Clients want transparency and this caused Tolleson Wealth Management to replace a mostly paper-based system.
Justin Thompson
Clients really want as much transparency as possible when they hand over their money to investment firms, says Justin Thompson, director on the client advisory team of Tolleson Wealth Management.
This became abundantly clear to Thompson two years ago when the firm began to transition away from a mostly paper-based to an automated system that would better support an increasingly complex wealth management practice.
Based in Dallas, Texas, the firm was founded in 1997 as a family office for the Tolleson family. Since then, the firm has become a multi-family office serving “a select group of clients with substantial wealth with all things financial,” according to Tolleson officials.
For its clients, the firm offers end-to-end services such as strategic wealth management and financial planning, family education and governance, investment management, trust and estate planning, non-CPA tax and bookkeeping, private banking and strategic philanthropy.
Regardless of the service provided, transparency is paramount among clients.
“Transparency is the number one thing that clients want to see,” Thompson says. “In the old days, I could not give them a report until 30 days later. So, they would see the money leave their account and then ask, ‘Where’s my money?’ ”
Steve Leivent
To provide more transparency, Tolleson was drawn to Black Diamond, a cloud-based platform and solution set from SS&C Advent, Thompson says. At that time, SS&C Advent was making changes to Black Diamond, says Steve Leivent, senior vice president for Black Diamond and Advent Outsourcing Services (AOS).
“At one point, about six or seven years ago, Black Diamond was really a portfolio accounting and reporting tool for a much simpler advisory practice,” Leivent says. “We were out talking to more complex firms, and as they were growing, they were adding more complex clients. It was the way that the market was evolving, to some degree. … We needed to be able to support things like alternatives and FLP [family limited partnership] reporting.”
Over the past two years, SS&C Advent has added more complex accounting, digital client communication and reporting, an alternative investments engine, and a native rebalancer, Leivent says.
“We did the release of the FLP reporting originally for the Tolleson Wealth Management team,” Leivent says. “It’s a capability to support limited partnership structures and provide transparency for the end-client and their online holdings.”
For Tolleson, the investigation, selection and implementation processes took about two years. “We spent about a year actually digging in and doing the research before ultimately deciding on Black Diamond,” Thompson says. “The process took 12-to-18 months after we decided to implement.”
The firm now has approximately 275 end-users of the Black Diamond system.
“Let me paint the picture for you,” Thompson says. “Although we run $6-plus billion, we have 175 client families. Our average account size may seem much larger, I believe, than most. We don’t have a tremendous amount of end users, but with every user it’s extremely important to us.”
The firm has been tracking end-user activity, “and about 30 percent are pretty avid users, meaning they log in multiple times per month,” Thompson says. “At the other end of the spectrum, we have some clients who log in sporadically but don’t actively use the program, which is okay, too. Then in-between you have users that probably check once a month.”
Specific Improvements
According to Thompson, there have been specific areas that have seen big improvements such as performance reporting and projections
Performance reporting used to be an eight-week process for Tolleson.
“We recently had a client meeting with a very savvy investor that wanted to talk a lot about performance,” Thompson says. “Our CIO [Chief Investment Officer] was in the meeting and they asked questions like, ‘Well, what does my performance look like from this date to this date?’ We had a live Black Diamond presentation … to show them just that. In the old days we would have had to say, ‘I’ll get back to you in a few weeks and give you that number.’ ”
In another example, Thompson points to limited partnerships.
“Because we run limited partnerships, we generally close the books about three weeks after month-end, meaning that I can’t tell a client what its performance is until three weeks later,” Thompson says. “[But] with Black Diamond, we are able to do estimates for clients and push them through the portal. So, if you’re a client and you say, ‘July was a scary month. What happened?’ Now I can give them that information immediately and they don’t have to wait three weeks.”
Some of the other benefits have been:
- Fewer Paper-Based Systems: “Everything was paper-based up until around two years ago, and we’re still weaning ourselves off of that. Prior to the switch, we literally had people pushing around carts full of stacks of performance reports and back-up. This was probably eight, nine years ago. But if you compare that to today, we run something like 1,000 performance reports in two hours.”
- More Digital Support: “The majority of our meetings now include a digital component in one form or another — either on a tablet or a presentation on a screen. … We’ve certainly had more conversations about our allocation than ever before because of Black Diamond.”
- New Roles for Staff Members: “One of our analysts has worked for the firm for eight years and has seen Tolleson Wealth Management pre-Black Diamond and post. They once said to me ‘Did you know that it used to take us a quarter to do all of these performance reports? My job actually used to be to check performance.’ … In the past, they were number crunchers, and today our advisors are actually advisors. They’re having conversations with clients that are impactful; they’re not just checking performance reports.”
- Billing: “Billing used to be a nightmare. It’s getting better. I won’t say it’s a turnkey, flip-the-switch operation, but billing has certainly improved.”
- Reconciliation: “We don’t have to worry about reconciliation. We were able to significantly improve our reconciliation process with the use of Black Diamond, where most of it is now done before we get into the office.”
Overall, the new transparency has been a hit with Tolleson’s clients, Thompson says.
“Today, we can sign up a client on Black Diamond and they can see in real-time where their money is, at that exact moment,” Thompson says. “We run everything from soup to nuts. What I would say about Black Diamond is that it’s changed our business in two ways: the client experience has improved tremendously, and we’ve become extremely efficient.”
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