Category: Client Communication


Earlier this year, Advent sent an alert to Axys users about Windows 8 issues and how to deal with them, as an interim solution to problems that Windows 8 users can face.  It is good that Advent is proactively alerting users, but I am not recommending that any of my clients move to Windows 8 just yet. Upgrading your office to Windows 8 is premature, unless you are willing to pay the premium and deal with the frustrations typically associated with being an early adopter of the latest Windows operating system.

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If your firm uses Axys, you may be wondering whether a new release is in the works. Though Advent hasn’t publicly set a release date for the next version yet, I expect they soon will. Based on what Advent has done in the past, users should expect a 3.9 release in the near future. That release will likely support Office 2013, and Adobe Acrobat 11, and may also feature improved Windows 8 compatibility.

Though these types of updates seem minimal, they have more substance than you might think. Axys remains a very functional and cost-efficient option for advisors. Compound reports generated in Axys 3.8.5 using Excel 2010 graphs rival output from APX at a fraction of the cost. If your compound reports look dated, find out what version of Excel you are using. Using the latest version of Excel in conjunction with a version of Axys that supports it can give your reports a newer look and feel.

Axys 4?

I would like to think that Axys 4 is in the works, but a major revision would probably mean a name change – perhaps “Cloud Axys?” Longer-term, expect Axys to undergo a technology transformation if Advent wants to keep the platform alive and decides to commit greater resources to future updates that keep pace with technology trends. While the number of APX, Geneva and Black Diamond users have continued to grow, Axys users still account for a considerable number of Advent’s clients.

Historically, Axys was the lynchpin of Advent Software’s success and center of their hub of solutions for their customers. Replacing the PMS of an investment advisor is more complicated than it seems.  It impacts many of the systems at an advisor’s office, as well as the people you need to support your business, the skills they need, and what third-party solutions are available.

It would be ideal for Advent if Axys customers moved to another Advent product in the future. Those conversions and newer software licensing agreements would generate more income, while eventually allowing Advent to phase out Axys without major renovations.  However, Axys users looking at APX, Black Diamond and Geneva don’t always see a clear path.

In the past two years, Tamarac/Envestnet and other competitors have won over some Axys customers. My firsthand knowledge of a couple of advisors who made the move to Tamarac leads me to believe that Advent didn’t need to lose these customers. Through better communication, negotiation or product positioning, they could have kept the business.  On that note, I spoke with an Axys user last week that requested an APX quote after seeing a demo in Q2 and never got one.

Perception is Reality

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“Be where your enemy is not.” -Sun Tzu

Current Axys users represent a ground of contention that will not be ignored by Advent’s competitors and should not be ignored by Advent. At stake is the perception of who provides the very best PMS platforms for investment advisors.  Advent may be willing to let some of their Axys clients go quietly, but in doing so they risk losing those relationships long-term, if not permanently, as well as other advisors in their sphere of influence.  Axys users represent a critical mass that could fuel the growth of  Advent’s competition in the near future.  Left unchecked, Advent competitors garnering Axys users now could ultimately vie for current APX, Geneva, and Black Diamond users down the road.

Obviously, Advent cannot be all things to all customers, but they can make a better effort to keep existing Axys clients in the fold.  In order to do so, Advent must improve communications with Axys users, affirm their commitment to Axys, and continue to add technology enhancements to Axys on a regular basis.

About the Author: Kevin Shea is President of InfoSystems Integrated, Inc. (ISI); ISI provides a wide variety of outsourced IT solutions to investment advisors nationwide.

For details, please visit isitc.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@isitc.com.

black coffee,glasses and newspaper on business fileI have been talking about the evolution of investment reporting for years and telling anyone who would listen that their clients will soon have other investment reporting options.  My dream or vision of the future includes me (of course) providing the interface to facilitate getting data from financial services firms to a secure data warehouse via xPort where their clients could download the data for analysis on an open reporting platform.

As I discussed this with one of my clients at a recent Schwab conference, they shared their concerns with me.   I was told, “It’s basically a problem of apples and oranges.”

My long-time client and friend explained to me that they would have concerns that data they reviewed and corrected (“apples”) might be reported as uncorrected data (“oranges”).

Though data aggregators exist and have much of the data required, they won’t have it all unless advisors participate and cooperate in the process.  Reconciliation needs to be performed and maintained on an ongoing basis with respect to assets under management, inception-to-date performance, and tax cost.  No one is more motivated and qualified to maintain that data integrity than the advisors whose decisions, service, and bottom line are impacted by the quality of that data.

Big Brother will have access to this data too – that’s not part of my plan, but just a given eventuality and perhaps already a reality.  Regulatory powers will employ predictive analytics to proactively search for potential fraud.  For example, an advisor reporting the same exact composite return two years in a row is possible, but highly unlikely and worth investigating.  When more scrutiny is applied to this data, one can only hope that the benefits of additional regulation will outweigh the compliance headaches.

Enter SigFig

SigFigAccording to their web site, SigFig was born out of the noble desire to serve the millions of investors that don’t meet typical portfolio minimums and cannot afford quality investment advice.  Your clients may be using SigFig already.  If you haven’t seen it, SigFig is to investment reporting what Mint is to personal financial reporting.  Unfortunately for investment advisors, SigFig has a similar business model, meaning that investors do not pay for the service, but instead get solicited with offers that appear relevant to their investments; for example, “this fund is outperforming your fund “or “your investment advisor is overcharging you.”

Using SigFig, investors can view a dashboard summary of investment reporting information that looks better than what many investment advisors currently provide to their clients.  However, as one familiar the details of performance calculations, client billing, and reconciliation, I am naturally concerned about possible data quality issues.  The idea of replacing the sound advice of an investment professional with algorithms designed to place ads – even though those ads are intended to be unbiased – seems inherently flawed.

To learn more, you can check out SigFig here:

www.sigfig.com

In my preferred vision, advisors would pay an interface fee and their participating clients would purchase SAAS reporting or a Droid/iOS app.  Idyllic as it might seem, this version of the future would allow investment advisors and their clients to share views of reports created by impartial third-party reporting sources.

SigFig is a step in the right direction, and should serve as warning to investment advisors that more robust investment reporting information will be delivered to their clients whether they participate in the process themselves or allow their clients to find it on their own.

The Best Investment Reports

It makes perfect sense that your firm should want to provide the best reports possible to your clients, without incurring an unreasonable expense or maintaining an unmanageable reporting process.  Unfortunately, what’s best for your firm and what’s best your client may be two different things. You want to validate your investment methodology and highlight the value continued use of your firm offers, but you also need to keep your client’s best interests in mind.  More than one advisor I have worked with in the past has chosen to shy away from slick, eye-popping reports, instead favoring black-and-white reports where simple numbers alone underscore performance.  In the opinion of these advisors, the relationship with a client is more important than fancy reporting and such reports can distract investors.

Call modern reports a prudent best practice or self-serving marketing effort designed to ensure your firm’s survival.  The truth is that they are a little of both.  Clients expect decent reporting, so substandard reports are now passé.  Quarterly report packages like those I have helped clients create for twenty years are also known as presentations, and perhaps that is a better name for them.  It describes what investors are really trying to do at quarter end.

Sample Client Reporting Presentation

Sample Client Reporting Presentation

Every quarter, advisors have an obligation and opportunity to make a presentation of how their clients’ investments are doing.  Most advisors also write a quarterly letter in which they address the near-term market conditions and reasonable expectations for the future while trying to impart some relevant wisdom to their investors.  Advisors are, in fact, presenting and remarketing to their clients on a quarterly basis.  Good presentations typically illustrate an advisor’s general knowledge of the markets, educate clients, and show how the advisor adds value.  The reports included in these presentations also present holdings analyses that provide clients with additional insight into their investments, but, most importantly, these reports provide the client with performance figures and comparative benchmarks for various time periods.

Report Development or Adoption

For some firms, proprietary custom report writing is required to meet the needs outlined above.  With this requirement comes the necessity to employ staff or contract with vendors to produce and maintain the reports.  The effort to produce high-quality reports can be daunting whether the project is handled internally or outsourced.  Many custom reports, by definition, are in flux.  In a typical quarter, custom reports may undergo additional feature enhancements and require maintenance modifications or bug fixes.  In order to maintain custom reporting systems, an ongoing commitment of time and money is necessary.

Advisors may want to create distinct custom reports that are part of their brand, but given the potential complexity and cost of creating those reports – the best investment reports for those with limited funds are the ones that already exist.

About the Author: Kevin Shea is President of InfoSystems Integrated, Inc. (ISI); ISI provides a wide variety of outsourced IT solutions to investment advisors nationwide.

For details, please visit isitc.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@isitc.com.

iStock_000009182001XSmallIn a day where security threats are constantly evolving and your business is reponsible for keeping confidential information secure, your clients’ computer systems may seem an unlikely place to prod your nose, but unfortunately, an increasing number of security threats are originating from the clients of investment advisors.

One recurring example that we have witnessed over the past year, is the hacking of email accounts.  In this scenario, your client’s email account with Google gets hacked because their password is “patriots1” or perhaps their PC has been infected with a keylogger virus.  In any event, a hacker somehow discovers your client’s password and now has access to their historic email records.

In the past, hackers might have been satisfied to use that account to SPAM everyone on earth, but today’s hackers are more sophisticated.  Apparently, they’ll actually take the time to read through your client’s emails in search of financially sensitive information.  Based on the content of previous communications with your firm, they can compose a similar looking email to one that the client might have sent in the past to ask your staff about total holdings or even request a check.

Here are some tips your clients should follow to keep their email and other accounts secure:

  1. Don’t enter your passwords in kiosks and other systems available to the public.
  2. When you get the option to store the password for various accounts and websites on your PC, don’t do it.
  3. Never send your passwords in an email.
  4. Use encrypted email connections.
  5. Institute complex passwords.  I know it’s a pain, but so is having your identity stolen.
  6. Don’t use the same passwords for multiple accounts.  Yes, this is a pain too, but there are some programs like eWallet that can help.
  7. Run up-to-date versions of security software that include protection for spyware, malware and viruses.  Don’t ignore messages from your Antivirus program.
  8. Stay up-to-date on operating system and application security patches.
  9. Be cautious of which sites you browse.  A program like openDNS can help you keep your computers clean by limiting access to potentially harmful websites.  The home version of OpenDNS is free.  You can find it at www.opendns.org.  Antivirus programs like AVG and Symantec can filter websites too, but do it with less specific controls.

Here is what your clients should to do if they do get hacked:

  1. Contact a computer professional or the email provider to help determine how you got hacked.
  2. Alert your investment advisor and other vendor relationships that hackers could try to take advantage of.
  3. Resolve any issues that may have led to the hack, such as: simple passwords, malware, spyware, and viruses.
  4. Change your passwords and any hints from a computer system, smart phone or the original system once the threats have been removed on the following: the hacked site, any other sites where you used the same username and password and any sites whose information you stored in the hacked account.
  5. If you determine that you have been a victim of spyware or malware, you will need to change all your passwords for your online accounts and follow the procedures for recovering from identity theft.
  6. If you cannot follow any of these steps because your account credentials have been changed, you will need to contact the company providing that account in order to regain control of your account.
  7. Implement better security provisions going forward.

There is only so much you can do to protect your clients.  Ensuring that email communications are secure should be at the top of the list. Your firm can implement a product like Zixmail to encrypt selected emails, but at the point where your client’s computer system has been compromised, this may only provide an additional deterrent, and should not be seen as the solution to the problem.

The best course of action is a combination of staying vigilant, educating your clients, implementing best-practice email security, and instituting additional internal controls aimed at how your firm handles client communications, such as balance and check requests.

About the Author: Kevin Shea is President of InfoSystems Integrated, Inc. (ISI); ISI provides a wide variety of outsourced IT solutions to investment advisors nationwide.

For details, please visit isitc.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@isitc.com.