Schwab Advisor Services said last week that Tamarac will be the latest “selected participant” to be added to its lineup of advisory platforms.
It is time to add some context.
Those platforms, known collectively as Schwab Intelligent Integration, have been under development for two years.
Opinions are strong and varied among financial advisers and industry experts as to the amount of progress being made, but the fact remains that Schwab works with more than 6,000 registered investment advisers, by far the largest share among the major custodians.
“Our concept here has always been that we want the providers to innovate; we want to give them some best practices and share with them: "Here's how you might use some of these integrations,'” said Neesha Hathi, vice president of technology solutions at Schwab Advisor Services.
Schwab's intent isn't to dictate how third-party providers implement the data shared through integrations or third parties' designs for their own applications, she said.
ENVESTNET ACQUISITION
Tamarac was acquired two weeks ago by the cloud-based hosted-asset-management firm Envestnet Inc. (the Tamarac division within the company has now been renamed Envestnet | Tamarac).
The integrations, once completed, will provide a real-time conduit for custody data to flow from the Schwab Advisor Services back-office systems directly into the modules making up the Tamarac Xi adviser platform, including both its Advisor customer relationship management system (built on Microsoft Dynamics) and its Advisor View billing application.
Ms. Hathi said that the integration will provide third parties with more choices about how data will flow through their programs. “I think our approach will help them better decide where they might put some of their efforts,” she said.
Andrew Lin, head of strategic development at Signature Estate and Investment Advisors LLC, said his firm, a large RIA, is representative of advisers most in need of such integrations to promote efficiency in their practices.
To handle his firm's $2.3 billion in assets under management, having data flow directly between Schwab's back office and into his firm's implementation of Tamarac is an imperative.
HISTORY WITH SCHWAB
“What I am hoping this means is that, opposed to using multiple systems, we will have a one-stop portal for both the front office and back office,” Mr. Lin said.
Ms. Hathi didn't provide a formal schedule for when integrations will be completed, or the full extent or depth that those integrations will take.
Envestnet | Tamarac already has a history with Schwab in that it uses PortfolioCenter as the portfolio management piece of its Advisor Xi platform.
And Schwab has worked out a 20% first-year discount for firms licensing for Tamarac products.
That could end up representing $5,000 to $10,000 in savings for a new firm, depending on its size in terms of accounts and assets under management.
Although the discounts will not help Laurie Klein's bottom line — she licensed the Tamarac Xi platform a year and a half ago — she said that the integrations should provide her with better data management down the road.
Ms. Klein, a principal at Kaizen Financial Advisors LLC, a small firm with $20 million in assets under management, invested in Tamarac's offerings to provide a truly independent and holistic set of cloud-based advisory tools.
“It will be well worth it if the data comes in accurately,” she said, adding that she would like to see additional enhancements made to Tamarac's CRM, which could benefit from more-direct data integration.
Restructuring and realignment within the newly merged company remain in the planning stages, as well.
In fact, Stuart DePina, now a group president within Envestnet | Tamarac (and formerly the latter's chief executive) is visiting Envestnet's offices in India, where some of the company's development efforts are based, and was unavailable for comment.
CORE RIA TOOLS
I should also note that Schwab's integration with Tamarac products remains focused at present only on the core RIA tools mentioned above, not Envestnet's outsourced wealth-management features (which include asset allocation, portfolio planning and management, model-based trading, and reporting).
A Schwab Intelligent Integration refresher is in order if advisers are to understand where Tamarac will fit into the Schwab ecosystem.
The Schwab Intelligent Integration stew comes in two different pots.
The first batch (and the easiest to describe) is the Schwab OpenView Integrated Office being prepared by the cooks at Schwab Performance Technologies, a subsidiary of The Charles Schwab Corp.
That platform is a turnkey system that bundles together a version of Salesforce.com customized specifically with RIAs in mind, real-time custody data from Charles Schwab & Co. Inc. and outsourced portfolio management for assets held in custody both at Schwab and elsewhere using Schwab's PortfolioCenter application.
Again, Schwab PortfolioCenter is included in all the various flavors of the Schwab Intelligent Integration platform, though Ms. Hathi has said in the past that other portfolio management systems would be included at some point among the application integrations in the firm's Gateway platform.
And now for that second and more complex Gateway pot of stew.
It is called Schwab OpenView Gateway and is under the auspices of another batch of cooks, a relatively new subsidiary called Schwab Intelligent Technologies, which sprang to life as a group within Schwab last year.
This stew has multiple flavors all meant to provide advisers more choices and is built on top of an open-architecture tech platform that integrates Schwab's back-office account management systems and those of third-party technology providers selected by Schwab.
At the center of each of the three original flavors of Schwab OpenView Gateway was a different CRM application: Salesforce, Microsoft Dynamics or Junxure.
Although it may seem confusing at first, the Tamarac integration isn't an entirely new flavor. Rather, its CRM is a customized version of Microsoft Dynamics.
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