RBC is struggling to get the bugs out of its new technology platform.
RBC is struggling to get the bugs out of its new technology platform.
Rolled out in early March, the system is still unable to accomplish basic tasks, according to some brokers at RBC Wealth Management and several correspondent firms that clear through RBC Correspondent Services.
Both units are based in Minneapolis.
"For three days last week, I was unable to connect," said a broker in California whose firm clears through RBC.
"It's the worst fiasco you've ever laid eyes on," said this representative, who asked not to be identified.
"Yesterday, the system was down yet again," said an executive of an RBC correspondent firm in the Midwest, who asked not to be identified.
Users said clients have been unable to log on. In addition, some financial advisers have complained about inaccurate account statements, errors on security-holding and cross-reference pages, and difficulty with such basic functions as tracking checks or dividends.
Most functions now require many more steps than they did with the old system, critics say.
Some correspondent firms have had trouble paying their reps, and getting the data needed to file FOCUS financial-status reports with the Financial Industry Regulatory Authority Inc. of New York and Washington.
"We're seriously considering a move" to another clearing firm, said an official at one of RBC's correspondent firms based in the Southwest, who asked not to be identified.
Making matters worse, problems with the rollout had a serious impact on users at tax time and came immediately after a sharp market drop.
Users of the system were further upset early last month when RBC's technology partner, Broadridge Financial Solutions Inc. of Lake Success, N.Y., issued a press release that quoted John Taft, U.S. head of RBC Wealth Management, as touting the new platform.
He later disavowed those comments.
'EXTREMELY CHALLENGING'
RBC management has acknowledged significant problems with the rollout.
RBC's "entire management team is aware that our migration has been extremely challenging," Mr. Taft said during a conference call with RBC correspondent firms last month.
The problems stem from combining pieces of a homegrown system with Broadridge's platform, he said.
RBC's other brokerage units were already using the Broadridge system.
RBC knew there were shortcomings with the Broadridge platform from a retail perspective, Mr. Taft told correspondent firms. "But [we] believed it would be possible to bolt on systems that both our retail and correspondent users were familiar with," he said.
The complexity of that task "was significantly underestimated," Mr. Taft said.
Instead of taking one year and costing $80 million, the conversion has taken three years and cost more than $200 million, he said.
The retail system and the new platform "don't mix at all," said the California rep whose firm clears through RBC.
Broadridge is "an institutional platform" that isn't set up to support diverse retail businesses, said an RBC rep in the Southwest, who asked not to be identified.
Mr. Taft conceded that restoring the functionality of the old system might be a way off.
The firm is working on a list of more than 1,000 defects, "many of which will be more complicated and time-consuming to correct than what we've fixed so far," he said during the call.
FIXES UNDER WAY
RBC's management has told brokers and correspondent firms that the conversion problems have the attention of RBC's top management, and that fixes are well under way.
The firm has added extra staff and brought in consultants to deal with the problems.
"I would say in four months, we will be in good shape" Karl Leaverton, RBC's West Division private client group president, said in an interview.
Mr. Leaverton said he hasn't recently heard about log-in problems. He said the firm has fixed several problems with drconnect.com, the client access system.
About 2% of the March statements had errors, he said, but the April statements, which are about to go out, will have close to the normal 1% error rate.
Overall, brokers "tell me it's getting better," Mr. Leaverton said. "Our call volume has gone down from 1,000 [per day] to 200."
Even critics of the new system say RBC has made progress and is fixing many of the system's defects.
"Now when it goes down, they're much better about getting it back up," said the executive at the Midwest correspondent.
And not everyone is upset. RBC reps who primarily manage money say they haven't been affected in any major way. Transactional brokers have experienced more difficulties.
The new system "works. It's just different," said the owner of a broker-dealer on the East Coast who clears through RBC and asked not to be identified.
"A lot of brokers didn't pay attention to their [user] manuals" for the new technology, he said.
Critics, though, say some users had trouble logging into online training sessions.
"I've had disastrous [technology] conversions before," the East Coast executive added. "This has not been a disaster."
RBC and other observers say some bugs are normal for any new rollout.
Last year, for example, brokers at Linsco/Private Ledger Corp. of Boston and San Diego couldn't log in to their system after the firm installed some new software.
In 2005, reps at A.G. Edwards & Co. Inc. of St. Louis complained about loss of functionality with a new technology platform, and brokers at Merrill Lynch & Co. Inc. of New York had similar problems with a $1 billion upgrade that rolled out in late 2004 and 2005.
But the RBC rep in the Southwest said his firm's migration is not normal. "I've got friends at all the other firms, and no one has had to go through this" with a technology transition, he said.
RBC officials insist that the new platform will ultimately prove to be more scalable and will better support third-party software, multiple currency reporting, new products and compliance updates.
E-mail Dan Jamieson at djamieson@investmentnews.com.
