FolioDynamix Making Waves in Bank Trust Market

Fundfire featured an article yesterday about FolioDynamix adding a new client in the bank trust space.  They called me for comments on how the company has positioned themselves to increase bank trust market share and if their platform provides an opportunity for asset managers to sell more product.

The article is by Danielle Verbrigghe, who recently replaced Tom Stabile as the wealth management reporter for Fundfire.  I always enjoyed reading Tom’s work, talking to him at conferences and was glad to be able to contribute to a number of his pieces.  I wish him the best of luck on his new beat, alternative investments.

But wait, there’s more!

Top 10 Most Popular Posts from 2013

What were the most popular WM Today posts from 2013?  Portfolio rebalancing, financial planning and anything mobile were big draws last year.  Here are the top 10 according to stats from WordPress:

10. 5 Ways a Web Portal Can Excite Your ClientsJunxure logo

This summary from the fantastic Technology, Tools & Today (T3) conference highlights how software vendors need to continuously expand and evolve their product offerings in order to stay relevant.  Junxure CRM has done this by building their ClientViewLive portal, which acts as central integration hub for all other wealth management products.  Through it, clients can access their account holdings, performance reporting, online statements even financial planning tools via a single sign on and a well-designed user interface.

9. Which Portfolio Rebalancing Software is Right for You? Smartleaf’s ResponseSmartLeaf logo

Part of an ongoing series of articles focusing on automated software rebalancers, I thought it would be interesting to interview different vendors and compare their products and their approaches to portfolio management. Continue reading

FolioDynamix v7.1 Delivers Support for Unified Managed Households

In a previous post (6 Keys to Launching a Successful UMA Program), one of the panelists commented that no vendors currently have a complete solution for Unified Managed Households (UMH).  I thought this would be an excellent opportunity to touch base with a few vendors that offer fee-based advisory platforms to learn more about their UMH support.

For the first part of this series, I spoke with Aaron Schumm, Chief Customer Officer at FolioDynamix.  Folio recently announced a deal with Vantage Benefits Administrators, who will deploy FolioDynamix’s wealth management platform for group benefit plan modeling, rebalancing and trade order management as part of their comprehensive benefit plan offerings. Continue reading

Adventures in Rebalancing: The Last Frontier

FA Magazine recently published a good primer on automated solutions for portfolio rebalancing. The article is titled The Last Frontier and was written by James Picerno and it is definitely well-researched. He managed to obtain quotes from industry experts such as Bill Winterberg, Joel Bruckenstein and Michael Kitces, all of whom I have tremendous respect for. The article is certainly a useful resource for any RIA or advisor interested in the basics of rebalancing.

Besides discussing the basic functions of rebalancing, Picerno also gets into some of the more esoteric features that make rebalancing software so incredibly useful. Here is a quote from a lesser-known industry expert:

Technology circa 2013 offers a better way, for reasons that go beyond easing your workload. “You’re also going to provide better service for clients,” says Craig Iskowitz of the Ezra Group, a financial technology consultancy. Rebalancing software, he explains, makes it easier to build and manage custom investment strategies, such as a socially responsible portfolio that closely matches an investor’s preferences.

Portfolio customization has been available for more than a decade on systems such as Fiserv’s Unified Wealth Platform, which is still based on what was formerly known as Checkfree\APL. While it’s true that most of the top vendors in the space offer this feature now, you didn’t have to wait until “technology circa 2013” in order to take advantage of it. Continue reading

Which Portfolio Rebalancing Software is Right for You? FolioDynamix Response

I recently posted a summary of the Portfolio Rebalancing Software Panel from the Tools and Technology Today (T3) Conference that took place in Miami last month.  The responses from the four vendors were very informative and I thought it would be interesting to hear from a few other vendors who couldn’t be part of the panel.

The first vendor I contacted was FolioDynamix.  They have been wracking up some impressive customer wins with Cambridge Investment Research and LPL Financial signing on to deploy their wealth management technology platform.  FolioDynamix is also the engine behind the block trading and rebalancing functionality in Pershing’s NetX360 product.

For this article, I spoke with Aaron Schumm, who was recently promoted to the position of Chief Customer Officer.  I asked Aaron the same questions that were posed to the T3 panel and he was kind enough to provide the following answers.

What are the main differentiators of your product?

The FolioDynamix trading and rebalancing tool (FDx Manage) has several differentiators that resonate through the fee and commissioned-based trust and brokerage industries – all of which contribute to increased productivity, efficiency and insight, Schumm responded.   It is cloud-based and integrates seamlessly with existing internal and external systems across multiple custodians.  It also monitors 30 types of drift and cash movements for accounts, he said.

Their alerts dashboard allows portfolio managers to rebalance all of their accounts in a single trade scenario, Schumm continued.  Since scalability and visibility are critical to their clients (LPL Financial for example), FolioDynamix designed a highly-scalable rebalancing engine that allows for multiple accounts to be linked to multiple models, which are held at multiple custodians and can be traded and executed simultaneously, he stated.

According to Schumm, their platform is tax-aware and automatically checks for wash sale violations, restrictions, minimums and replacement securities.  FolioDynamix also follows custom trade workflows for orders over defined amounts, discretionary, non-discretionary and commission-based accounts.  Finally, FDx Manage seamlessly interoperates with the other modules of FolioDynamix SingleSight wealth management technology platform – allowing firms to deploy a single cloud-based system to support the entire wealth management life cycle, he noted. Continue reading

Diversify, Diversify, Diversify – 3 Ways to Help Advisory Products Succeed in Volatile Markets

“How can clients improve diversification in their portfolios?” was the question Roger Paradiso posed to those attending this session at the MMI Tech and Ops Conference 2011.  Client’s portfolios aren’t performing as expected and their needs aren’t being met, he said, they are looking for solutions. The recent rise in volatility in the market, he explained, combined with the correlation of many previously uncorrelated asset classes, has increased the priority of diversification for many investors.


Roger Paradiso, President and Chief Investment Officer, Private Portfolio Group, Morgan Stanley Smith Barney


Mark Thomas, Senior VP, Head of Managed Accounts, PIMCO
Joe Mrak, CEO, FolioDynamix
Donna Davis, Director of Trade Management, Private Portfolio Group, Morgan Stanley Smith Barney

Alternative investments help to diversify portfolios. How are you introducing alternatives into advisory solutions?

PIMCO uses a forward-looking process when designing client solutions, Mark explained. They evaluate what vehicle, product or platform makes sense and decide on the right structure for each client. Support for 40Act funds, limited partnerships, private funds, and separate accounts are all included in their program.

One issue when introducing new products is ensuring that there is enough capacity, Mark said. PIMCO is continually looking for ways to lower the minimums in their alternative structures and vehicles to make them available to a wider audience.

Continue reading

FundFire: Bank of Hawaii Launches $2B UMA Program

Article published on Fundfire on August 12, 2010
By Tom Stabile

The Bank of Hawaii is the latest wealth management outfit to ride the unified managed account wave, unveiling a new program that opens the door to third-party separately managed account managers for the first time. The Honolulu-based bankexpects to shift more than $2 billion of its $6.6 billion in client assets over to the new UMA program, which will include SMAs, mutual funds and exchange-traded funds (ETFs) in its inaugural lineup.

The commercial bank’s Investment Services Group touts itself as the largest trust and asset manager in the Aloha State’s financial services market. To date, the bank has funneled most of its wealth management services through its proprietary investing vehicles, including internal mutual funds and individual bond and equities selection handled by its own portfolio managers. The new UMA takes a much bigger step toward open architecture investing, says Steve Rodgers, the bank’s CIO.

“Right now we’re estimating that about $2 billion of our existing accounts will be converted over,” he adds. “We’re in the process of converting existing accounts over the next several months.”

Continue reading

Defining Tax Management

In the most recent edition of my Managed Accounts Newsletter (MA Monitor, Feb 2009), I compared different recommendations of the minimum value for a managed account that is required in order for tax management to be effective. The values ranged from $0 (no minimum) up to $1,000,000:

I have since received a few updates, including one from Joe Mrak who wanted to amend his comments:

I actually agree with Dale from M3 that an account should be at least $1 MM for “tax optimization” vs what I was think for the $200K account “tax treatment”.

This raises a semantic issue since there is no standard definit0n of tax management as well as a lot of overlap between the many terms currently in use.  Here are a few tax management terms that I have found:

  • tax optimization
  • tax treatment
  • tax aware
  • tax sensitive
  • tax efficient
  • tax managed
  • tax centric

Joe’s update includes a good definition of tax optimization in his clarification of a minimum account value:

Just to clarify that point…my thought has always been that most accounts can benefit from some tax rules (don\’t allow a ST gain etc.), but the more involved tax optimization of an account where you are doing much more algorithmic logic to determine the trade-offs of alpha, risk and tax only makes sense on accounts with $1 MM or more. No sense in working that hard on a $200K account that will see little to no benefit to that extra effort.

He also added:

I want to be more tax aware than tax optimized. I believe that only a handful of advisors can understand the value proposition of all-out tax optimization.

As a follow-up, I asked Joe if he could also provide his definitions for tax aware versus tax treatment:

Tax Aware – The system is constantly seeking to offset gains and losses at any time of the year and all investment decision takes into account tax.

Tactical Tax Treatment – Tactical gain/loss management based on a request or done on an annual basis.  So tax is considered, but only ad-hoc by request or specific action.

IMO, this definition of tax treatment sounds a lot like tax harvesting, which is a feature of some Separately Managed Account (SMA) programs.  Although, there is also a difference between manual and automated tax harvesting.

Now that I’ve opened a can of worms related to the many definitions of tax management, I’ll be continuing to delve into more detail on the many different terms in future posts.