Real estate on independent advisor workstations is now reaching stratospheric values, triggering an all-out battle among industry heavyweights for market share and control of distribution.

Clearly, advisor technology is now ground zero in the battle plans of the industry’s giants as they look to deploy integrated, bundled systems to capture more mind- and wallet-share of independent advisors.

The growth of the independent sector, most notably independent RIAs, has shifted the power structure in the wealth management industry away from captive, employee models. As a result, product manufacturers, custodians and broker-dealers are being forced to find new ways to get their revenue generating products and services in front of advisors to better control their distribution needs.

What this means for independent advisors is that the technology they use on a daily basis to operate their business and provide advice to investors -- CRM, portfolio management, rebalancing, financial planning, client portals -- is now in play as the strategic lever the big firms are using to better position their brands and products to independent advisors.

Case in point: Schwab’s failed attempts to deploy an integrated technology strategy through Salesforce. (Editor's note: Welsh has consulted with organizations competitive with Schwab and Salesforce.) 


Due to the ginormous costs of deploying, customizing and supporting Salesforce for an advisor’s business, Schwab attempted to create an integrated bundle, the Schwab OneView Integrated Office, that would attract advisors to their platform in order to better control those advisors’ access to the investment products and services Schwab sells to subsidize their custody services.

After six years, I believe Schwab gave up on this strategy not only to stem the financial bleeding from offering a subsidized bundled offering -- only 150 firms are subscribed -- but also to focus on ways they can better control the ways advisors operate their businesses directly through their own software, and not a third party and potential new competitor. 

Salesforce recently announced their own integrated bundle called the Financial Services Cloud -- which conspiracy theorists (myself among them) view as Salesforce’s version of a Trojan horse to control the advisor desktop and then charge basis points back to the custodians, asset managers and broker dealers for access to advisors through their technology pipes.

(When contacted by Financial Planning's managing editor Suleman Din, Brian Shenson, vice president of Schwab Advisor Services, says the decision to end the bundled offering was unconnected to Salesforce's entry into the platform space. Firms in the plan were always expected to graduate from the bundled offering, which started at $10,000 for access to two users, to more customized solutions as they became more established, Shenson says. He adds a good working relationship remains between Schwab and Salesforce and that there are still other ongoing efforts between them. In response to inquiries, Salesforce states: "Schwab continues to be a great partner of Salesforce.")


So, while Schwab and Salesforce make nice in public, it is clear that they are eyeing each other with dubious thoughts of becoming future competitors under the covers. Similar to how Google, Apple and Facebook seem to dominate different industry segments, they all acknowledge that they are in direct competition with each other for consumers’ eyeballs, devices and purchasing power.

Unfortunately, when there are battles among the heavyweights, there will be casualties. 

In this case those 150 advisory firms are now under the gun to find a replacement CRM along with the other systems that were part of the bundle before the end of April in order to inform Schwab of their plan. Otherwise, they will have to continue to pay Schwab for a system that is on life-support only for another three months when it will be officially killed on July 31.

This task of completely re-doing an advisors back office systems is daunting, requires a tremendous amount of research and will be completely disruptive for 150 advisory firms by the end of the month -- thanks Schwab!

(Shenson tells Din at Financial Planning that the 150 firms subscribed to the offering were given notice months in advance of Schwab's decision, and those remaining with their service providers outside of the bundle would be provided with discounted pricing "to offset what would be perceived as a more expensive soltuion" as well as discounting some of Schwab's costs for portfolio management.)

Industry experts and consultants are recommending that these firms abandon Salesforce and move to purpose-built systems such as Junxure Cloud or Grendel, that do not require consultants, customization and high costs just to get them to work for a wealth management business.


In the meantime, the drumbeat of integration and platform bloat continues on, driven by the other independent industry goliaths. The most recent example is Fidelity’s mind-boggling, billion dollar initiative called the Total Advisor Platform. Fresh off the acquisition of eMoney, Fidelity is putting that new asset to work as part of an impressive attempt to replicate all of the systems advisors need to run their businesses.

The Fidelity TAP is taking the idea of controlling the advisor desktop to the highest level, as it will ultimately provide every piece of advisor software needed to run an independent wealth management business. Even for advisors using multiple-custodians, Fidelity insists that the TAP will provide all aspects of the tools and third party systems currently mission critical to advisory firms.

According to Tom McCarthy, head of the Fidelity TAP, who I spoke to at the recent T3 Advisor conference, “With this capability, advisors will no longer need traditional portfolio accounting systems anymore.”

This statement sent off an alarm bell and warning to the advisor technology sector that now wakes up to a new competitor offering up every piece of advisor software in the form of one integrated bundle from one of the largest financial institutions on the planet. Good luck with that!


While the custodians are going all-in on technology strategies to battle it out for supremacy, other institutions are not sitting still in this war for the advisor desktop. Consider Envestnet’s acquisition strategy over the last several years.

They too are aggressively pursuing a total desktop approach through their nearly billion dollar spending spree buying portfolio management, rebalancing and CRM platform Tamarac, financial planning software maker Finance Logix, robo advisor Upside and data aggregator Yodlee for a stock-crushing $600 million.

Also, not sitting idling by is Morningstar, which is quietly building their own advisor desktop bundle through acquisitions of data aggregator By All Accounts, portfolio rebalancer TRX, robo advisor Hello Wallet -- all of which will go nicely with their already robust and popular portfolio management system, Morningstar Office.


So given this technology war being battled around them, what should advisors do?

Clearly, after the Schwab-Salesforce debacle, advisors should think twice about going with any custodial bundle and pushing for open architecture. Controlling your own systems means controlling your own destiny. The last thing advisors want is to be at the whims of a massive institution that may or may not decide to keep a system, trash it, or even worse, stop innovating with it.

Advisors are independent for a reason, and so should their software. Along these lines, there are excellent examples of institutions embracing that spirit, such as TD Ameritrade Institutional, with their Veo Open Access initiative that has over 90 different technology integrations -- and no bundles.

The good news for the advisor industry is that given its success and growth, outside investments in technology continue to pour in. As the more the custodians and asset managers attempt to make independent systems proprietary, the more innovation is created to find better, more efficient ways to support advisors. 

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access