COULD CHALLENGE SCHWAB: SOFTWARE TO CUT ADVISERS’ CHAINS

Two technology companies are readying an Internet-based service geared to help financial advisers save mouseclicks and money when clearing trades and reconciling accounts.

Investment Advisory Network and DST Systems Inc. by Jan. 1 hope to roll out a one-stop program allowing investors to access data and easily move money between a variety of brokers and marketers.

Some advisers think the service would encourage advisers to spread their money among different custodians, which could present a challenge to Charles Schwab Corp.

“We’re going above the Schwabs,” says Clark Underwood, chief executive of Denver-based Investment Advisory Network, which provides asset management software to banks, broker-dealers and investment advisers.

promiscuity encouraged

“You can work with Schwab or work directly with product manufacturers or…have two or three brokers,” Mr. Underwood says. “You’re no longer going to have to be married to a broker just because he can give you the data.”

Mr. Underwood adds that “we are not brokers,” and says he wants to integrate Schwab into the system.

A Schwab spokesman, saying he was unaware of the Investment Advisory Network-DST Systems initiative, notes that Schwab customers can — for a fee — execute trades with other brokers through Schwab.

In recent weeks Mr. Underwood has been pitching the platform to members of the elite Alpha Group — whose members include financial planner Harold Evensky of Evensky Brown & Katz in Coral Gables, Fla. — and the Family Wealth Advisory Council.

Investment advisers who have heard the tech companies’ spiel are intrigued by the concept and the promised savings of time and money. Yet they appear to be withholding judgment until they see what’s actually delivered.

“We’re interested in further exploration,” says Robert Wacker of R.E. Wacker Associates, an advisory firm in San Luis Obispo, Calif. “We work with Schwab and Vanguard so we have to download from each and upload from each.”

“It’s a way for us to get a great deal of connectivity of different applications and functions,” says Ben Coombs, a vice president for Petra Financial Advisors in Colorado Springs, Colo.

“It should make things seamless and less troublesome.”

Kansas City, Mo.-based DST — which provides information processing and software to mutual funds, insurers and banks — makes the transactions possible.

“DST has its hooks into all the major data sources,” says Mr. Underwood.

The service would be “linking the primary databases and putting it on the web so it will be completely automated,” he adds. “(Advisers) wouldn’t be required to do any reconciliation if (they) wanted to do asset allocation or profiling; all the information would be in a seamless automated environment.”

Says a DST spokesman: “We push the trades through.”

Investment Advisory Network and DST are in the midst of recruiting brokers and other vendors to integrate into the system. They currently are building an interface for the Bank of New York Co.

aiming at advisers

The bank “is interested in focusing on the investment adviser market,” Mr. Underwood says. It may offer trust services through the system as well.

A Bank of New York spokesman declined comment.

Investment Advisory Network plans to target banks and brokers, as well as advisers. Ultimately it hopes to reach retail investors as well. The service will be offered in a in modules, so users can tailor it to their needs.

“We’re trying to change the way the world will be processing,” Mr. Underwood says. “This is not a pipe dream.”

Mr. Wacker, while calling the proposal “an attractive idea,” is sticking to a wait-and-see approach.

“It’s not together yet,” he says.