Many financial institutions have spent the past several years investing significant staff time and dollars in a quest for an ideal and feature-rich wealth platform. At the same time, technology providers were attempting to offer the industry the one-stop platform of choice.

For financial institutions, a considerable proportion of their investment has centered on the attempt to add incremental capabilities and features to their legacy mainframe back office systems. These systems were designed during a time when the financial advisor/client relationship revolved much more around transactions involving individual securities, and when advisors stayed close to their terminals and conveyed information to clients over the phone.

Times have changed, of course, and advisors and their clients interact with each other and with financial data in more dynamic ways. Clients have easy access to abundant consumer-oriented financial data and sophisticated investment analytical tools. They also expect their advisors to produce answers whenever they want them -- no matter where the advisor might be at the time the question arises.

Legacy-based wealth platforms have been challenged, at best, to meet advisors’ needs in this new environment, and thus system utilization rates by advisors have been low.

In the second quarter, Aite Group conducted an online survey of 200 financial industry technology executives.  “We asked advisors to identify their needs and pain points,” says Alois Pirker, research director for the wealth management industry at Aite Group. “The results revealed that advisors have many challenges, and high on their list of priorities are system integration, desires for mobile functionality and real-time streaming market data.”

“The majority of firms will have to look externally to address their needs comprehensively, rather than try to reinvent and adapt their own home-grown solutions,” Pirker says. “Advisory firms realize they have to make changes, because we live in a new world. You have to invest in your business in order to move forward.”

The central industry dynamic, Pirker believes, isn’t so much about large versus small, or even large technology budgets versus small, but a divide between investment firms that are “willing to innovate and move the business model forward, and those that aren’t.”

Today, the competitive landscape has changed. It is no longer just the advisory firms competing against one another. They are now challenged by self-directed, online trading services that have additional capabilities at their fingertips that the advisory firm may lack.

What are the hallmarks of a wealth platform designed from the ground up around the needs of advisors in today’s “new world?” We offer some thoughts in the form of a checklist to guide your consideration of this important question. These questions outline what advisor firms should ask themselves when developing their next generation desktop platforms.

1. Can the system achieve "anytime, anywhere" access?

That is, does it deliver the ability both for advisors and their clients to leverage the system from any computer, at any time? This capacity is based on a web-based framework, without a requirement for a dedicated line. A system should have “anywhere” access from any web browser, and solid strategies for future technologies such as mobile and HTML5, the latest markup language for structuring and presenting content on the Web.

2. Is the system cloud-based? 

Investment firms with large internal legacy systems can take months to complete system updates. In contrast, a cloud-based Software as a Service (SaaS) model enables immediate updates and requires much fewer resources than in-house systems. The “anywhere, anytime” nature of cloud-based systems enables efficient access from multiple devices.

3. Is the system built on a platform of interoperability?

That is, can it integrate with other systems and tools, while also offering freedom from existing back office and clearing provider systems? A basic test of a system’s interoperability is being able to share real-time market, client and account data with any third party system that may benefit from it. 

4. Does the system facilitate full integration into back office and other third-party systems, bringing together market, client, account and transactional data?

Advisors should be able to showcase a client’s real-time portfolio to clients using market research and data tools without burdensome navigation. The system should also offer a full application programming interface (API) that can allow data and applications from third-party systems to follow one another.

5. Does the system provide real-time streaming market information?  

The systems should offer all the advantages of a web-based, cloud-based solution while simultaneously delivering the crucial streaming market data that investment advisors demand. Future-focused solutions don’t require advisors to decide between browser-based or streaming capabilities. The same solution should now be able to deliver both capabilities.

6. Does the system feature advisor productivity tools to help automate and make better, more timely decisions?

For example, does it automate:

  • Client on-boarding?
  • Trading?
  • Book management?
  • Portfolio rebalancing?
  • Compliance?
  • Tax management and cost basis reporting?
  • Money transfers and automated investment plans?
  • Electronic document delivery? 

7. As requirements related to social media become better understood, will the architecture allow you to support social media?

The benefits of social media and its uses are evolving. Systems must be open and available to support these capabilities. Examples include social-based support systems, practice-based idea sharing between advisors, and social-based advisor/client interaction.

8. Does the system require minimal support?

The complexity of wealth management platforms that have originated and evolved from legacy systems inevitably creates greater user support issues. Web-based cloud solutions are inherently more familiar to and easily understood by today’s advisors and therefore have fewer associated costs related to support.

9. Have you built an environment that supports adoption?  

Advisors’ time away from clients is expensive. Therefore, systems that are intuitive and operate consistently with systems with which they are already familiar are preferable to those that require many hours of training to gain the benefit of their full functionality. The job is not completed once the wealth platform is built. It must be supported by an effective plan for rollout, demonstrating to advisors how they can make money using it.

10. Can you measure the ROI of the system?

While the term ROI usually involves tangible dollar figures, firms should be focusing on the value of the system versus the overall cost.  This determination must include a full cost of ownership analysis – which factors in IT staffing requirements (or the lack thereof). Many times the advisory firm will find that Web-based solutions are more cost effective in relation to the resulting benefits they provide to advisors.

Advances in technology have driven the development of financial information systems that are better able to meet wealth managers’ functional requirements, accessibility and usage needs, while remaining low in cost and easy to maintain . The competitive positioning of financial advisory firms today hinges upon the strength, flexibility and sophistication of their technology. The question is not whether or not they will need to move beyond their legacy systems, but, rather, when they will choose to do so.

Bill Chambers, vice president and general manager for Interactive Data’s wealth management business in the U.S.  Interactive Data provides market data solutions for wealth managers. Its data and decision support tools are available across multiple platforms, including mobile devices.

Joe Stensland, Executive Vice President, Product and Delivery Management for Scivantage, an independent financial technology provider with proven expertise in online brokerage, tax and portfolio reporting, and wealth management applications that automate and integrate key business practices for broker-dealers, mutual funds, custodians and prime brokers.