Mentioned In This ArticleFresh off the acquisition of Black Diamond Performance Reporting, Advent Software convened its 25 th annual Advent Connect users conference in downtown Boston at the cavernous Hynes Convention Center over three days, September 12-14, 2011.
For the first time, Advent’s newly acquired, shiny new jewel was on display in front of a record crowd of advisors, asset managers and technology vendors. Advent executives spent much of the conference touting their renewed commitment to advisors, presenting Black Diamond as evidence.
The Back Story
Advent, long the number one purveyor of the mission-critical business software independent advisors use to run their investment management operations, had recently been challenged by agile, cloud-based software companies and needed an answer.
They found that answer earlier this year in a stunning, blockbuster transaction by acquiring their most feared competitor in order to focus their efforts on the fastest growing segment of the financial services industry – the independent Registered Investment Advisor ().
Advisors use Advent for portfolio accounting, managing data feeds from custodians, fee billing, and producing performance reports. Advent’s ability to reconcile data from multiple sources and automate accounting, billing and reporting arguably created the independent advisor industry nearly 30 years ago, as it enabled RIA practices to scale their businesses and compete head to head with the largestfirms.
Recently, however, Advent’s product suite was becoming somewhat mismatched with advisor’s needs as Advent expanded into the hedge fund and large asset manager markets. More nimble competitors were rapidly poaching Advent’s advisor clients with slick, web-based tools and it was this competitive technology issue that drove Advent to act.
In his opening remarks, Advent President Pete Hess acknowledged as much. “We’ve made some mistakes. But now with Black Diamond we are more committed than ever to the advisory.”
Hess laid out Advent’s approach for rationalizing the platform strategy for their various market segments. “For hedge funds we have Geneva, for asset managers Advent Portfolio Exchange and for advisors Black Diamond.”
“Black Diamond is a web-based fully outsourced portfolio management and reporting platform dedicated to helping advisors be great,” said founder, SVP and General Manager of Black Diamond, Reed Colley. “Our mission is to support and cultivate advisor greatness by providing the best combination of technology, service and innovation in the industry.”
Black Diamond has been growing its client base at roughly a 30-40 percent annual rate, including 60-70 percent growth in assets under reporting. And because Black Diamond typically bills on an asset base, these results are great.
Hess also commented that the combined entity would have many benefits to both firms and advisors. “Advent buying Black Diamond isn’t necessarily the case of a big fish eating a small fish,” Hess said. “To quote Reed Colley, this merger is more like a drop of ink in a glass of water. It will be transformational. We will benefit from their innovation and they will benefit from our structure and resources.”
Technology Change and Flash Mobs
CEO and founder Stephanie DiMarco provided some inspirational and thoughtful commentary in her opening keynote on the pace of change and how Advent has benefitted. “It’s been a pretty amazing ride we’ve had. We’ve benefitted tremendously by the massive change driven by the growth in digital computing. We’ve caught a great wave and been able to ride it for 28 years. We’ve had some wipeouts along the way, but we’ve always gotten back on the board and continue to ride the wave.”
To provide some perspective on the impact of that change, DiMarco offered up this analogy. “If Moore’s law could be applied to the airline industry, then a New York to Paris flight would take one second and cost one penny.”
DiMarco continued her “change” theme by highlighting the growing trend towards mobility and how Apple’s iPad was a disruptive application. “Apple has never been in the business enterprise, but with the iPad, it is just getting started. Apple is moving in the back door and will soon take over.”
To show Advent’s whimsical side and to set the tone for the conference, the opening keynote concluded with a high energy, “Rent” themed, Broadway musical flash mob of performers singing Advent technology lyrics while dancing on the stage. Unusual and surprising for the traditionally staid investment management technology industry, the flash mob charged up the audience for the day’s sessions.
Black Diamond Buzz
There was definitely a buzz during the conference, particularly among current Advent users about the promise of the powerful Black Diamond web-based technology and platform.
Much of the conference featured Black Diamond’s capabilities including an advisor panel of Black Diamond users touting the software’s many features and flexibility and talking about how they have deployed the software in their firms.
Ted Rich of Vinoy Capital, described how he conducts client review meetings on his iPad through the native Black Diamond iPad app, drilling down with the touch of a finger on various asset classes to quickly propose new strategies or graphically show in real time the client’s performance. “I conducted a last-minute client review meeting on my iPad in the hotel lobby of a conference and was stopped by many advisors asking me how I did it. They were completely blown away.”
The main product announcement from Black Diamond was the soon to be available re-balancing tool. RIAs typically re-balance portfolios on an ongoing basis to ensure that target asset allocations are maintained as part of their investment strategies. On a single account, this re-balancing process of buying and selling assets is fairly straightforward process. However multiply that by hundreds and sometimes thousands of accounts and this usually manual process can easily bog down a firm. By integrating re-balancing into Black Diamond’s platform promises to bring many efficiencies for advisors.
During the “Fireside Chat” session with Advent President Pete Hess and Black Diamond founder Reed Colley, Hess said that Black Diamond will be an independent business unit and will be Advent’s offering for advisors. “We are committed to continue to invest and innovate with Black Diamond.” When questioned why Black Diamond agreed to be acquired by Advent, Colley said, “The cultures were aligned - this was truly a merger of visions and values.”
Freakonomics and Federal Building Parties
Highlighting the conference agenda was a keynote speech by “Freakonomics” and SuperFreakonomics authors, Steven Levitt and Stephen Drubman who shared some of the many funny stories they uncovered during their research.
“Most people make mistakes when trying to solve problems,” Levitt noted. “The key is to admit that you don’t know the answer and not pretend that you do. Only then can you then attempt to redefine the problem and find the solution.”
Since this was a business software event, there had to be a party, and Advent did not disappoint. Taking over the Federal building in downtown Boston, conference attendees dined on exotic appetizers, sipped fine wines while having access to the interior architecture of the famous building, only after a thorough security screening, of course. Overall, the 2011 Advent Connect conference was a smooth operation, pulled off with flair and fun. Optimism about the transforming power of technology coursed through the conference.
While much work remains to fully integrate Black Diamond’s technology, products and services into Advent, advisors now have an even more formidable tool as they look to leverage the latest technologies to grow their businesses.
Timothy D. Welsh, CFP® is President and founder of Nexus Strategy, LLC, a leading consulting firm to the wealth management industry, and can be reached at firstname.lastname@example.org or on Twitter @NexusStrategy.