Advent Speaks
George Seiters, director of product marketing for
Advent, says Advent has no intention of dropping its Axys clients. "Why
would we ever do that?" Seiters asks. "Small advisors grow. Our
heritage is in working with smaller advisors." Seiters says Advent is a
scalable company. Advent, he says, has a service model that works well
for it and its small-advisor clients. He says Advent attracts 100 new
clients every year to its Advent Office Essentials product, which
provides discounts to smaller firms.
Seiters makes a convincing argument when he explains
that Advent Axys works well for small advisors. Yes, he concedes, it is
not the latest technology, but it gets the jobs done reliably for small
advisory firms.
Seiters says that Advent will find a way to roll out
a version of APX in the future that will allow smaller advisors now
using Axys to benefit from APX's superior capabilities. There is no
time frame, however, to do this. Seiters says that it is likely that a
small-advisor version of APX will be a Web-based application. That
makes a lot of sense, because it is more efficient to provide software
to thousands of dispersed users over the Web than via desktop
application. It's a cost-effective way of providing high-end software
to thousands of users. It's much easier to update a Web-based version
of a software application that is sitting on a Web server than it is to
update software loaded on thousands of desktops around the country.
Seiters says that in addition to desktop and Web-based applications
there are other options for delivering APX-such as a service bureau. So
the path for migrating Axys users to APX could take several routes.
However, there is no time frame, Seiters says, for
rolling out a Web-based version of APX that might be priced more
effectively.
Sad Truths
In an ominous sign for RIAs, Intuit pulled the plug
on September 11 on its PortfolioMinder PMS application, effective
October 16. PortfolioMinder was intended to be a low-cost program for
advisors just starting out and those with fewer than 100 clients-the
small advisor market. As I wrote in this column in June, however, for a
big company like Intuit, with 7,000 employees and $2.2 billion in
annual revenue, the small sales and financial rewards in serving RIAs
may not be worth the trouble.
You have to wonder if Advent is reaching the same
conclusion. Can this publicly held company be successful financially
continuing to serve Axys' 4,000 users? While advisors love to hate
Advent and complain about its high prices and arrogance, Advent is the
market leader. It makes good software. And it's hinting that it has a
plan for migrating Axys users to a Web-based version of APX.
The RIA business may be at a tipping point. While a
number of small companies have risen up in the last few years to serve
up PMS software to RIAs, none has much traction. Advisors are loathe to
entrust the lifeblood of their businesses to startups with five or ten
employees. With Intuit now leaving the fray, it points to a sad
realization that serving technology to RIAs is a tough business to make
money in. Advisors have no choice but to pay up for Advent's proven PMS
applications and experience, entrust Schwab's technology subsidiary and
buy PortfolioCenter, or bet their business on a start-up that has less
reliability and that could be acquired by a larger company that will
eventually decide to jack up prices to Advent-like levels.
I have said many times in this column and during
presentations at conferences that independent advisors are not just
frugal, they are downright cheap. Vendors have a hard time making a
buck, and that is why there are not more vendors trying to serve
independent advisors. Advent, like other vendors serving advisors,
needs to make money and must be paid for its products and services.
Unless RIAs are willing to pay up for PMS applications from small
vendors, such as IAS, PowerAdvisor, and AssetBook, and put up with the
difficulties of working with a small technology company, there won't be
other choices available to you. That's the reality of this market.
My guess is that advisors will soon be forced to
accept the ugly truth that running their businesses means paying more
than they do now for technology. Advent will not allow Schwab, which
views its PMS subsidiary as a strategic holding, to keep it from
charging what it must to make money. Either Advent will get paid what
it wants or leave unprofitable relationships behind it.
Bottom Line
Advent is not going to end support of Axys anytime
soon. But you do have to wonder how long it will continue to support a
product that is outmoded. Sure, Axys gets the job done now. It remains
reliable and offers elegant reports. But advisors running Axys need to
realize that over the next two or three years Advent is likely to make
a change to what you're doing now. Either you're going to be willing to
migrate to a Web-based version of APX, or you need to start thinking of
leaving Advent and examining your choices.
Over the next couple of years, Advent will gain
experience in converting Axys users and implementing APX in larger
offices where they are willing to pay high prices to get the job done.
Advent will learn in this period how to implement APX more efficiently.
Advent will get paid to integrate APX with different CRM, analytics and
other programs. After Advent gets that experience and sells APX to its
customers where it can make the most profit, it will be ready to
migrate smaller advisors to a Web-based product. What it will charge
you is anybody's guess. But Advent isn't evil, it's just business, and
Advent all about business.
Andrew Gluck, a longtime writer and journalist, is CEO of Advisor Products Inc., a Westbury, N.Y.