What four beta testers of Black Diamond's new software have to say about it

Funny that one of the quotes in your Black Diamond “Blue Sky” article mentions “scalability”. I understand that they are speaking from the point of software functionality, but I would claim that Black Diamond as an offering, and as a business model is not scalable. In fact, from the RIA perspective, they are the very definition of not-scalable. What I mean by that is their AUM BPS based pricing model. We’re at $1B AUM and planning to grow to 3 to 5x that. My software (or SaaS) costs should NOT rise 1:1 with my AUM increase — that’s the very definition of not scalable. I do think they need a scalable pricing model before the large RIAs (1 to 5 Billion) will take them seriously as an alternative. I’d love to see more competition for Advent, but it must offer true scalability for our business.

Have any of you larger RIAs been able to negotiate a pricing structure with them that isn’t BPS based? Would love to hear about that if so.

Laura Kogen
Interim Chief Operating Officer
Sand Hill Global Advisors, LLC (Palo Alto, CA). LKogen@shadv.com

Laura,

Thank you for your comment and I agree that a scalable pricing model is important to all advisors! At Black Diamond, we exist to make advisors great and are committed to being a partner with our clients through their practice growth. Not only do we believe we offer an extremely high level of value in our solution and platform at a very reasonable cost (resulting in substantially increased ROI for our advisor) but we also offer all of our clients a tiered fee model to accommodate their growing practices. While most of our advisors are on a basis points model, we do have some clients in which it makes more sense for both parties to price the service on a per account model.

We appreciate the feedback and are always looking to enhance our offering so that we can help advisors do something great today!

Reed Colley
CEO & Founder
Black Diamond Performance Reporting, LLC

Laura,

I’ll take some blame for any confusion here. In the future, when I use a word like “scalability”, I might make an effort to define it.

It didn’t really exist in normal dictionaries and there were references to mountains that could be climbed and the surface of lizards and fish.

I persevered to Wikipedia and found this excerpt:

In telecommunications and software engineering, scalability is a desirable property of a system, a network, or a process, which indicates its ability to either handle growing amounts of work in a graceful manner or to be readily enlarged.<sup class="footnote"><a href="#fn801f69d5-fc70-4cb5-af94-dd0ef6bab197" rel="nofollow">1</a></sup> For example, it can refer to the capability of a system to increase total throughput under an increased load when resources (typically hardware) are added. An analogous meaning is implied when the word is used in a commercial context, where scalability of a company implies that the underlying business model offers the potential for economic growth within the company.

Scalability, as a property of systems, is generally difficult to define <sup class="footnote"><a href="#fn35ae1992-5310-40c4-85a6-41d6332f24c2" rel="nofollow">2</a></sup> and in any particular case it is necessary to define the specific requirements for scalability on those dimensions which are deemed important. It is a highly significant issue in electronics systems, database, routers, and networking. A system whose performance improves after adding hardware, proportionally to the capacity added, is said to be a scalable system.

I hope this helps to better understand what the speaker, I believe, was alluding to when he referred to scalability.

my best,

Brooke