Transcription:
William Trout: (
Hello, I'm Will Trout with Javelin Strategy and Research. I'm here with Lori Hardwick and Mark Mitchell. We are here to talk about APIs, APIs in the context of reporting and how wealth management firms can use these, a application programming interfaces to scale their technology and service offerings. So the question is why are APIs an essential software element? I guess I'll turn to you, Lori. I mean, what do you think? APIs? What's the point who cares? why do you think they're important?
Lori Hardwick: (
I love this. Um, you know, you start out with a provocative question, right outta the gate. Um, well, you know, with APIs, it's not like we're gonna teach anyone what an API is today. They've been around and evolving for the last five to 10 years and have really become a big part of why I think the, in like the whole industry around financial services has accelerated somewhat. Um, prior to APIs, we were kind of stuck with either just working with end to end wealth management solutions, or really legacy all in one house solution where you could get a lot of the data points you needed in, in, you know, talking to each other. And, um, so that one could connect the dots. What I love the most about APIs though, is that because it does allow for that easy transfer of data between separate platforms on the very different code bases, it allows for more unification of, of data.
Lori Hardwick: (
And what that means for advisors straight, straight up is that they're not doing that swivel chair effect all day long, trying to get one piece of data from one app and to take that to the next app and the next app to try to build their story. So if we're really thinking about APIs and utilizing those in a way that can be conducive to building more capacity in an advisor's day, I think that we, if we're smart about it, we can really pull the right pieces together and help those advisors be even better for their clients.
William Trout: (
Thank you, Lori. Mark, I I'd love your perspective. You work with corporate or institutional clients, and, and I imagine there's a whole lot of different systems you have to connect or you want to connect and you wanna do so very judiciously, um, with an eye to, you know, certainly bidirectional data, but also, you know, regulatory, uh, factors, requirements, and risk. Could you give us a little context and, and tell us, share with us your take on APIs?
Mark Mitchell: (
Sure. Yeah. Thanks. Will, I mean, I think if you think about, you know, here at Morgan Stanley at work, uh, we connect our platforms in many cases to our corporate clients' platforms. And in many cases they're pulling data into those platforms that effectively gets consumed downstream by all of those kind of in that chain. And I think, um, you know, what really is an advantage from our perspective for APIs are, are really sort of two main things. I mean, one is APIs give us the ability to consume that data in real time, right? And it allows us to sort of pull large amounts of data, um, very, very quickly. But I think the other factor that is also a big, uh, advantage for us and for, for our corporate clients platforms is we also can pull data very, very frequently, effectively pulling less at a given at a given interval in time. So in other words, for us, it, it really brings two things to the forefront. One is the ability to consume large amounts of data in real time. The other is to make more calls, more frequently getting more refreshed data, but less sort of data over the wire, if you will. And I think that that sort of allows data to move through all of our systems a lot more easily and a lot more quickly.
William Trout: (
So tell us a little more about the systems you're connecting to, um, Mark either in the context of Morgan Stanley at work, or generally, I, I mean, I imagine for what you do, you need to access payroll systems, you need to access, you know, internal human resources systems or even the, the services or the, the data from outside providers' audit. I mean, how do you connect all these disparate internal and external systems?
Mark Mitchell: (
Yeah, no, that's a great question. And, and I think if, if you think about the way that data needs to flow for us to conduct our business, right, it's a pretty long sort of path that the data has to travel. So let's say for example, if we're talking about a retirement solution, for example, we're gonna pull data from that record keeping solution that we're partnered with, we're gonna then consume that data into our internal system, right? Generally by then, we're doing some additional calculations reconciliations and those kinds of things. We're gonna then distribute that data within the four walls of Morgan Stanley to our advisors, potentially to other people within the business that are doing things to support that, that particular program and, and all of that has to happen either in real time or as close to real time as we can get it. So there's a lot of data that's moving around now, in addition to that, oftentimes before we even get that data that, that, um, corporate client, or that planned sponsor might be pulling data in from a payroll system and a HR system. And all of those things sort of together in some cases, bundling up before it gets to us or sending it to us in different groups. So it gives you sense really for how much movement there is when it comes to data, moving across the ecosystem here.
William Trout: (
Lori, I'd love your take. I know in your, in your role in past roles, as an executive, you've oversee, you know, massive organizational transformations, the coming together of, of different groups or different platforms with, with unique code bases, but also different organizations, which with very different histories and trajectories. Um, what have you seen? Share with us, maybe a few lessons, uh, from the trenches?
Lori Hardwick: (
Sure. So yeah, I, I spent, you know, 16 years of my career at Envestnet and also spent a couple years at Pershing. Um, and then now I'm working with private equity companies and I'm on boards such as Satara and Bestwell and Orion. So you're right. I am seeing a lot of different, um, consolidating events. Certainly when I was at Envestnet, we had an acquisition or two or three every year I was there and we became quite good at, um, tucking in those applications. But I'll tell you, there were several that really were difficult for us when it came to sitting on different code bases and having, you know, a completely different experience and, um, you know, threads to different, you know, back-end vendors. So what now, today, especially while I'm at Gen Star and we're looking at buying new firms, or even at Orion, having that API connectivity allows for acceleration of that data to reside quickly inside your four walls of, you know, the rendering of data to the client.
Lori Hardwick: (
So it can bring together not just the rendering and kind of to the glass, if you will, but it also really reduces the overall cost and having to actually take two different code bases and try to rebuild one completely when really in a lot of those cases, particularly when I was at, in Envestnet, we were buying perfectly great technology. Um, it wasn't broken per se, but to get it to live together, we had to recode it all. And so now with the advent of APIs and just being able to share data back and forth, that becomes way less of an issue for these companies. And, and it it's really changed the game. And I think it's actually one of the big reasons why we see more and more consolidation in the industry, because it is easier to get a lift immediately from those, from those acquisitions.
William Trout: (
Yeah. That's, that's, that's a fascinating, um, sort of overview of, of kind of the, the lay of the land and, and, and, you know, from your perspective in particular, I mean, one thing I'm looking at from a research perspective is are these API marketplaces, right? Sort of like the custodians are developing them and you, you've got, you know, the Envestnets of the world and Orion, you mentioned also investing in these. And I think it really speaks to kind of the, this idea of, of unifying the advisor experience, you know, creating a single interface and really streamlined workflow, which in the past has been challenging. Um, so, so just kind of to take that. I mean, if we, if we, if we sort of, um, whether it's a, a marketplace or I, you hear marketplace library exchange or, or, or, or other types of API-based integrations, what, what, I guess getting back to the who cares question, Lori, I mean, what's the benefit to the advisor and yeah. How does this translate to the end client?
Lori Hardwick: (
Well, before, when there was really no option of API data exchange, it wasn't just the swivel chair effect, but it was also that lots of advisors were using the same platforms because they were the only platforms that were end to end. Envestnet being one of those. And so now with the advent of API, it really allows for advisors to build their end enterprises, to bring together their own best of breed solutions to give them a unique app stack. And, and that doesn't look and feel like everybody else. And beyond that, maybe it fits better for your advisors than, than what an end to end solution would. Um, so I think that, you know, because of APIs and that ease of transfer of data, it's taken us to a new level to really allow for some of these emerging point solutions, I'd call point tech solutions to live alongside of some of the older legacy tech solutions. And you can kind of pick and choose what fits best to customize that experience to not only your advisors, but to the end clients.
William Trout: (
Yep. Uh, Mark, translate that, those thoughts. I mean, it's you agree to the institutional or corporate context? I mean, really, how are you judged at the end of the day in terms of integration, uh, flow of data and ultimately, you know, outcomes for your users, be they plan sponsors or financial advisors or others.
Mark Mitchell: (
Yeah, no. And, and, you know, we're, , I think we're in the midst of that as we speak, right. Uh, Morgan, the Morgan Stanley at work business is effectively a combination of the existing Morgan Stanley business and their advisors, uh, the Etrade business and the Sodium or Shareworks business. Right. And we're in the midst currently of bringing all that together. And there's really three sort of big audience, which we have to serve there. And that's the, the, the corporate clients or plan sponsors the advisors and also the individual participants or employees of these companies. Right. And, you know, the way that we're really leveraging, um, this integration to deliver that value is APIs is how we're connecting it all together. So we're delivering data between the platforms via API, we're leveraging APIs to connect to our corporate client systems. And APIs are also what we're using to build out and deliver data downstream to, uh, to all of our advisors as well.
Mark Mitchell: (
So, you know, I think in, in, in years past, we'd probably be looking at, uh, building an entirely new system that combines the functionality of all of these systems that we're talking about. Potentially we'd be looking at long, expensive, complex integrations to sort of, uh, sunset one system and, you know, pick a system to, to sort of go forward with, but in this environment, we, we don't have to do that. Right. We have API allowing us to really build piping between all the systems and deliver the data sort of in both directions at the same time. And it's just an enormous advantage that we're absolutely recognizing the value of right now.
William Trout: (
Yeah. Yeah.
Lori Hardwick: (
The one thing I'd also add to that question about the API library in general is that there's a lot of firms out there who are charging their clients for that. And I, I know that it does take time and effort to, you know, build out the API to all of these various solutions, but I would really challenge these firms to think about it a different way, because the more that your data is being, you know, brought into other systems and being pulled and that you're pulling in there are other features and functionality into your solution, the stickier the client is. So I think that the firms that have been maybe more difficult to work with, or are charging a lot of money for that API library should maybe just rethink about the benefit, the longer term benefit they'd get by just opening it up and allowing everyone to kind of share their data freely.
Mark Mitchell: (
Yeah. And Lori, I'll, I'll add to that. I think we, and we talk about these benefits very frequently. Right. Um, and I think you think about the fact that flat file integrations are very prone to breaking. Right. Right. They work for, you know, a given period of time and then break very frequently. And then secondly, I think the other advantage, and I think the reason why building APIs is, is obviously a good idea and, and, and sort of building integrations in a more simple way is it requires effectively less technical work on both sides. Once you've got a well built, well designed API between two systems. Right. Right. So, you know, while, while, uh, people should probably consider ways to sort of monetize those services differently and, and everybody's business model is different, the reality is hopefully a cost savings is ultimately the benefit, right?
Lori Hardwick: (
Yes. I agree.
Mark Mitchell: (
Yeah.
William Trout: (
Fascinating. Um, right. We're not gonna, we're not gonna name any of those firms, you know, that are charging or that are, that, that are, that are not recognizing the power of these systems, but it's, it's a great point. Uh, both of you, I guess, that sort of mark to continue on your thought. I mean, what apart from sort of, uh, workload and maintenance, I mean, what are other issues top of mind for you? Obviously, Morgan Stanley has a very, uh, visible profile and you, you you're, you're, you're speaking, as you said, to working with several different constituents even internally, and what keeps you up at night?
Mark Mitchell: (
Well, look, I think, you know, I don't think it's unique to APIs per se, but I will tell you that when it comes to APIs and frankly, moving data from system to systems, um, third parties, all the above, there's no, no, no argument that, you know, information security and sort of the overall security and governance around those integrations is, is, is paramount. Uh, it's really important that everybody who's involved in those connections sort of understands that landscape, understands what those risks are, has a firm understanding of the technologies and has a firm understanding of what controls need to be in place, uh, to make sure that everything that's happening is being done securely and, and with industry leading, um, you know, technology is kind of end to end. I think the, the other thing is, um, something else that we need to really pay careful attention to, and that we spend a lot of time thinking about, which is also data governance and understanding really who owns the data at what point and where ownership of data gets handed off and sort of having again, controls and processes in place to understand that. So that, um, if there is an issue we understand where the liability sits and sort of who's in, in, in, in the lead to sort of rectify a given problem.
William Trout: (
Lori, do you, do you wanna expand on that or, well,
Lori Hardwick: (
I, yeah. I mean, I think that that was very well put. I think that those, you know, clearly every firm out there right now is really, and every advisor is worried about, you know, cyber security and making sure that data is accurate and, you know, we cannot be operating off data that's from yesterday's close anymore. That is just not okay. So the way that APIs have evolved have really, as I mentioned before, kind of helped our whole industry evolve and accelerate in a way that has allowed for, I think the whole, like the rendering of our data to be much more responsive. And that's what the end client has been kind of wanting us to do for a long time. But with the advent of the APIs, it's allowed us to get there in a much more expedient way.
William Trout: (
So, so, so let's, let's, let's take a final round of, of, of questions and I'll, I'll, I'll start with you, Mark, and, and Lori, then we'll go back to you for your thoughts, I guess. I mean, you know, there are their, their risk, their governance, but assuming Mark we're, you know, in a pretty good place, uh, at least regarding the sort of bidirectional flow of data, the system stability, the, the, the sort of user access to realtime information. Um, I mean, I doubt you're gonna say we've reached the promised land. So where, where are we five years from now? Or what is the future in terms of, of these technologies?
Mark Mitchell: (
Yeah, I, I mean, I think, I think the way that we're thinking about that is even today, when we're leveraging APIs to connect systems together, there's an awful lot of work that's still involved to sort of orchestrate how that data moves. What's going between the systems when it's going between the systems, uh, where calculations are happening, right. There's a lot of business logic that we still have to effectively build around, even though, um, we're getting the data sort of in more real time. So I think the future, as we see it, is these systems evolve in a way where you're not only sort of moving the data between the systems, but the systems are smart enough to understand the logic that needs to happen. The business rolls around the data, and that travels, if you will, with the data, as opposed to being something that happens in one system or another, as that continues to evolve, we really get to a point where you can truly connect two systems together and they understand how they're supposed to interact with one another.
Lori Hardwick: (
Right. Yeah. I would add to that, that, you know, from my perspective, the holy grail is really getting everything in the Palm of a hand that is, that matters for end clients. You know, there's a lot of data floating out there that doesn't really matter and it's not helpful. And we're sometimes, you know, APIs make things easier, but it also is pulling a lot of data in that we don't really use. And we're kind of sifting through that. So to your point, Mark, I think making a, um, rational view of that data and, you know, even better yet taking that to the next step and having a, you know, here's your next best step to an, a client, whether it's on tax or insurance or, you know, the financial planning or even real estate, you know, being able to take that into the palm of a hand, because even though all the data is at different places, pulling that together in a aggregated view and making it matter for the clients, that's gonna be the holy grail. And I think that really is what we're aiming for.
William Trout: (
I think it's very fitting that we end on that now, whether you wanna call it AI or next best action, you know, it's about, I think at the end of the day, empowering advisors and other users to do the best job they can and inform decisions.
Speaker 4: (
Thank you both. That's a wrap.
Lori Hardwick: (
Thank you. Well,