Modular Management

The FinFolio asset management/reporting program has taken user customization to its logical conclusion.

Matt Abar’s FinFolio organization may be the most interesting software company that you’re barely aware of, mostly because there appears to be no advertising campaign behind it, and I have never seen the company exhibit at trade shows or conferences.  FinFolio showed up on the T3/AdvisorPerspectives/Inside Information software surveys as a less-publicized portfolio management competitor to Orion, Black Diamond, Schwab PortfolioCenter and AssetBook, with a specialization in larger wealth management firms. 

Some of you remember Abar back when he created much-needed competition to Advent and PortfolioCenter with a software solution called TechFi, which he eventually sold to Advent and sat out the next five years under what must have been a very rigorous noncompete agreement. 

“In retrospect,” says Abar today, “I wish I had gotten involved with something else, because five years ended up being a bit longer than I thought it would be.”

Abar’s new software offering has two components which might be of interest to planning and wealth management firms.  The first is the FinFolio asset management program ( , which Abar says was created backwards from the way most software programs are usually written.  Normally, the firm starts creating functionality, and then builds an interface to deliver that functionality in a way that’s easy to learn and use. 

“We actually started working with UX [user experience] designers nine months before we dove and and started writing code,” says Abar.  “For FinFolio, we shifted our development strategy over to a design-first mentality, where we spent most of our time on the user mockups ahead of the coding.”  The goal was to figure out what advisory firms wanted, and then make it easy for them to get to it.

Modular interface

The research taught Abar that what people really want is the user experience that they uniquely want—which seems obvious in retrospect, but how do you design such a thing?  Abar’s solution was to create an almost entirely modular program where the user can borrow, for any screen or subscreen, from a “component library” of calculations, interfaces, graphs, lists—basically anything you’d want to know about your company or any individual client. 

Borrow?  You can go into FinFolio’s “edit” mode and set up your own customized dashboard with anything on the menu (see images), anywhere on the screen’s precious real estate.  For example, you can start with the very simple list of your current clients and/or households, simply by opening up a blank screen and pulling in that functionality from the library and putting it where you want it.  You can pull in your firm’s total asset allocation, your firm’s total assets under management broken down by categories, and you can also pull in deposits in and monies leaving, broken down by client or household. 

Put them anywhere on the screen and that becomes the dashboard for the company founder or CEO.

All of them these components are automatically hyperlinked, so you can drill down into the underlying data—for example, click on one of the households on your list and you come to another screen that you’ve configured, which, if you have chosen them when you configured the client household portfolio screen, will show the client’s list of assets, a pie chart showing the asset allocation, and the list of assets can include, or not, columns showing the holding, account value, market value, unrealized gains or losses and percentage of the total portfolio.  You can add columns, or delete them. 

If your firm uses model portfolios or sleeves, you can have the screen reflect what percent they make up of each client’s portfolio, and the underlying assets in each.  To get a sense of how complete the component library is, it includes more than 30 different views of asset classes, including bar and pie charts and tables.

The firm owner might have one dashboard and client view, while the investment management team might decide to configure their FinFolio experience differently, and the operations team would have still different data on their screens.

If you’re not into customization, the program comes with 12 different default dashboards and a variety of pre-determined ways to view client information, with links that dig deeper and deeper into the data.  But what’s the fun in settling for a default? “The key takeaway is that the program is totally customizable,” says Abar.  “It reflects the fact that different people at different firms run their practices in different ways and care about different things.”

Modular client reports

Having all those pie and bar charts and graphs comes in handy when you go into “edit” mode and configure client performance reports.  Here, you get all the same options from the component library, and once again you can move them around in different arrangements on the blank screen.   You can pick the point-to-point time frame that the components will reference if you’re displaying performance, portfolio holdings and asset allocations.  But the more sophisticated users will use another feature, which renders each component into a dynamically-linked HTML file.

Meaning?  You can fill the screen with your own customized client reports that will update either during the day (if the custodian permits that) or at the end of the previous trading day, and post the fully-configured result on a client portal that you would customize to your firm, with firm colors and logo.  If you so choose, clients would be able to view their holdings, asset-by-asset, with year-to-date and other time period performance, plus, if you want, cost basis and unrealized gains or losses, allocations in a variety of charts and anything else you might choose from the component library—updated online any day of the week.

“We recommend as the cloud storage service,” says Abar, “because of the FINRA features.  But we can hook into any cloud storage solution a firm might already have.”

Interestingly, Abar has found that many of the larger wealth management firms are using a feature that he didn’t think much about when he added it to FinFolio’s capabilities.  “For the larger firms, I think it’s become our favorite feature,” he says: “they have a network of advisors, the advisors can create their own reports and publish them to the firm.  Then all the other advisors can see what reports have been created and shared across the network.”

Rebalancing and trading

The program comes with a rebalancing engine that functions across households as well as accounts, and if you run model portfolios, you can aggregate all the trades that relate to a sleeve or a model—in FinFolio-Imageother words, selling a particular ETF holding for the model will, if you want, sell the holding in every client portfolio that is invested in that model.  Abar says that a number of firms are running tiers, where the first tier is the asset class configurations, and the next tier is the individual security types, and the next tier might be the actual securities within each security type. (See image where you can select one view of how FinFolio tracks these levels.)  “You can have an infinite number of tiers, and trade in and out of the models,” he says.

An alert system shows which portfolios are out of tolerance and are candidates for rebalancing, and the rebalancing system recommends specific trades of specific lots and holdings based on an algorithm which takes into account tax issues, such as whether the household portfolios include nontaxable IRAs.  “If you go to the analysis lab, it will show you why it is making the decisions,” says Abar. 

FinFolio also supports straight-through trading, which Abar concedes is becoming standard now in the portfolio management world.  FinFolio uses Sungard’s trading system because it has access to the most custodians.  Place a trade and you can see when it’s executed, because the security slides from inside the portfolio column to outside, or vice versa, depending on whether it’s a sell or a buy.

And of course there’s a billing pipeline that can be applied across the entire client base or (far more commonly) applied individually.  “They can make the fee structure as simple or complicated as they care to make it,” says Abar.  “They can do quarterly fixed fees, or a combination of fixed fees with a lower AUM on top of that, they can apply tiered billing to their AUM.”

Interestingly, one of the features that has helped Abar gain traction with the larger wealth management firms is something you would normally think of as a disadvantage.  “The larger firms like the fact that they can install FinFolio on their server, and keep their administration staff doing the same work they always did,” he says.  FinFolio began life as a server-based platform, but is now also available in the cloud.

Cost?  FinFolio assesses a per-user fee plus an AUM fee, so you’re going to have to get a quote if you’re interested.  Abar says that the minimum price generally excludes interest from smaller firms, but larger wealth management firms have been finding FinFolio because they need more flexibility.  “We’ve almost become the program of last resort for some of those companies,” he says.  “They want a feature or a customized dashboard, and they can’t find what they’re looking for anywhere else.”

APIs for hire

At the beginning of the article, we noted that there are two components to Abar’s firm.  The second piece of it is (, which might be described as a swiss army application program interface (API) for developers and app creators in the wealth management world.  The concept is simplicity itself; since Abar had to create his component library, and each component was basically a separate app, and all of them were strung together by a common interface, Abar made the component library and the API that held it all together available to…

First to developers.  “In my career, I’ve created a portfolio management system five or six times now, each time from scratch,” Abar explains.  “I’ve literally built a Schwab interface six times.  I learn new tricks each time, but that is not something anybody really wants to do.  To create a new program for the advisor space, you first have to develop the API, and build out the interfaces with the different custodians, and then create all the internal calculations like point-to-point returns and gains and losses and the tax engine, and THEN,” he says, “you build the program on top of all that, if you still have the energy.”

Abar decided that he would allow other developers to create their own programs based on the “guts” of FinFolio, so they wouldn’t have to reinvent all these various wheels.  “No longer will developers have to spend two or more years building this initial infrastructure of just general stuff before they can offer unique tools to the profession,” he says.  “If they have a really great idea, they can get it into peoples’ hands much more quickly.  We’re creating a lower barrier to entry.”

But interestingly, has proven to be attractive to larger wealth management firms as well. 

“That turns out to have been the bigger opportunity, so far,” says Abar.  “You have a firm with technically sophisticated advisors who want to build some customized apps, maybe they want to build a custom client portal and make it deeper and richer, but they just can’t get to the data in a way that they can easily do it.  They want to do imports from the custodians and put it on their site.  They want to come up with their own customized data sets, where they can use WealthLab to feed those parameters into a certain API column, and it pulls back the dataset that gives you what you asked for.”

Modular back-end

Instead of a “component library,” WealthLab delivers a “calculation library.”  “If the wealth manager needs it, it’s probably in there,” says Abar.  The list includes a variety of cost calculations, custom rebalancing calculations, trade orders, a variety of return calculation options including some that fall under GIPS compliance, tax planning-related metrics and a lot of investment-related calculations that advisory firms are currently doing on Excel, or creating spreadsheets that interact directly with the calculation components.  “You don’t necessarily have to be a developer to use it,” says Abar, “but I’ve found that most of the larger advisory firms have at least one developer on staff doing some type of custom work for the firm.” 

Later, describing his motivation for making WealthLab available, Abar says that he has to maintain the component/calculation library anyway, as a routine part of his stewardship of FinFolio.  “I’m a developer,” he says.  “I’d happily sit back and support my API while some other company is marketing their software.  The better the integrations get, the easier they are to build on, the more developers will start creating new products and the more wealth management firms will start customizing apps for their own needs.”

I think the most interesting thing here is that FinFolio seems to represent a different way to offer software capabilities.  Abar’s deep dive into the user experience convinced him that the best user interface is the one that you create yourself, since you are the only person who knows your unique preferences and data needs. 

How do you make THAT task user-friendly?  By building a library of everything users might want, and then giving them a canvas on which they can drag and drop what they want onto their dashboard, onto their client portfolio screens, onto their performance reports and onto their client portals.  We’ve seen programs where you can customize the user experience, but FinFolio takes the idea to its logical conclusion. presents that same customizability to developers and app designers who also have an interest in building their own user experience. 

It will be interesting to see if the profession experiences a variety of new software services built on the WealthLab platform, or—and I think this is more likely—we start seeing advisory firms creating apps and then sharing or selling them in a richer ecosystem of customized tools.