Portfolio Management and Client Reporting Design


Overall, the technology landscape of vendors and clearing/custody firms continues to grow, with well over 50 firms in this very crowded market. In the enterprise space, the market is quite consolidated by established legacy participants. On a combined basis, Aite-Novarica Group estimates that legacy providers Morningstar, Pershing, Orion, Envestnet Tamarac, and SS&C have around 50% market share. On the other hand, the registered investment advisor (RIA) channel is quite fragmented. Established veterans are competing fiercely against newer players that have grown remarkably since their inception a few brief years ago.

Aite-Novarica Group’s vendor community estimates current RIA market adoption of sophisticated portfolio management and reporting systems at around 40% to 60%. Therefore, of the estimated 23,500 RIAs in the market, 9,000 to 14,000 still use very basic tools. This represents US$1.2 to US$1.3 trillion—a substantial market opportunity.

Here are six of the top trends among the vendor market for portfolio management and reporting systems.

1. The RIA and the independent advisor, in particular, became the primary distribution channel for much of the financial advice Americans received in 2022

This trend will only increase, and integrating nontraditional elements of an individual’s financial life into traditional client reporting is a top-of-mind priority for RIAs. Moving past investment management into other elements of an individual’s financial life, it will become more feasible and necessary for all RIAs to integrate insurance (in-force illustrations); environmental, social, and governmental (ESG) impacts; legacy planning; and more into reporting.

2. Wirehouses are expanding broker-workstation capabilities with custom-made vendor solutions

Broker workstations are evolving and, in some cases, deploying vendor technology. Workstation development was historically a proprietary effort except for large-scale infrastructure initiatives. Fintech firms are also tactically expanding their presence into the wirehouse channel. For example, Morgan Stanley, RBC, and UBS use Addepar for their advisors with an ultra-high-net-worth (UHNW) clientele. Envestnet Tamarac is used by Merrill Private Wealth Management teams for its portfolio management and reporting solutions, helping them address clients with complex financial needs. Broadridge’s strategic partnership with UBS to overhaul its financial advisor workstation comprises a suite of front-to-back component solutions designed to drive advisor revenue and productivity, personalize the investor experience, digitize enterprise operations, and deliver cost efficiencies.

3. Wealth managers merge channels to serve clients across their life spans and turn toward Gen Zers and millennials as wealth transfer accelerates

RIAs’ need to cater to individuals across all wealth cohorts almost dictates their requirement to have a highly tailored, personalized service model. Appropriate engagement with portfolio management and reporting software is therefore vital to service all these individuals in a manner that makes it easy to make investment decisions, interpret statements, and so forth.

4. Integrated regulatory and compliance solutions have become table stakes to scale business models

All financial institutions (FIs) will ultimately need to cope with increasing amounts of regulatory data in a variety of formats. This is an extremely positive development, as wealth managers continue to juggle regulations. In fact, the dynamic and evolving nature of regulations is a key driver for all FIs to adopt client reporting systems that can help support compliance efforts.

5. Economics and functional commoditization are driving provider value migration toward enhanced RIA services

Vendors seek to grow their value proposition with enhanced RIA services, including digital client onboarding, rebalancing/trading, financial planning capabilities, practice management, and business intelligence leveraging data capabilities. RIA practice management solutions were historically part of the custodial and aggregator value propositions. That is now shifting toward technology providers. Envestnet has been particularly strategic and aggressive with its partnerships and acquisitions as of late to open its ecosystem for expansion. As recently as October 2022, Envestnet entered into a strategic partnership with FNZ, a New Zealand-based custodian and wealth tech firm with over US$1.5 trillion under administration.

6. Vendors are competing against each other in a race to solve the most elusive integration hurdles. The API-ification of wealth management will help

A central pain point for advisors is getting accurate performance data—particularly for alternatives—correctly calculated and integrated into their technology stacks. APIs provide firms with the runway to customize their offerings and innovate fast, using data-rich building blocks. Cloud-native firms, such as InvestCloud and Addepar are raising the bar in providing complete portfolio management and reporting to wealth managers. Client reporting vendors are increasingly focused on this point and have developed well-thought-out open API frameworks to facilitate the creation of a vibrant ecosystem of third-party applications, which also increases the attractiveness of their own platforms to RIAs.

If you’d like to discuss these key findings for the changing environment for portfolio management and client reporting vendors, please read our new reports Aite Matrix: RIA Portfolio Management and Reporting Systems and RIA Portfolio Management and Reporting Systems Market Overview or contact me here to continue the dialogue.