Brooke’s Note: Without a doubt, two of the up-and-comers in the RIA technology business are Black Diamond See: How Black Diamond is faring as a unit of Advent Softwareand Tamarac See: What Tamarac’s overhauling of its Advisor Xi has yielded. But at this point, it would seem that’s all they have in common: They don’t work together anymore except with a handful of legacy accounts. This article lays out the reasoning for the rift from both points of view.

Tamarac, the Seattle-based provider of integrated systems of software for RIAs, is no longer willing to integrate its rebalancing software with Black Diamond Performance Reporting — and that refusal is a factor in why one advisor has dropped Black Diamond and another has dropped Tamarac.

Tamarac’s vice president of marketing, Matt Stroh, says that the Seattle-based provider of integrated systems of software for RIAs says the decision not to let any new Black Diamond users integrate with its rebalancing software comes after careful consideration.

“In 2008, Tamarac offered an initial integration between Advisor Rebalancing and Black Diamond for roughly a dozen clients,” he says. “However, because Black Diamond was unable to provide the required data for our clients to use key functionality in the rebalancing application, we stopped taking on additional clients using both systems.”

Dave Welling, chief solutions officer for Black Diamond, says that his company is disappointed that Tamarac chose not to integrate with its clients.

“Unfortunately for the industry, Tamarac made the strategic decision in 2009 to become a closed-architecture system,” he says. “At that time, we had about a dozen Black Diamond clients who used Tamarac and benefited from the integration, and most of them remain with Black Diamond. Since 2009, we have made hundreds of enhancements to our platform and our data management capabilities, including custodial integrations, cost basis syncing, fixed income reporting and tax reporting, and have developed integrations with multiple other third parties.”

Stroh says that his company still has an open-architecture system.

“While we respect Black Diamond as a competitor, their characterization that Tamarac discontinued to support the integration between our respective products as a result of a strategic decision to become a 'closed architecture system’ could not be more inaccurate. Tamarac is an open-architecture system, built on SQL server and .NET technology, with a published API which all of Tamarac’s integration partners use. Eight of the top portfolio accounting systems, and several outsourced service providers, work seamlessly with our API and enable full functionality of our system.

Matt Stroh: Black Diamond was unable to provide the required data for our clients to use key functionality in the rebalancing application.
Matt Stroh: Black Diamond was unable
to provide the required data for
our clients to use key functionality
in the rebalancing application.

These portfolio systems that Tamarac work with include: Adhesion Wealth Advisor Solutions Inc. ; Advent – APX; Advent – Axys; Advent OnDemand (ABOS); Schwab Portfolio Center; Morningstar Office, dbCAMS+; and Fortigent, LLC.

Who bears the brunt?

But Tamarac may not be making enough of an effort to be certain that its rebalancing software works properly with Black Diamond’s Blue Sky performance reporting system, according to Welling. See: Black Diamond releases BlueSky Mobile for the iPad.

“Great integrations require collaboration between technology vendors for the benefit of shared clients — Black Diamond is eager to commit development time to enhance our Tamarac integration but Tamarac has been unwilling to make this a priority,” he says. “This position is unfortunate and is to the detriment of our shared clients and the advisory industry as a whole.”

Stroh says that his company is continuing to open its architecture with other partners.

“Tamarac continues to add integration partners to its Advisor Xi platform, where data requirements and services standards can be maintained at the high level its advisor clients are accustomed to. Tamarac recently added several new partners in the areas of documentation management, financial planning, online form submission and hosted exchange — and future integrations are in the works.” See: One RIA’s unvarnished views on Advent, Black Diamond, Tamarac, IAS, Orion and Schwab PortfolioCenter after an odyssey of test drives.

Bryant Engebretson: I'll immediately save $10,000 a year.
Bryant Engebretson: I’ll immediately save $10,000
a year.

Case 'closed’?

Stroh adds that of the 480 RIA clients utilizing Tamarac’s integrated RIA platform, nine remain that still use Black Diamond, and Tamarac supports them.

Stroh adds that Black Diamond has closed architecture in that they do not integrate with their competitors.

“Case in point, Black Diamond doesn’t offer or support integrations with portfolio accounting systems including PortfolioCenter, Checkfree APL, dbCAMS+; Morningstar Office; or outsourced service providers such as Schwab Performance Technologies or BOSS, to name a few — and prior to being acquired by Advent it didn’t even support an integration with Advent,” he says.

Welling says that comparing integration with like applications to integration with applications that complement each other is “nonsensical” because it would not be expected that a portfolio-accounting company would integrate with companies that it is equipped to replace.

“I don’t know anyone using PortfolioCenter and Advent and if they are they don’t want to very long,” he says.

Welling adds that when Black Diamond adds its own rebalancing software later this year (It’s currently in beta with about 24 clients) that it will in no way seek to push out RedBlack Software, iRebal and others.

“We don’t want to talk people out of using Tamarac if they enjoy using it,” he says.

Picking sides

Tamarac brought aboard Tradewinds Capital Management LLC to its portfolio accounting package — in addition to rebalancing — on Jan. 1. The Bellingham, Wash.-based firm has three advisors who manage about $125 million of assets.

Bryant Engebretson, principal of Tradewinds, says that in general he is a fan of Black Diamond and that he was originally hoping to stay with the company, but a number of factors led him not to. Tradewinds differs from some RIAs in its willingness to take on the accounts of the mass affluent. It has a total of 900 accounts — making rebalancing a portfolio when changes are deemed necessary a significant effort.

“Rebalancing is core to my business,” Engebretson says, “and that’s why I communicated to Black Diamond [about it]; and they reminded me they were working on [developing in-house] rebalancing software, but I couldn’t foresee that they would get up to speed.”

But another advisor, Ted Rich, principal of Vinoy Capital LLC, based in Orlando, Fla., was also a customer of Tamarac and Black Diamond in 2009. When he had difficulties making the systems work well together, Rich went the opposite direction from Tradewinds — forgoing his relationship with Tamarac and replacing it with RedBlack, another rebalancing vendor.

Ted S. Rich: We flipped on RedBlack day one and we had clean data and we could immediately use the system [with Black Diamond].
Ted S. Rich: We flipped on
RedBlack day one and we had
clean data and we could immediately
use the system [with Black Diamond].

“We couldn’t get the systems to play well together; we could tell it was going to take work on our part so we said: 'let’s see what else is out there.’ We flipped on RedBlack day one and we had clean data and we could immediately use the system.”

Rich adds that it was a pretty simple decision to stay with Black Diamond because his company had a relatively long relationship with the Jacksonville, Fla.-based company and it had only worked with Tamarac a few months. “We had a good relationship with Tamarac; we had a very amicable separation,” he says.

At the Advent/Black Diamond national conference in Boston in September, Reed Colley, head of Black Diamond, said his company is making rebalancing one of its priorities. See: AdventConnect Report: Black Diamond will sell rebalancing software and better reporting on alternative investments.

Still, Engebretson says that he has since found other reasons — cost being one — to justify the hassle of switching systems.

With Black Diamond, he says, he was paying about $41,000 annually for portfolio accounting. That amount has been reduced to $36,000 under Tamarac. Plus, by purchasing Tamarac’s whole bundle of services, he is saving an additional $5,000 to $6,000.

“I’ll immediately save $10,000 a year,” he says.