How a Cold Call Led to a Deal with Scottrade for ASI’s Rebalancing Software

It was an idea born of convenience.  Neal Ringquist, President and Chief Operating Officer of Advisor Software Inc., was planning a trip to St. Louis to meet with one of their clients, EverBank.  He knew that Scottrade® Advisor Services was also headquartered there.  The thought seemed natural to him to give them a call and see if he could arrange a meeting and pitch his company’s portfolio rebalancing solution?Scottrade Logo The Chinese philosopher Lao Tzu said, “A journey of a thousand miles begins with the first step.”  Ringquist’s call was the first step a journey that led to the recent announcement by Scottrade that they would be integrating ASI’s Portfolio Rebalancing Solution® into their new custodial platform. Brian A. Davis, who has since left the firm, but up until last month was Head of Scottrade® Advisor Services, was the recipient of the cold call.  “Your competitors use ASI for rebalancing,” Ringquist told him, referring to Schwab Advisor Services and TD Ameritrade Institutional, so why not see if it would also be a good fit for you a well?ASI Logo Ringquist’s pitch apparently resonated with Davis and his team because one of their core principles is always looking for ways to simplify the advisor’s workload.  Since so many of their advisors were already familiar with ASI’s software, they believed it would be a burden for them to be forced to learn how to use a different rebalancing tool.  Ringquist got his meeting.

White Labeling

Scottrade, whose RIA custody business serves over 1,000 advisors, will be licensing ASI’s rebalancer and white labeling it with their own brand, which is similar to what Schwab and TD Ameritrade have done, according to Ringquist. While they do not have access to detailed statistics about the number of accounts or number of trades generated by their software, Ringquist did say that they have seen substantial growth in the number of total rebalancing sessions at both custodians. ASI’s relationship with TD Ameritrade started back in 2005, two years before they acquired iRebal.  This deal means that TD Ameritrade will offer two realancing solutions to their advisors.  Ringquist feels this is because iRebal is not as efficient for advisors that manage their portfolio using models, which is the majority of Scottrade customers. (See TD Ameritrade Comes Out Swinging with iRebal Update)

GadgetThrowAwayOut With The Old

Not only has Scottrade replaced the head of their RIA unit, but this deal also replaces their former technology partner for portfolio modeling and rebalancing, MyVest.  Scottrade and MyVest announced their tie-up a little over a year ago, but it seems that one of the last decisions Davis made was to bring in ASI.  Neither of the vendors would comment on the reasons behind the switch.  Scottrade would only say that it has “ended its relationship with MyVest to provide modeling and rebalancing”. Based on my discussions with MyVest and review of their rebalancing software, I can’t see any reason related to technology that would cause Scottrade to make this change.  MyVest’s product is solid and they are especially strong in UMA\UMH functionality.  My guess is that ASI simply offered them a better deal.  (See Is MyVest the Right Portfolio Rebalancing Software for You?) Since Scottrade launched their new custodial platform back in February, they have been looking to cut costs and increase their revenue per client.  According to an article in, they recently announced that they were hitting advisors that have less than $7 million in assets on their platform with an annual fee that could reach as high as $12,000.  That should be a strong incentive for the smaller RIA firms to jump ship.

Rebalancing Features

ASI offers a proposal-generation mode as part of their rebalancing solution that is similar to their Client Acquisition Solution, with just a bit less functionality.  Although both products do share the same portfolio analytics including Current vs Proposed, backward-looking analytics like Morningstar rating and forward looking analytics like Monte Carlo Simulations The standard rebalancing software provided by ASI supports multiple custodians, but Scottrade clients will only be able to rebalance assets on their platform with the integrated version.  Of course, RIA’s can always contract with ASI directly to take advantage of this capability. The ASI software provides a lot of flexibility in the modes that an advisor can use in a rebalancing session, Ringquist explained.  It has a lot of flexibility for management of cash-in/out logic, tolerance bands, and restricted securities, he said.

Will ASI Ever Become a TAMP?

While ASI does own an RIA and provides outsourced asset management products for other RIA’s, they have no plans to become a full-fledged TAMP, Rignquist stressed.  Analytics are their core competency, he added, they do not want to be seen as a competitor to their clients or partners and want to work on as many platforms as possible.


Ringquist noted that his vision for ASI is “marrying technology and asset management to provide solutions”.  One way they are doing this is by providing technology to help advisors to build a digital persona.  This web presence will deliver lead generation workflow, proposal and document delivery, and account opening, to name a few.  There will also be an option for an entirely online service model for smaller accounts or for more tech-savvy clients (like Millenials).  It could also be packaged with ASI-provided model portfolios that fit into a goal-based model mapping functionality that advisors can brand as their own, he observed.

Deepening the Relationship

Scottrade already offered ASI’s financial planning app, goalgamiPro™, which constructs a Household Balance Sheet to validate whether a client can reach their goals.  (See Financial Planning in 10 Minutes or Less with goalgamiPro) With the addition of portfolio rebalancing, the relationship between the to firms is strengthened and the ASI brand is more visible to advisors.  Scottrade benefits be reducing the number of vendors they have to support and possibly reducing their licensing costs.  ASI also gets their foot in the door at another of the top five RIA custodians.   That’s a win-win deal in anyone’s book.

Related WM Today Content
Which Portfolio Rebalancing Software is Right for You?
Which Financial Planning Software is Right For You?
5 Hot Tips For Selling to RIAs

TD Ameritrade Comes Out Swinging with iRebal Update

I began this series of articles on portfolio rebalancing software with a panel of four product vendors at last year’s T3 Conference. (see Which Portfolio Rebalancing Software is Right for You?)  One of those products was iRebal and since then I have been looking forward to writing a more in-depth review of it.

I recently had my chance when I was able to speak with Danielle Fava, Senior Product Manager at TD Ameritrade (TDA), who gave me a demo and discussed some of the new features that will be part of the upcoming May release of the cloud-based version of iRebal.

iRebal on Veo, as TDA refers to it, was built by following the blue-print for rebalancing set forth by the desktop version, which was acquired by TDA back in 2006, Fava explained.  iRebal on Veo has been offered for free to RIAs for use with accounts that are custodied with TD Ameritrade Institutional, since last year.

Continue reading

Which Portfolio Rebalancing Software is Right for You? (2/2)

This is part 2 of 2 of a summary from a panel discussion at the Tools and Technology Today (T3) Conference, which took place February 11-13, 2013 in Miami, FL.  You can read part 1 here.

Moderator: Tess Downing, Financial Advisor, Fox, Joss & Yankee, LLC


Does your product update portfolios using real time prices before rebalancing?

iRebal retrieves the latest pricing as soon as a rebalance is run, Fava stated.  All of the recommended trades are created using dollar amounts instead of number of shares, since they believe this provides a better picture of how the trades will impact cash levels.  They convert this to the number of shares when trades are approved and also refresh the pricing, she noted.

Tamarac also offers real-time pricing as part of their rebalance and also real-time execution reports for equities and ETFs, Rembe said.  Also, when you tell the system to update the cash positions, it evaluates T1 and T3 settlement to ensure that the accounts won’t be short cash.  If they are, then it provides an option to put those trades on hold and execute them on a later date, he said.

TradeWarrior receives real-time pricing from an external feed that can be used to update positions before running a rebalance, Evans said.

Rowling pointed out that TRX was designed to focus on trading of Dimensional Fund Advisors (DFA) funds, so they haven’t previously had a need for real-time pricing.  However, in response to recent requests from clients, they plan to support real-time pricing in a release sometime in the second quarter of 2013, she said.

Continue reading

Which Portfolio Rebalancing Software is Right for You?

This is a summary of panel discussion from the Tools and Technology Today (T3) Conference that took place February 11-13, 2013 in Miami, FL.

Update: Since this topic has been so popular, I launched a series of articles on portfolio rebalancing software. Here are links to a few that you might find interesting:
Is MyVest the Right Portfolio Rebalancing Software for You?
IAS Responds: Which Portfolio Rebalancing Software is Right for You?
FolioDynamix Response to Which Portfolio Rebalancing Software is Right for You?

Moderator: Tess Downing, Financial Advisor, Fox, Joss & Yankee, LLC



What do four vendors of rebalancing software have in common? Quite a lot! All four vendors are custodian-agnostic and have cloud-based versions of their software. Although, there were some notable differences in the product offerings, which could help sway you one way or the other. This is not an exhaustive list of top vendors, but should provide a good overview of whether one of these four would be a good fit for your firm.Top 5 Rebalancing Software

Most of the advisors in the audience indicated that they were already using automated rebalancing software, which was surprising, considering that a recent Investment News survey reported that over 70% of advisors still rebalance manually or not at all. Hopefully, this panel imparted some insight as to the many benefits automated portfolio rebalancing can bring their practice. Continue reading

LPL Strives to Improve RIA Practice Efficiency

This post is a summary of a session from the MMI’s 2011 Annual Convention:

In 2010, LPL Financial grew the AUM on its hybrid RIA platform from $7.3 billion to $13.5 billion, an 85% jump. One of the main drivers that is attracting independent brokers is LPL’s ability to improve practice efficiency.

This point was highlighted by the keynote speaker of the MMI 2011 Convention, Mark Casady, Chairman & CEO, LPL Financial. Mark described the results of a PriceWaterhouseCoopers study commissioned by LPL that found their RIA practices to be 20% more efficient than other platforms. The study also reported that LPL practices generate 80% more revenue per client.

Advisor efficiency is an important metric at LPL. The average advisor can support around 300 households, Mark reported. The industry will need to use a combination of technology and best practices to increase this to 400-600 households ten years from now.

According to a study done by Curian Capital, a Denver-based registered investment advisory firm, 62% of advisors said improving efficiency and overall time management is a major goal for the coming year. One way to reach this goal would be through the use of improved technology platforms, like the one provided by LPL.  Being able to view all of a client’s holdings on a single platform was mentioned by 74% of advisors.  These advisors would benefit from an aggregator such as ByAllAccounts or Albridge (now an affiliate of Pershing).

“Advisors value tools and resources that can help support the marketing and development of their businesses,” according to Mark Schoenbeck, a senior vice president and chief marketing officer at Denver-based Curian Capital. “Providers will need to focus on ensuring that their support programs are practical, relevant and easily accessible, so advisors can quickly and efficiently grow their business.”

Mark pointed out that there aren’t enough advisors in the world.  The number of licensed retail advisors has hovered around 330,000 for past decade and there are about 15-16,000 RIAs.  LPL is looking for ways to make them more efficient so they can handle larger books of business, Mark said.

Advisors have been continuing to invest in technology throughout the financial crisis, according to George Tamer, director of strategic relationships at TD Ameritrade, who was quoted on as saying that:

“…advisors realized one of the ways to get through this—to reign in expenses—is to invest in efficiency; they don’t see technology as an expense, but as an investment.” Tamer noted that it “might not be sexy to buy a CRM system,” but if doing so allows a firm owner to increase the firm’s human capital yield by “increasing non-revenue generating efficiency” it can produce clear bottom-line returns.

One way that LPL has enabled advisors to handle more accounts is via their All ETF Program in conjunction with BlackRock. This program added $1 billion in AUM in its first eight months, Mark reported, and it also increases the practice efficiency by “outsourcing” the investment selection and allowing the advisor to focus on relationship management.

LPL also focuses on practice management, Mark noted, by helping advisors to better support their business today and improve profitability. For example, when they analyzed pricing across their client base and adjusted for practice size and region, they found that most of their advisors were underpriced! They developed “suggested retail pricing” in different parts of the country.