Envestnet | Tamarac is offering premium package deals for its recently acquired Schwab PortfolioCenter platform to lock-in advisors for the long-term — even as some industry observers say the legacy system will need to be upgraded to remain competitive in the marketplace.
The world’s largest TAMP is making a strong push to keep PortfolioCenter advisors from jumping to competitors — like Orion Advisor Services or Morningstar — which have slashed their own rates for similar products in recent days.
Advisors can access premium upgrades free for up to two years on the Tamarac platform and get access to the firm’s annual conference, according to Andina Anderson, executive managing director at Envestnet | Tamarac.
“Envestnet | Tamarac has been successfully supporting RIAs using PortfolioCenter for over a decade and we will continue to support all PortfolioCenter clients using the application — we will not force anyone to switch portfolio management applications.”
Envestnet | Tamarac presented the discounted deals to advisors who discussed the terms with Financial Planning. Those deals offer a year free for Outsourced Solutions if advisors sign a four-year deal, or two years free if advisors sign a seven-year deal. The basic PortfolioCenter package, which does not include the added on tools, costs roughly $3,000 per year, according to one advisor.
Envestnet | Tamarac declined to comment further on specific pricing.
After a long discussion with the firm, Erika Safran, of the New York-based Safran Wealth Advisors, decided to continue using PortfolioCenter on the Tamarac platform. Envestnet honored her current contract, but was unable to upsell her the additional Tamarac features, she says.
The premium tools would not have provided enough value to her firm, she says, and the length of the contract was disconcerting. “For your home mortgage, lock yourself in,” Safran says. “But, in terms of technology, being locked in for long periods of time just doesn’t make sense. Seven years would have been a lifetime.”
The cost of the Envestnet | Tamarac services are determined by the number of client accounts and the amount of assets under management at the firm, Safran says. The ballpark example presented to her by a representative of Envestnet | Tamarac was that $200 million in AUM and 200 accounts would cost approximately $16,000 a year, she says.
For Safran, the platform would best suit advisors who use multiple custodians, don't use model portfolios and can't do operations in-house.
"This is pretty consistent with Tamarac’s operating model," said Brian Shenson, former vice president of advisor technology at Schwab, who oversaw the PortfolioCenter platform during his tenure at the firm. "Everyone is trying to lock up clients to longer-term commitments and remove some of the feeding frenzy that happens when advisors come up for renewal."
While the platform is generally considered one of the least expensive in the marketplace, if there is movement, the real winners could be other similarly-priced solutions, such as Morningstar or Assetbook, Shenson says.
The length of the deals also took other advisors by surprise. "It's a goodwill gesture, but no one wants to sign a seven-year deal," one advisor, who asked not to be named, told Financial Planning.
There are currently 1,000 RIA firms on the Tamarac platform and over $1.2 trillion in assets, according to the firm. Envestnet | Tamarac also took on 50 of Schwab’s support staff employees in Raleigh, North Carolina to help move over as many advisors as possible, according to Anderson.
“It’s a really big opportunity for us,” Anderson says, adding that the move will help the firm gain traction with smaller RIA firms on the Schwab network. “We’ve talked for years about being able to focus on the smaller end of the market and this is going to jump start us getting there.”
Competitors have cut their own rates to try and lure away some of the 3,000 advisors that used PortfolioCenter. For example, Orion is offering nine months of access to the firm’s Eclipse trading platform for free, and firms that sign on will get access to the entire Orion suite of advisor technology, says Orion CEO Eric Clarke. His firm typically offers three-year deals.
“Envestnet wasn’t buying the legacy technology as much as they were buying the right to reach out to those advisors on the platform,” Clarke says. “And while they’re reaching out, we’re trying to provide enticing offers to do the same.”
The Omaha, Nebraska-based firm is in conversation with dozens of advisory firms about making the transition and adds upwards of 400 firms annually, Clarke says. “We’re highly motivated to win as many of these advisors as possible"
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Other portfolio accounting software firms, like Morningstar, also reached out to advisors looking to make the switch.
Morningstar is offering a free webinar to current PortfolioCenter users to highlight the advantages of joining the firm’s Morningstar Office technology. Advisors that attend the seminar can also attend the firm’s annual conference for free. The Chicago-based firm says it transitioned 400 prior PortfolioCenter advisors to its network,
Though it's unclear how many more advisors could leave for competing platforms, Shenson says.
“Think about what’s been happening in the market in the last five years," he says. "You have Black Diamond, Orion and Tamarac picking off PortfolioCenter clients. The ones left were not motivated to move off PortfolioCenter in the first place.”
While other firms will do what they can to entice the remaining clients, the firms that stayed with PortfolioCenter are likely there for a reason, Shenson says. "These are the really do-it-yourselfers. Many grew up on Centerpiece, stayed on when it became PortfolioCenter. Their businesses are fine. They'll retire before the product expires, and that’s okay with them."
Envestnet | Tamarac says it has no plans to discontinue the product. The firm is also reaching out to clients and hosting a webinar to educate them about the platform.
"It’s a pretty aggressive deal, and hopefully will be well-received by clients excited by Tamarac’s terms," Shenson says. "It’s kind of a win-win. Advisors get to stay where they are, or they get to upgrade to the Tamarac solution at an attractive price point."
