In addition to the Sky Boxes' snapshot views of assets you managed, Colley says Sky Pages will make lengthier pre-configured reports available on demand. A Sky Page will provide a comprehensive report on the tax status of all portfolios, presenting a view of all short-term gains and all long-term gains, and then show unrealized long and short gains as well. Another Sky Page may include a variety of modern portfolio statistics, giving you a comprehensive report showing alpha, beta, the Sharpe ratio, R2 and downside volatility.
BDR charges based on assets you manage on the system. It costs 1.5 to 2.5 basis points depending on your volume, Colley says. The minimum contract is $20,000 per year and the setup costs 15% to 20% of the annual fee. For example, if your firm manages $200 million, you'll pay 2 basis points and a $6,000 to $8,000 setup fee.
Two new trends that came up in interviewing Colley: a move to provide business metrics and business intelligence for users of BDR and taking direct feeds from held-away accounts. Colley says BDR will begin providing statistics about how firms can better manage their business, and he was the second CEO of a PMS vendor to talk about this. (See my report on Orion Advisor Services below.)
In addition, Colley says about 30 of the firms using BDR are now downloading direct feeds to report on held-away assets. Advisory firms in recent years have been using account aggregation systems to present a consolidated report to clients. ByAllAccounts, an account aggregation app, has had great success in the last two years in downloading data into portfolio management systems, thus enabling advisory firms to report on assets it does not manage, such as 401(k)s or assets being managed by a broker at a wirehouse or regional brokerage. Colley says that in addition to using ByAllAccounts, 30% of BDR clients are using direct feeds written by BDR to pull in data on assets managed by someone else. A direct feed from Merrill Lynch, for instance, is likely to contain data that is reconciliation-ready and likely to be more reliable than feeds used by account aggregation firms.
FinFolio. This application has been created by Matt Abar, best known to advisors for his previous PMS venture, Techfi Inc., which soared to prominence in 1999 before Abar sold the company to Advent Software in June 2002 for about $23 million (famously netting Abar about $12 million).
When we last checked in with Abar in early 2009, he was busy supervising development of FinFolio from his home just outside of Denver, with several full-time engineers pounding out code in a spacious room next to his den. While he is a few months behind schedule, Abar says he is now planning a January release.
FinFolio is obviously different from BDR or Orion Advisor Services because it isn't bundled with a service bureau that downloads and reconciles transaction data. FinFolio will not be available as a hosted application, at least not initially. Having learned from his previous PMS startup, Abar wants to avoid being distracted by a service bureau business and wants to stay focused solely on developing the PMS app. He says he'll revisit the idea of a hosted version after the system is built.
FinFolio is also different because it runs on a firm's network server and then can be exposed to the Web by a firm's IT administrator. With pricing starting at $10,000, and the annual cost also in that same area, Abar is determined to create a program for more sophisticated wealth management firms with IT resources to run the FinFolio system on an internal network. Firms will be able to expose it to the Web to allow for remote users and even client access.
Abar is not precluding offering a hosted version if demand is there. He says he will likely partner with a service bureau that's already working with advisors using other PMS apps and that kind of arrangement will, thus, provide a hosted solution comparable to Orion and BDR.
FinFolio runs on either a Web browser or as a desktop application, which means some users may access it remotely via browser while others can use it internally on the network with a desktop interface. Either way, the interface looks the same.
Abar has again leveraged Microsoft development tools and interface conventions. The interface looks just like a Microsoft Office program, complete with a ribbon customized for FinFolio's functions.