For years, independent RIAs have struggled with various technology-related issues, but none has been more daunting than integration. How do advisors get their software applications to talk to one another? And how do advisors get their applications to communicate with those of their custodian partners?
This issue is a pressing one for both advisors and their custodians. Without integration, it is often necessary to key in the same data multiple times. Not only is this costly in terms of man hours, but can also lead to errors, which further increase costs.
Custodians have come to the realization that when it comes to integration, their interests are closely aligned with those of their advisors. Seamless integration frees up advisors to spend more time serving existing clients, and allows them to expand their capacity to take on new clients without adding to their overhead. This in turn leads to more business for the custodians.
But what does seamless integration really mean in the financial planning world? In the past, integration has meant nothing more than the ability to import and export data from one application to another. While this is better than manual data entry, it is far from ideal. Custodians are now investing substantial resources in facilitating more thorough integration. As these initiatives progress, custodians, advisors and their end clients should all benefit enormously. Here's a brief overview of what a select group of custodians have planned for the coming year.
According to Neesha Hathi, vice president, advisor technology solutions at Charles Schwab: "A lot of folks say they have integration, but in many cases it is not the sort of deep, contextual integration that we are striving to achieve." Schwab is pursuing integration on two fronts: a turnkey solution called OneView Office and a modular solution called OpenView Gateway. Both will allow advisors to access data on the Schwab platform in real time from within their third-party software applications. "It is difficult working with multiple integration partners in the various software categories," says Hathi, "but that's what our advisors need, so I don't see any way around it."
The OneView Office solution will initially consist of a customized version of Salesforce CRM integrated with Schwab's PortfolioServices (an outsourced portfolio management and reporting solution). Schwab recently announced three CRM partners for OpenView Gateway: Salesforce, Microsoft CRM and Junxure. They plan to announce their portfolio management partners in addition to Schwab Performance Technologies in the second half of 2011. Looking a little farther out, Schwab plans to integrate financial planning, document management and rebalancing applications into both the OneView Office and OpenView Gateway offerings.
Fidelity, the first custodian to provide deep integration through its WealthCentral offering, intends to build upon its early success in 2011. At press time, there were over 700 advisor firms using the company's WealthCentral option, with deployment of third-party integrated components having grown more than 60% in 2010. Fidelity expects to migrate another 1,000 firms to WealthCentral in 2011.
"With some of the most advanced data and workflow integrations in the industry, we're confident that WealthCentral can help advisors scale their business effectively and affordably, particularly since we offer these third-party applications at price points not typically available to them directly. And because WealthCentral is built on a true open platform, the breadth of integrated offerings will only continue to grow," says Edward O'Brien, Fidelity's senior vice president of technology product management.
Fidelity recently added Black Diamond to their platform and say they will continue to selectively add providers. "We don't need 20 providers in every product category, but we want to offer our advisors a choice with regard to functionality and price without sacrificing quality," O' Brien says. Among the improvements coming in 2011: full technology support to facilitate advisor trading and compliance with the new cost basis regulations; WealthCentral mobility solutions (Fidelity is pilot testing iPhone and Android apps); and further enhancements to the Northfield rebalancing solution. In addition, EISI NaviPlan Select will be available in the first quarter of 2011.
At Pershing, two areas of emphasis for 2011 will be providing choice and driving adoption, says Suresh Kumar, the company's chief technology officer. With regard to choice, Pershing wants to provide software at different price points (in some cases free), and at various levels of sophistication and functionality. In terms of adoption, Pershing wants to help advisors better reap the benefits of technology. "We know that everyone should be using certain software tools, for example CRM, but according to Financial Planning's Technology Survey, not everybody is. We want advisors to make use of the tools we provide. We think that once they experience the benefits, they will be willing to invest more to build upon their initial success." Part of the adoption initiative will involve providing advisors with more training and custom tips so that they can use NetX360 more efficiently. Also expected early in 2011: an Android NetX360 application.
For its part TD Ameritrade Institutional is working with a host of vendors who are writing code to their new application programming interface (API). In early December 2010, vendors were accessing the API through a test environment. Jon Patullo, TD Ameritrade Institutional's director of technology platform management, expects vendors to begin releasing applications that integrate with TD Ameritrade's custodial platform in the first quarter of 2011. Looking farther into 2011 and beyond, Patullo expects his firm's Veo system for advisors to be able to call on data from third-party providers without leaving the platform. Advisors would be able to look at tasks stored in their CRM system and call up data from their portfolio management system from within Veo. The company plans to provide a customized dashboard so that individual employees within an advisory firm can customize their home pages to better facilitate data access.
Another company, Shareholders Service Group (SSG), is committed to achieving deep integration that will stand the test of time, according to Dan Skiles, executive of technology services. "Our strategy is to make sure our clients are not using a special release or proprietary edition of a product. We want the core offering so that when a new release comes out, we can offer it immediately without having to worry about compatibility issues," he says.
SSG currently offers integration through NetX360 with Redtail, Black Diamond and MoneyGuidePro. They are in the process of rolling out integration with Microsoft Outlook and Salesforce. The company currently offers access to the Albridge platform at a very competitive price, although that offering is not yet integrated with NetX360. Skiles expects Albridge/NetX360 integration in 2011. SSG is also close to releasing a trading solution in conjunction with RedBlack. And advisors should look for further integrations soon, according to Skiles. "We are a nimble custodian. If a good integration opportunity presents itself, we can react quickly."
According to Dennis Noto, chief information officer at Trust Company of America (TCA): "Our vision is to build deep user-experience integration so that advisors never have to leave the application we provide." Currently, the TCA custody platform is a single application that offers account registration and maintenance, portfolio management, performance reporting, portfolio modeling, trading, rebalancing, billing, sales management analytics, tax reporting and a client portal. And the company is busy working to improve the platform in 2011.
One project in the works is an upgrade to TC Access, the client-facing web portal. The goal is to provide a portal that has a more "Apple-like" look and feel. Noto wants the portal to be easier to use and more graphical, while offering boosted performance. Down the road, the company's technology road map calls for bringing the same approach to the advisor-facing application.
TCA is also working on a new performance engine that will provide a more visual experience-built right into the user interface. Noto calls this approach to software architecture "visual interactive web services" and plans to build out other integrations that are deeply embedded within the TCA application. "We are trying to provide a level of cutting-edge integration that has never been available to advisors before," he says.
Another RIA custodian, Trade PMR, is also making significant integration strides. They already offer integration with Morningstar Office, Redtail CRM and FinanceLogix. They are very close to completing integration projects with Junxure CRM, Ebix and MoneyGuidePro. According to Chief Technology Officer Dennis Suppe, the company is also making enhancements to its proprietary performance measurement and reporting package. The enhanced application will soon offer daily performance numbers and a number of new performance reports to choose from. They are also enhancing their free, proprietary CRM application.
"Our goal is to offer our advisors good, easy-to-use, cost-effective tools. At the same time, we understand that not all of our tools are suitable for all of our advisors, so we also offer great integration with third-party applications. If an advisor does not like our application, we don't want to lock them in; we want to offer choice." While acknowledging that some of Trade PMR's tools, such as their CRM application, are not the most sophisticated on the market, Suppe believes that entry-level tools "open advisors eyes" to their capabilities. Some advisors had their first CRM experience with the Trade PMR CRM offering because it was free. After realizing the value that CRM could bring to their practice, they later upgraded to a more sophisticated product.
Clearly, RIA custodians are investing significant dollars to facilitate advisor technology integration. This should open the door to increased efficiency and productivity in the coming years.