $275 per advisor, with the exact figure contingent upon on how many of a broker-dealer's advisors use the product, Orban says. How much an advisor pays depends on how much of that subscription is picked up by the broker-dealer.
Probably the biggest advantage StatementOne has is its ability to reconcile 12 million accounts per day, says Mark Calhoun, also a managing principal at Etelligent Consulting. "I think their technology is phenomenal," he says, though adding that some advisors could be uncomfortable with automated reconciliation. "The downside is they're limited to that (large enterprise) niche. What they don't have really is the ability to sell to smaller [advisors]."