Schwab's Tech Pivot Is All the Buzz, but …

For Bruckenstein, Schwab's "revised strategy" is "a net positive … based upon the feedback provided by their advisors," he said in last week's blog. In addition, it will likely "reverberate throughout the advisor tech industry."

The tech guru also points out that if Schwab had released a multi-custodial solution, the move "would have put competitive pressure on Black Diamond, Orion, Tamarac and others."

For Welsh, though, Schwab's move away from a multi-custodial, cloud-based portfolio resource represents the firm "throwing in the towel" on such initiatives. Spending on the effort is estimated to have been about $50 million. 

According to Salesky, though, Schwab's multi-custodial efforts and spending have not been for naught: "The development effort of PortfolioConnect has had multiple benefits, including support for and the launch of Schwab Intelligent Portfolios and Institutional Portfolios, and both of our platforms benefit from the infrastructure created for PortfolioConnect," he explained.

Plus, the past several years of this development work have led to "the deep integration of PortfolioConnect into our custodial experience and the elimination of daily data downloads and reconciliation, which will be made available to our custodial clients for no fee," the Schwab executive explained.

Meanwhile, rival Fidelity is spending $1 billion on its comparable project, Welsh points out. "Any big RIA does [multi-custodial work], and small ones do, too," the consultant said. "This is table stakes, and [Schwab] is essentially saying that it can't deliver."

As a result, Schwab likely could "lose market share" to other vendors, Welsh adds. "It's not a good sign, when you're not will to invest in [certain parts] of your platform."

In contrast, TD Ameritrade, Pershing and Fidelity are "doing great things with technology — look at the headlines at their conferences," he said. "Why not adds some bells and whistles, too?"

Sit tight, Salusky says. Schwab will share more information on PortfolioConnect before its yearly Impact conference, set for late October in Washington, D.C.

"We're looking at general availability … in the first half of next year," the executive said. "There's some early access, … which is providing feedback and allowing us to continue to enhance the platform as we prepare for the launch in 2019."