What one big RIA has to say about its switch from Advent Axys to Advent Portfolio Exchange

Since Advent Software launched Advent Portfolio Exchange in 2005 it has slowly won a following of several hundred firms – but only a few hundred of them are legacy customers.

Advisors who quit the older Advent product, Axys, often gravitate toward competitors like Morningstar Office, Orion Advisor Services, LLC, AssetBook or Black Diamond Performance Reporting.

They cite various reasons but the higher price and the cost of conversion often come up in conversation. Other advisors say they aren’t confident that APX is really that big an upgrade from Axys. See: Advent Software is moving ahead in the RIA tech market – even if most Axys users refuse to budge.

Advent also just spent $73 million to purchase Black Diamond Performance Reporting, which the company acknowledges is the result of wanting more of the capabilities it lacks – especially reporting. See: Why Advent and Black Diamond are merging and how advisors look at the deal.

Menu choices

Yet obviously many advisors do choose APX, and Advent plans to continue selling the product after putting Black Diamond’s BlueSky product on its menu.

With these thoughts in mind, we were interested in debriefing an RIA who converted from Axys to APX.

Advent has been reticent over the years to refer advisors to the press – even ones who happily buy its product, so when Advent put out a press release and referred us to Erika Donalds, vice president and controller of Dalton, Greiner, Hartman, Maher & Co., we were eager to hear what she had to say.

DGHM went live with APX in November.

Today just over 3,000 asset management firms, including hedge funds, family offices, wealth managers, registered investment advisors and financial planners are using Axys, which was launched in 1993.

Just over 700 firms are using APX which was introduced in 2005, approximately half of these clients are conversions to APX from Axys.

DGHM manages about 30% of its $1.6 billion in AUM for high-net-worth individuals, and the remaining 70% for institutional clients. In 2003, the firm switched to Advent Axys from Thomson PORTIA after a new CFO, who had a good experience with Advent, pushed for the change.

Back-office drivers

“We’ve been happy with Axys, and we weren’t unhappy with it when we went to APX,” says Donalds. “They’ve made good upgrades over the years.” She added that the implementation was extremely organized and the company considered it a 'great experience.’

See: How one company is making money by making Advent data portable

Donalds says that DGHM didn’t shop around when moving on from Axys. “We knew we were going to upgrade at some point, and we knew APX would be a good fit for us.”

The firm, which now has 22 employees with offices in New York and Naples, Fla., has a clear separation of front and back office.

“Our portfolio managers did not use Axys,” says Donalds. “It was only the back office.”

Since Axys doesn’t have the ability to restrict different logins to different parts of the system, the back office specialists were given the keys and did all the driving. To get a report, a portfolio manager would have to send an e-mail request and wait for it to be processed. In practice, the back office would send a set of information daily to keep things rolling smoothly, she says.

“Axys does not have any kind of login or audit trail, so you couldn’t assign users; you couldn’t limit what different users could see or do in the system,” says Donalds. “That was too much of a risk.”

“With APX we’re able to give them access just to reporting, so the marketing team can run their own reports,” she adds.

Consolidating functionality

But the transition brought DGHM more than just the ability to run reports with less trouble – they were able to consolidate the functionality from many disparate applications onto the single platform, including CRM, reporting and automation.

“It already has been [an efficiency gain],” especially for the marketing department, which used to have to wait on reports fairly often, according to Donalds.

“With APX we have extensive user capabilities where we can create user groups; anyone in the marketing group has access to [limited] reports, and can’t change anything in portfolios.”

Audit-trail functionality is standard among contemporary portfolio management platforms.

DGHM had looked at converting before but didn’t think the benefits were worth the costs, according to Donalds, but that wasn’t the case anymore in 2010.

In part, the firm’s decision was prompted by one of their non-Advent systems becoming out of date. It used Fox Pro, an older programming tool, to send out client portfolios on a monthly basis, and were no longer able to maintain it. It was build by an IT person years ago, and “nobody really knows Fox Pro anymore,” according to Donalds.

Once Advent got the green light, Donalds says the process was very organized.

Painstaking process

“This is what I was most impressed with: They do a planning session [that takes] three days,” she says. “I thought: 'What are we going to do for three days of planning? That seems like a lot!’ But what happens during that planning process is you literally go though every single task that needs to be done for the project. You start at a high level – what are your goals, what do you want to convert, what is the end result you want to get to – and then you start working it down – in order to accomplish this goal, what are all the steps – and it’s easily hundreds – that you need to go through to get to that end goal. Then you go through each step and decide who is going to be responsible for it; is it going to be Advent or is it going to be DGHM?”

Conversion aversion

This conversion process is one of the barriers that has kept some advisors from making the switch. According to some of Advent’s competitors, conversion fees have caused Axys users to consider other options rather than upgrading.

“I have a pretty knowledgeable team as far as technology is concerned, and so we were able to take on a lot of those tasks ourselves, and that may have helped with the conversion costs,” says Donalds. “I’m sure other firms go through the process and Advent is responsible for every single task.”

Donalds declined to give any specifics surrounding pricing because of an agreement with Advent that stipulates the firm not share the fees with outside parties. Advent also declined to discuss pricing of conversions.

Unfazed

But Donalds didn’t seem fazed by the costs. “Considering all of the additional capabilities that APX has that Axys doesn’t, I think the pricing is reasonable,” she says.

In the end, she says that the conversion took about eight months, but was well worth it.

Donalds says they actually intentionally converted the data three times. Each time they took notes on how the conversion went, changed the process a little, and did it again until everything was perfect. But DGHM is something of an extreme case, with lots of backlogged data from a time even before the firm went to Axys.

“The data that was coming from Axys to APX was actually the easiest part…and we’ve found even more benefits with the system now that we’re actually using it actively than we anticipated.”

Editor’s Note: The lead from an earlier version. It said a “few” firms had made the switch from APX to Axys. It’s a few hundred.