Private client resources (PCR) has been around for over a decade, but it is not well known in the independent advisory space. That’s not really surprising given the firm’s history. It was founded in 2000 by a number of wealthy individuals.
Originally, the firm’s goal was only to solve the needs of its founders: They needed a consolidated reporting service that could report on all of their assets, not just publicly traded securities but also alternatives. In addition, they needed to track real property, art holdings, rare wine and other assets that don’t neatly fit into the typical portfolio management and accounting systems RIA firms use. In addition, they wanted liability tracking, and they wanted everything online, in real time.
What the founders required went well beyond RIA-style performance reporting. They wanted consolidated reporting. This includes a full balance sheet. It includes the collection of information, the standardization of the data collected, the reconciliation of the information and the retrieval of the information in various formats for reporting purposes. In terms of the services commonly available to advisors, you can think of the PCR offering as consisting of three components: an account aggregation piece; an online technology platform; and a service offering.
The founders eventually got the functionality that they required, but a decade ago, the Internet was not as highly evolved as it is today. Nor was account aggregation. So there was a good degree of manual work involved in maintaining the price and tax information of non-traded assets, and the cost of offering such a service was thus high. When PCR’s principals subsequently decided to make their offering available to outsiders, the likely users were going to be family offices, private banks and others serving ultra-high-net-worth individuals. These institutions had a need for what PCR was offering, and they had the ability to pay for it.
Meanwhile, over the past decade, the technology needs of family offices and RIA firms began to converge. Many RIA firms now invest in alternatives on behalf of clients. They need software and service providers who can value, reconcile and report on such assets. Since few providers adequately address alternative assets in the RIA space, there is an opportunity for PCR to fill the void.
The PCR Business Model
As mentioned earlier, PCR’s offering falls into three broad categories. The firm does its own account aggregation using a proprietary engine. According to Seth Bates, PCR’s manager of product development, “Reporting is only as good as the data feeding into it.” When asked how PCR’s aggregation differs from that of ByAllAccounts and Fiserv, he says PCR’s is superior. The firm receives data feeds from thousands of sources, although (though he did not give an exact number). PCR tries to avoid screen scraping, and only uses it as a last resort. When the firm does make use of screen-scraped data, it performs multiple integrity checks to ensure that the data is accurate.
In the case of non-publicly traded assets, there may not be data feeds or other digital records to access. In that case, the firm does one of two things: It can take paper records, scan and digitize them. Or sometimes, it has no choice but to input data manually. The firm’s ability to provide for the accurate manual accounting of alternative assets is a major differentiator.
PCR puts the focus on its reporting capabilities. According to Bates, it all starts with understanding the clients’ needs. Armed with that understanding, as well as the data elements and report formats advisors want, the firm can design the appropriate report templates. It creates report packages for clients in one of three ways: It can draw on its extensive catalog of existing reports and brand them with a firm’s logo and colors for a “custom” feel. Another method of customization is to take an existing report and modify it to an advisor’s needs. This might entail moving the report elements around on a page, removing a column and adding another in its place, etc. If neither of these options works, PCR can create new custom reports.
The third cornerstone of the PCR offering is the technology platform—the PCR Palette platform. Although the firm declined my request to run the software on my own, it did demonstrate the platform’s capabilities. Experience has taught me to take demos with a grain of salt, but my short experience with the technology left a favorable impression.
The platform is constructed on a Microsoft SharePoint foundation. This technology is flexible and reliable. One advantage of SharePoint is that it supports PCR’s open architecture approach to technology. Currently, however, that openness is limited: Salesforce is the only CRM that can be integrated with Palette at the moment. Clearly, Microsoft Dynamics CRM can integrate with SharePoint, so PCR can add it when the demand is there. But as of right now, no client has asked for it, so PCR does not offer it. On a number of occasions during our interview, PCR’s team emphasized that they will partner with more third-party tech providers if there is demand. They mentioned Redtail and Junxure as two future potential CRM partners.
When you log on to the Palette platform, you land on your dashboard. This is customizable. The page can be divided into various widgets, each of which is capable of presenting any of the platform’s capabilities. For example, an advisor might want to divide the dashboard into four sections. One might contain a list of the 10 largest household relationships; another might contain a graph of the total advisor AUM over the last 12 months. The platform also offers some ability to bring in third-party information, primarily RSS feeds. One useful feature would be to view one or more screens, such as a calendar or task list from Salesforce; however, this capability does not yet exist, though the platform will support it in the future.
Once all information is loaded on the system, and once it is configured, its power becomes apparent. A firm’s principals can easily access companywide analytics. They can see what assets are owned by the firm and the current allocation, and they can view assets by custodian. If you use separate account managers, there’s a view that displays where assets are by manager. On almost all screens, you start with a global view, and you can drill down by double clicking to view further details.
For viewing portfolios, there’s a well-designed “Portfolio Summary” page. The one I saw included widgets for top portfolio gainers and losers, the portfolio’s top 10 holdings, a portfolio summary and an asset allocation graph. PCR’s calculations, unlike those of their competitors, are performed in real time. The only downside to this functionality is that when you refresh a page, it may take four to five seconds because the results have to be recalculated.
Advisors have total freedom in classifying assets. They can assign asset classes, sub-asset classes and styles to each holding. If a user clicks on an asset class, all the securities making up that class will be displayed. If a user clicks on an individual security, the tax lots will be displayed, with the realized/unrealized gains and losses. The platform can also display research about securities from Argus, as well as ticker information and news from Yahoo.
Besides the traditional performance reports, the platform offers numerous analytical reports. For example, you can view performance across a business by asset class, by style or at the individual holding level in order to determine what factors are driving enterprise performance. You can display year-to-date performance, quarter-to-date performance or that of another time period. With a click or two of the mouse, you can drill down and view performance by date.
End-client reporting is customizable as well. The platform allows you to build composites and set target allocations. You can filter to include or exclude various accounts from a reporting package. You can also choose a reporting template and, once you do, select what data to include within the template. Once the templates are in place, advisors can generate reports for clients with either PDFs or Excel spreadsheets.
Billing is another strong suit of this platform. Users can create multiple invoice profiles and apply them to clients. The system can handle just about any type of tiered pricing, and it can include or exclude individual assets at the account level or the client level.
The platform also includes a client portal. Since Palette runs on SharePoint, each client gets an account, just like the advisor does. What’s different is the level of access that the client gets to the system. In many cases, the client will be limited to a document storage section where their performance reports reside. The advisor can also give the client the ability to upload documents to the SharePoint site so they can store personal documents and collaborate with the advisor and other trusted parties there. PCR recently added an annotation layer to the client document vault. This allows authorized users to annotate a document without altering the original underlying document.
The pricing is asset-based, but PCR was a little bit sketchy on the details. The premise is that the service is highly customized, and the pricing reflects the services provided. If much of the work required can be automated, and if PCR can configure a system for you with minimal custom work, you will pay less than someone who requires a lot of manual labor.
There are a few recent developments of note. One is the platform’s recent work with Hidden Levers. Advisors using the PCR platform can feed portfolio holdings into Hidden Levers and run them through its analytics engine. This should be a popular feature.
PCR has also launched a hybrid alternative to its full offering: It gives advisors access to the PCR Palette technology plus electronic feed aggregation (the advisor manages the alternative assets). The hybrid should appeal to cost-conscious firms that do not require a lot of the custom work on alternatives. It should also appeal to firms that want to outsource some technology and service aspects while retaining others.
I’m not in the habit of writing about firms that fail to provide full access, but every now and then an exception is in order. Based on the feedback I’ve received recently from advisors, there is a real demand for better alternative asset reporting. PCR offers the type of solution that advisors tell me they want. But I’m not sure if the economics of the offering are palatable. The hybrid offering provides what appear to be excellent technology, aggregation and reporting capabilities, so that may be attractive if the price is right.
If you need a sophisticated reporting service/technology package, PCR appears worthy of consideration. This is particularly true if alternative investments make up a meaningful portion of your investment portfolios.
Based on what I have seen, I believe that PCR would be of interest to a significant number of advisory firms at a price point that’s competitive, but currently I can’t say whether the pricing is competitive enough.