Schwab Portfolio Technologies cutting price on PortfolioServices

With competition heating up in the portfolio performance-reporting space, Schwab Performance Technologies today is expected to announce a substantial price reduction in its annual minimum fee for PortfolioServices.
Beginning immediately, the cost of Schwab’s outsourced offering for firms will drop to $12,000 annually, from $15,000. These firms have 200 or more client accounts on SPT’s system. Schwab said it would be lowering its annual per-account fees by 20% as well.
Smaller firms might be in for even more of a reduction.
As part of its announcement today, SPT, a unit of The Charles Schwab Corp., is also introducing an discount for firms in its Emerging Practice program that have fewer than 100 accounts and less than $50 million in assets under management. These smaller firms could end up paying as little as $8,000 a year for PortfolioServices.
In an interview, SPT sales director Michael Williams said that by Schwab’s count, there are between 2,000 and 3,000 firms that fall into the category.
PortfolioServices provides portfolio data management to advisers on an outsourced basis, allowing them to view client holdings, generate client reports and presentations, and create invoices, all using an online interface.
While not directly acknowledging the many competing services in the space, Mr. Williams said that a big reason for the reduction is to help win more of the outsourced performance-reporting business for Schwab.
“But we see the move as very attractive for advisers needing help running their back office,” he said. “After all, advisers aren’t going into business to generate client reports.”
According to Schwab, more than 133 advisory firms, most of them registered investment advisers, currently use PortfolioServices, and client assets handled through its systems totaled more than $28 billion as of Dec. 31.
PortfolioServices was born out of Schwab Performance Technologies’ acquisition of the outsourced provider Etelligent Consulting Inc. in early 2008. There were 100 firms on the platform at the time.
An entire subindustry has grown up around portfolio performance reporting for advisers and clients. Several fully outsourced alternatives to Schwab’s venerable PortfolioCenter program have come into existence.
These include those from AssetBook Inc., Advent Software Inc., Black Diamond Portfolio Reporting LLC and Orion Advisor Services LLC, and third-party applications such as Assette EasyReports that work in conjunction with PortfolioCenter.
Black Diamond and Orion both reported sizable gains in sales in 2009, much of it at the expense of the Schwab PortfolioCenter desktop program. Nonetheless, the Schwab offering still resides on the computers of around 3,000 advisers.
Many customers have expressed frustration with the PortfolioCenter product in recent years, however, saying that it is difficult to customize and not as intuitive to use as more recently introduced alternatives.
“As part of the Etelligent acquisition, we went in and built a new set of reports and did a complete rewrite of the PortfolioCenter reporting engine, and that is available now for our PortfolioServices customers,” Mr. Williams said.
“On the outsourced side, we go in and work closely with the adviser — you are paying us to be the consultant and to help you get the highly customized reports you want — with PortfolioCenter itself you are running it on your own, and you are starting with sort of a blank slate,” he said.
That too could change, though, as many of the improvements made to the reporting engine for the outsourced PortfolioServices offering are going to be available starting sometime in the second quarter through an “enhanced-report option” available to PortfolioCenter users.
For more information, visit Schwab Performance Technologies online.