New portfolio management and reporting platform capable yet inexpensive.
Do financial advisors need another portfolio
management and reporting software solution? Intuit, the company that
brought us products such as Quicken, QuickBooks, TurboTax, Lacerte Tax
Software and ProSeries Tax Software, apparently thinks we do.
The firm conducted extensive market research before
embarking on the development of PortfolioMinder. During development,
which is still ongoing, Intuit consulted with independent financial
advisors to get a better understanding of their needs and their work
flows. They also hired Interactive Advisory Software LLC (IAS), a firm
with experience in the advisor marketplace, to help develop the
product.
Intuit concluded that most of the portfolio
management and reporting solutions currently being sold to financial
professionals provide too much functionality at too high a price. They
believe that there is a largely untapped market for a simple, efficient
and affordable portfolio management solution, and they believe that
PortfolioMinder can fill the void.
Before we get into the details of the program,
remember that PortfolioMinder is currently in the second phase of a
three-phase pilot program; hence, the program continues to evolve
daily. As a result, some of my current criticisms will be
corrected before release, and other new problems may appear.
Nevertheless, even at this early stage, there is much to be optimistic
about, and that is why I'm uncharacteristically providing such in-depth
coverage of PortfolioMinder prior to its release date.
PortfolioMinder: An Overview
PortfolioMinder is an ASP (application service
provider) portfolio management and reporting solution. This means that
all data is stored on Intuit's Web servers. In addition,
PortfolioMinder provides a "client portal" at no extra charge. Advisors
can enable it if they wish to provide online access and document
storage for their clients.
When advisors log on to the system, they are
transported to the home page. This page contains two views: Clients and
Investments. I won't spend a lot of time talking about the
"Investments" view today, but it is worth noting that Intuit gives
advisors an intuitive method of accessing either a client-centric or an
investment-centric view of all pertinent data.
The default client view contains headings for Last
Name (or household name, as I would think of it), Client Names (for
example Jack and Jill Jones), Security Value, Cash Value and Total
Value. The list can be sorted by any of the column headings, in either
ascending or descending order. There is a second view called contact
information, which contains the identical first two columns, followed
by e-mail, phone and status (active or inactive). In both views, the
Last Name (household) is a hotlink which takes you directly to the
family unit's home page.
At the family household page, there are three tabs:
Information, Documents and Notes. The first contains the names of the
household members (the individual account holders), a list of
"portfolios" and a list of accounts.
If all of this sounds a bit confusing, it is. Intuit
is still toying around with the structure here, and the nomenclature
they use is a bit confusing, particularly since it was changed during
the course of our discussions. The way I understand it, right now there
are three levels of views. The bottom level is the account level, which
is what it sounds like. The next step up is the "portfolio level,"
which is used to link one or more accounts to a goal, such as education
or retirement. The top level is the household, although, as I said,
these labels are fluid at the moment.
Anyway, the point is that you can view all of the
household's assets as one entity (household), by portfolio (group of
accounts that could be linked to a goal), and at the account level. At
the portfolio level, you can see gain/loss in percentage and dollar
terms. The portfolios are nested, so you can view the portfolio as a
single unit or you can click on the plus sign to reveal the accounts
nested within the portfolio. When you drill down to the account level,
more security-specific information (symbol, date acquired, shares, cost
per share, etc.) is supplied.
The default view at the account level is called
Information. Here, you can view a summary of the account holdings,
along with the information you are most likely to want about those
holdings. You can also assign characteristics to an account
quickly from drop down list on this page. These include account name,
portfolio, type (IRA, 401(k), etc.), financial institution and
accounting method (FIFO, LIFO, average cost, etc.). You can also
designate here whether the account is to be included or excluded from
billing. If you click on a holding within the account, you are taken to
a page that displays all open lots, with the appropriate details for
each. The other view at this level is the transaction view, which lists
every transaction with all the details. By default transactions are
sorted by date, but can be sorted by any of the column headings.
The other section of interest on the information
page is "Reports and Tools." Here, hotlinks are provided to some common
tasks. These include four popular portfolio reports (performance recap,
asset allocation, capital gains and investment value) as well as the
"create an invoice link" and the "Export to Morningstar" link.
Moving back up to the household level, the next tab
is the "documents" tab. This is the area where shared documents are
displayed. It can be thought of as the advisor's interface with the
client's portal, which is discussed below. The third tab "Notes" is of
limited use, since it can contain a maximum of only 2,000 characters,
enough to literally make a few account-specific notations but not much
more.
Client Portal
The client portal includes an asset summary (market
value of assets, cash and total portfolio value), an asset class
distribution (provided the advisor has assigned an asset class to each
holding) and a more detailed account list with account numbers,
holdings, number of shares and current values of the holdings. The
portal does not offer clients the ability to generate their own
portfolio reports. Many will perceive this as an advantage, because
most advisors want control over the reporting process. PortfolioMinder
does provide a "document safe" where advisors can upload and store
performance reports, as well as other documents.
The document safe is wonderful. As a client moves
the cursor over the safe icon, the door swings open. Clicking the mouse
brings up a menu listing the contents of the safe. If a client requests
a performance report, the advisor can upload the report as a PDF file.
The client can then log on to the portal and download the report.
The document safe is not limited to performance
reports, however. Any file on the advisor's hard drive can be uploaded
to the portal. If you wanted to keep digital correspondence between
yourself and a client secure, you could post a letter, invoice, or
report to the safe, and then alert the client to pick it up. But that's
not all-clients can upload files to the safe for retrieval by the
advisor. So, clients could upload estate planning documents here
for retrieval by the advisor and/or emergency access.
Since it is anticipated advisors will occasionally
be receiving multiple documents from clients, advisors have the option
of clicking a "download all" button. This button causes all of the
files in the safe to be compressed and downloaded to the advisor's
computer as a zip file. The idea is to speed up the download process,
particularly for those who don't have blazing-fast broadband
connections. As an added benefit, this same feature can be used to
periodically archive the contents of the safe.
Platform Strengths
Overall, I found the software design, from a
navigational perspective, to be excellent. PortfolioMinder is the only
portfolio management system I've ever come across that could
potentially be mastered without the aid of a manual or training class,
although I would not recommend that. Navigation is highly intuitive,
and navigation tools make it easy to see exactly where you are and to
get back to where you were.
The price is very reasonable. There is a one-time
set-up fee of $995; however, until the end of the year, this fee is
discounted to $495. The monthly service charge, including the PMS
system, the client portal and the custodial interfaces, is just $150
per month; no minimum commitment required
For the price, PortfolioMinder provides a great deal
of functionality. You get a portfolio management system, nice reports
capable of including standard or custom benchmarks, the ability to
manually enter data, flexible invoicing, a client portal and secure
anywhere/anytime access for yourself. You also get the ability to
create model portfolios, link the portfolios to goals and assign the
models to client accounts.
Currently, communication between Intuit and users is
excellent too. All new users can participate in an introductory
training Webinar. I sat in on one of these sessions, and I found it to
be highly informative. The home page contains communications and tips,
which should help minimize trouble. Intuit appears to be intently
focused on the user's needs; one hopes this will continue after the
full product launch.
For many advisors, Intuit's sheer size and financial
strength are a huge plus. Numerous advisors have told me that they are
hesitant to change portfolio management systems because most providers
are small, untested firms. Relative to most technology companies that
serve independent RIA's, Intuit is a giant. The firm had annual revenue
of $2.04 billion in its 2005 fiscal year; operating income was $524.1
and net income was $381.6 million. To put those numbers in perspective,
Advent Software showed a loss in their 2004 fiscal year, on revenues of
about $150 million. Clearly, this is not an apple-to-apples comparison,
but it does give you some idea of Intuit's financial footprint. Indeed,
the relevant question with Intuit may be whether PortfolioMinder can
ever reach the critical mass to capture the attention and resources of
the giant software concerns senior management.
Stumbling Blocks
PortfolioMinder is not perfect; however it is still
a work in progress. Currently, with the exception of Schwab data, I'm
told that advisors must first download a number of files from the
custodian each day, save them to a local hard drive, and then upload
the data to the PortfolioMinder servers. Next, the servers process the
data, which can take a few minutes or more. Once the data has been
processed, the advisor can reconcile. Finally a reconciliation report
is generated. The whole process of getting data into the system looks
OK, but I didn't have an opportunity to test it.
It would be nice to see this process automated.
Ideally, advisors should select a custodian or custodians, click a
button, and everything should be transmitted from the custodian(s) to
the PortfolioMinder servers. I have no doubt that this is what will
happen in time; the question is when?
Another annoyance regarding downloads is the
system's current inability to process all forms of custodial data.
PortfolioMinder can bring in all asset-related information, but it
cannot capture all types of additional client information stored by the
custodian. If this information could be captured, it would save
advisors a great deal of manual data entry.
Conversions appear to be a work in progress. Intuit
recognizes a need to provide help in this area, but it isn't apparent
at this time exactly how data conversions will work.
There are a number of useful controls available at
the account level, but they need to be made more granular. For example,
you can currently exclude an account from billing, but not an
individual asset. You can set a tax-accounting method at the account
level, but not at the individual security level.
I'd like to see the asset class modeling become a
little more flexible. You can create and name your asset classes, but
you can't create a hierarchy, so, for example, you could create a
large-cap growth and a large-cap value asset class, but you cannot
create a large-cap asset class with subclasses (growth and value)
beneath it.
The ability to offer clients a Web portal is great;
administration is not. The advisor must enable each household's account
individually, and assign each a password. In my version, the user name
could not be customized; it was generated by the software. Some clients
or their advisors will surely object to this.
The Web interface has a few quirks. Like many
Web-based programs, pop-up blockers will likely interfere with the
program, so users must remember to turn them off. Users also must
remember to save changes on most pages, or they will be lost. As I
indicated earlier, Intuit needs to work a bit on nomenclature, but I
feel confident that they will before the final release.
Perhaps the most startling omission is the lack of a
Quicken import/export facility. If would be very nice to be able to
selectively upload information from a client's (or prospect's) Quicken
file. I suspect that this capability will be added at some point, but
it isn't there yet.
Who Will Buy It?
Based upon what I've seen so far, it appears that
PortfolioMinder has what it takes to become a commercial success. If
Intuit can make downloading custodial data into PortfolioMinder a
one-button process and do a better job with labels, this platform will
represent an outstanding value for small RIA firms, and possibly larger
firms that invest primarily in mutual funds, ETF's and individual
stocks. It should also appeal to many independent-minded B/D reps who
either do not currently offer performance reporting, or offer it
through their B/D.
I'd be willing to bet that Intuit will add many
additional features over time, although not necessarily at this price.
Based on the firm's past history, a more likely scenario is that they
will "close" this version's feature set at some point, and then add
additional functionality to an "enhanced" version at a premium price,
much as they have done with Quicken, QuickBooks, etc.
In any event, Intuit's entry in the market will
almost certainly benefit advisors. If they get the final release right,
PortfolioMinder will offer more bang for the buck than anything on the
market today. Even those who choose not to buy it should benefit
indirectly, because PortfolioMinder will ultimately force the
competition to do more in order to retain their market share.
Intuit has the resources to significantly impact
this industry's software development for years to come. It will be
interesting to see how the competition responds.
Joel P. Bruckenstein, publisher of
Virtual Office News (www.virtualofficenews.com) and an expert in
applied technology for financial services professionals, can be
contacted at [email protected].