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Wealth management

Portfolio Management Solutions Pricing Models. Where’s the Catch?

Research, Evaluate, Decide

There is no doubt that right now a Portfolio Management Solution is a must have for any growing wealth management business. It can help you to automate manual, repetitive tasks, get a 360 degree view of your clients’ wealth and allow you to match the expectations of new generation of digital savvy customers.  On the other hand, the process of choosing the right software provider can turn into a very challenging and time-consuming decision. The market is flooded with companies that at the first glance might offer very similar solutions and oftentimes it is really hard to uncover meaningful differentiators. In this article we will give you an overview of most common pricing strategies.

Pricing plays a crucial role in the evaluation process of possible solutions. There are multiple ways to put a price tag on a PMS and unfortunately most of the providers tend to complicate their pricing to such a level that a license fee may seem to be only a tip of an iceberg. Nobody likes surprises when it comes to business cost, so the first question you need to ask yourself when looking at different offerings is about the transparency.

Pricing Components

When comparing different providers in terms of pricing there are standard components that you should pay attention to and ask your potential provider if you have to pay extra for them:

  • Set-Up Fee – one of the most important one-off components of the PMS pricing. Depending of the speed of full implementation and historic data migration the final price might equal to a full annual license in an all-inclusive model. We strongly recommend taking a good look at the set-up cost breakdown and question its validity.  At WealthArc we are not charging separately for the set-up of our solution. Instead we offer pilots, during which you have 3 months to test our solution, giving us time to properly onboard and train your team before the official roll-out.
  • Custodian Connection Set-Up Fee – setting up a new API is costly and often time consuming. This is why it is of extreme importance to pick a provider who already established a substantial number of connections. At Wealtharc we have already connected with over 35 custodian banks and work every month on delivering more. Watch out, because some companies might charge you for connecting every single custodian, even those which they already have in their toolkit.
  • Cost Per User License – a strategy that is being used by some of the players on the Swiss market. Instead of paying for the assets under management you pay for the number of active users of the solution. At first sight this approach might look beneficial, but in most cases additional costs (including maintenance, data migration, customization) boost the final price. Some providers go even further and will charge you for every custodian bank connection, every portfolio you manage or transaction you make.
  • Hosting Fees – in some cases PMS providers decide to separate license fee and a hosting fee. It is a tactic that tries to justify the high cost by breaking it down to smaller pieces. At WealthArc, all hosting services are included in the licensing fee and thanks to our strong partnerships with Microsoft and Swisscom, we can significantly lower the hosting component.  
  • Data Quality Fee – verification of the data quality is one of the core services of every PMS provider. Offering these kinds of services separately is like selling a car without an engine. At WealthArc we believe that is our duty and we take full responsibility to deliver you the best quality data possible.
  • Customer Support & Customization Cost – some software providers will charge you for the basic customer support, and it won’t be pennies. You can expect to be charged from CHF 100 to CHF 250 per hour of work. Regular support for the clients can be estimated for about 10 hours a month, which already sums up to a range between CHF 12 000 and CHF 30 000 of additional cost. If you wish to have a dedicated training session, customization or new features developed – prepare for a juicy bill.  
  • Upgrades to New Versions – this cost applies to most of the available on-premise solutions. After obtaining a license of the solution you are entitled only to this version of the solution. When the new version comes out (including new improved modules) you need to pay for the upgrade separately. At WealthArc we work at 2 week sprints which results in 2 new features publishes a month. Needless to say, at WealthArc all product upgrades are free of charge. Simple as that.  

Simplicity & Transparency

WealthArc aims at making data integration process easy. This approach is reflected in our All-Inclusive pricing. We will charge you only one fee – based on AuM. This model is fair, fully transparent and it is the same way you bill your clients. It covers unlimited user licenses, all the customer support you need, data quality assurance and reconciliation, hosting and data protection.  We also develop our solution constantly and introduce features that are being requested by our clients on quarterly basis. This way we make sure to help you expand your business, because when you grow, we grow together with you!

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