The great migration from Axys to Blue Sky is still not a torrent -- and has actually slowed from pre-merger days -- thanks to an unforeseen psychological freeze from Axys clients

March 6, 2013 — 3:42 AM UTC by Brooke Southall


In one respect, Black Diamond Performance Reporting has not lived up to the expectations of executives of Advent Software Inc., which acquired it in 2011. See: Advent to buy Black Diamond for $73 million.

The Jacksonville, Fla.-based subsidiary is no longer continuing to win, at the same blistering pace, RIAs that use Advent Axys as their portfolio management software, according to what Advent chief executive Peter Hess had to say in the company’s most recent quarterly conference call.

“With regard to Black Diamond, we expected when we bought Black Diamond for a lot of Axys clients to go to Black Diamond and a lot have,” he said on Feb. 4 in response to a question from a research analyst from Avondale Partners that was captued by Seeking Alpha. “But what we’ve also found is that owning Black Diamond gave many of our Axys clients comfort that there is a path forward for them. And so we have seen a lot of Axys clients, who prior to us owning Black Diamond, were on the ropes and potentially flight risks for us. They are now ultimately still planning on migrating to something, but they don’t feel the same urgency.” See: Black Diamond is winning big accounts from Advent at an impressive clip.

Though Advent tends to win either way, Hess went on to say to the Wall Street analysts that RIAs switching over to Black Diamond’s Blue Sky technology tend to generate revenue for Advent that is four or five times greater than the Axys revenue. One of Advent’s big Axys clients that made the switch to Black Diamond in 2012 was the Moneta Group in St. Louis, which has 74 advisors and about $11 billion of managed assets. See: What four beta testers of Black Diamond’s new software have to say about it.

A bargain compared with Black Diamond

In a follow-on interview with RIABiz, Hess said: “For a lot of people [who signed on long ago], Axys is pretty inexpensive — less than $5,000 a year, or even $2,000.” On the lower end, Black Diamond tends to cost about $20,000, the company’s executives have quoted as saying for earlier articles.

Hess added that his company is still experiencing some success in migrating advisors to Black Diamond and that about 25% of Black Diamond’s new clients are ones who switch over from Axys.

Yet he allows that before Black Diamond was acquired, Axys users were migrating to it at double the current rate.

The good news about Black Diamond in the competitive landscape is that it has helped immunize Advent against the poaching of clients from other firms, Hess adds. See: How Black Diamond is faring as a unit of Advent Software.

“We’re seeing a lot less attrition away from Advent altogether. We still lose some to Morningstar and other lower-cost providers.

Orion pulls Advent clients

Eric Clarke, president of Orion Advisor Services LLC, says that his firm’s success in winning Advent clients has stayed strong.

“With regard to Advent conversions, 29% of our new revenue in 2012 came from Advent clients we migrated,” he says. “Year-to-date 51% of our new growth has come from Advent conversions. Out of the 31 new advisors we are currently onboarding, eight are Advent conversions.”

Orion has $100 billion of assets under administration of its portfolio management systems,

Short-term head winds

Black Diamond had set records in both revenue and the number of new licenses during the quarter ended Dec. 31, Hess told the Wall Street analysts.

But he allows that Black Diamond had a slow period leading up to the last quarter — for internal reasons.

“In the beginning of 2012, we merged the Black Diamond sales force with what was at the time called our AMG [Asset Management Group] sales force because we wanted to approach the market agnostic with respect to the solution that we prescribe — really be as prescriptive as possible so that the clients ended up leveraging the right systems,” Hess says.

“We didn’t want to force the wrong system on the wrong client. That decision was the right decision long-term. And we feel really good about the fit of the products that we’re rolling out to our clients. But there was a short-term slowdown in Black Diamond sales as the AMG sales team learned how to sell Black Diamond. So one of the head winds, I would say, in the bookings performance in 2012 was that organizational shift. The good news is, it’s already been made. And we are now at full steam.”

Own worst enemy

When Advent Software acquired Black Diamond nearly two years ago, its biggest competitive threat was … Black Diamond.

The Jacksonville, Fla.-based relative upstart was winning users of Advent’s Axys in droves because Black Diamond had three big advantages over the incumbent. It was web-based, it had far better reports and it had a culture of getting to know a practice in a consultative manner. You might add in the fact, too, that Advent was a brand that turned off many advisors.

This trust factor is an area that Hess readily acknowledges and regards as an important intangible that is headed in the right direction.

“It’s going great and I’m really thrilled. We had to earn the trust of the marketplace back and we’re making good progress.”

Share your thoughts and opinions with the author or other readers.


MJ said:

March 7, 2013 — 9:13 PM UTC

Honestly, was not a fan of Black Diamond and are MUCH happier at Tamarac/Advisor view. To each their own.


pccoock said:

April 12, 2013 — 5:01 PM UTC

Advent is the worst in customer service, missed the cloud and had to purchase Black Diamond in order to figure Saas out….... if you have a culture of upsetting clients, how are you going to understand being an outsource provider??


Jude said:

October 15, 2014 — 2:47 PM UTC

Don’t switch to Black Diamond. They don’t have the experience or knowledge to reconcile account data and composite reports are horrible. This results in bad data. We went from using Axys to Morningstar and then switched back to Black Diamond. Worst decision every.

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