Joel Bruckenstein takes a skeptical look at Adhesion’s WealthADV platform over on Morningstar Advisor. It’s an interesting offering, but isn’t a generic portfolio management system and it requires you partially buy in to their account management philosophy, which focuses on UMAs. They network into various money managers who can manage specific accounts for you.

WealthADV is not a portfolio management system like Axys or PortfolioCenter. In fact, they’re actually using PortfolioCenter behind the scenes to run the platform:

Adhesion Technologies has made some astute decisions with regard to their portfolio accounting and performance reporting. They use Schwab’s PortfolioCenter for portfolio accounting (for example tracking tax lots) but they calculate performance using their own proprietary performance engine. “This is one of their competitive advantages”, says Gardner. Why?  Well, first of all, one of the major impediments to changing portfolio accounting systems is the data conversion. If an advisor currently using PortfolioCenter in-house wants to switch to an outsource provider that uses some other application, the conversion process will require time and an additional outlay. A move from PortfolioCenter to WealthADV does not require a conversion since Wealth ADV already uses PortfolioCenter. Since PortfolioCenter is probably the most widely used portfolio management and accounting system among Adhesion prospects, compatibility with PortfolioCenter is a big plus.

They’re right about PMS conversions being difficult, but I’m not buying the “competitive advantage” argument. From Adhesion’s point of view, they’re having to pay a licensing fee to Schwab for every client, yet PortfolioCenter doesn’t expose all the calculations so they’ve had to write their own overlay on top of it to provide real-time performance on the web. Ideally, they would either create their own portfolio management engine, and have complete control over the code, or PortfolioCenter would be open enough that they could just use it anywhere and not have to rewrite calculation routines.

Of course, this is all irrelevant from a client perspective. I assume Adhesion is absorbing the cost of PortfolioCenter, and the clients never see the various hoops they have to jump through to get it working.

Joel loves the reports:

Client deliverables are excellent. They are aesthetically pleasing, with nice layouts and ample graphics. Of equal importance, they can be customized and branded by the individual advisory firm. A report wizard allows the advisor to create different report sets for different clients. The intelligent scheduler will automatically generate and distribute recurring reports as programmed by the advisor. 

From their web examples I’d have to agree. They look slick:

The front-end is also pretty:

He points out that WealthADV is more expensive than other third party reporting firms. But I don’t see this as a direct comparison. The real value really comes from adding of the UMA capabilities, which invites comparison to AssetMark or FundQuest. I don’t know of another company that combines PMS outsourcing with UMAs so I’m not sure there’s a true competitor.

He ends it on a positive note:

In contrast to my previous visits with Adhesion Technologies, the firm now seems to be highly focused and hitting on all cylinders. They’ve better defined their niche, and they’ve refined their technology. Few advisors I know are familiar with WealthADV, but based on what I’ve seen, they should be.  If the services Adhesion Technologies offers are consistent with your business model, I’d definitely recommend that you check them out.