You can pay as little as roughly $800 for portfolio management software. You can also pay tens of thousands more. This month, we'll take a look at two portfolio management systems at opposite ends of the cost spectrum. One product, Portfolio Director from a Holidayburg, Pa.-based company called Portfolio Systems Inc. (http://www.scscompany.com), retails for as little as $795. At the other extreme, we will look at a system from Orion Advisor Services LLC (http://www.orionadvisor.com) that will almost certainly set you back more than $30,000 annually and possibly much more.
Portfolio Director
Portfolio Director is one of the least expensive, functional portfolio management programs that I have come across. According to Portfolio Systems Inc., there are currently about 200 Portfolio Director users. The company also produces Option Money, a program for active options traders with about 2,000 users.
Portfolio Director is a Java-based desktop application capable of running on either an individual PC or a network. Because it is Java based, Portfolio Director will work with Windows, Mac and Linux operating systems. The program has a number of limitations, but it also has some interesting stock option tools.
According to Portfolio System spokesperson Bob Yacobucci, client accounts must be set up manually. This entails entering the account holder's name, account number and other relevant data (type of account, for example) into the system. For small advisory firms or new ones, this should not be much of an issue. For those with larger account rosters, the firm offers a manual data entry service that can enter the data for you at a reasonable price.
Once the accounts are set up, historical data is converted electronically. Portfolio Systems will either provide the advisor with a program that can convert the data from the old program to Portfolio Director, or the advisor can ship the data file to Portfolio Systems, in which case they will convert the data, create a new file and send it back to the advisor. Yacobucci says his firm charges $95 per hour to convert data, and the total conversion cost rarely exceeds $1,000.
Once all relevant data makes its way into the program, Portfolio Director is easy to navigate and use. Most program features are accessed by selecting something and right-clicking on it, which brings up a context-sensitive menu. For example, if you click on a single mutual fund holding in a portfolio, you can obtain, among other things, trade history, position details (cost basis, P & L, pricing info, etc.), classification (Morningstar category and three user-defined classifications) and a "corporate actions menu" to insert manual adjustments.
Portfolio Systems maintains pricing files for U.S. stocks, mutual funds, listed stock options and indices that can be accessed over the Web. These files would be useful as a backup to custodian-supplied information, but they can be used to compare portfolio performance to a custom benchmark or to an index as well. The pricing files also enable advisors to illustrate the historical performance of model portfolios.
There is a separate tab for tracking options strategies. Say that you regularly write covered calls on certain individual equities in a client portfolio. This tab allows you to view, at a glance, the performance numbers for the individual security after options trading profits and losses are factored in. One can view the results at the client level (all strategies for all equities), the equity level (all strategies for an individual equity) or at the individual trade level.
Portfolio Director Web is an optional additional service that allows clients to generate their own portfolio reports. Portfolio Systems creates a secure, custom log-in page for your customers that can be seamlessly integrated within your firm's Web site. The advisor regularly loads a copy of the firm's Portfolio Director data file onto the Portfolio Director Web server, and the server creates the Web reports for clients as requested. Advisors can control which reports clients have access to, selecting from a menu that includes all Portfolio Director client reports.
Portfolio Director is inexpensive. A one-time purchase, which includes three months of support and end-of-day pricing, costs $795. For professional advisors, the monthly subscription at $70 per month ($840 per year) is the way to go. The monthly subscription includes 20-minute delayed prices, historical pricing, unlimited technical support and all software updates. The networked version costs $70 per month for the first three licenses, $35 for each additional one.