Imagine for a moment a platform provider that offered the absolute best-in-class categories of CRM, financial planning, rebalancing & trading, reporting, client portal, aggregation, and marketing solutions, as well as the gold standard in customer service. One provider for all your technology and marketing needs. One phone number to call when you have a question or need training. One company with a culture built around helping advisors reach the absolute pinnacle in their profession. You're probably thinking one of two things: (1) This doesn't exist, so what's your point. (2) Sign me up.
Did you think to yourself this doesn't exist? You're right. It doesn't exist (yet). Or are you holding out hope that I'm going to share the name of this unicorn platform? I'm sorry, but I'm not going to name it because it doesn't exist.
Why The Perfect Platform Does Not Exist
To get to that answer we must look at the heart of the problem: A lack of true bi-directional system integration in wealth management. There are plenty of systems for you to select from and build your ideal technology stack, but the providers are often small or undercapitalized. The providers lack financial or human resources to aggressively pursue all available integration opportunities. Building integrations, the right way (think bi-directional data flow) is costly, time consuming, and requires intense analysis of the unique data requirements and inter-communication that comprehensive integration projects present.
As a result, technology platform providers have been left to develop single point-to-point connections. This type of integration is unstructured and lacks the cross-platform integration advisor’s desire. Independent point-to-point connections simply share a common data element between two, not multiple, applications. Independent point-to-point connections do not allow advisors to sync data that originates in one application across all the other applications in the tech stack.
That brings us to the vendors and service providers that developed homogenous all-in-one systems incorporating proprietary versions of CRM, planning, reporting, aggregation, and rebalancing software. When we think of the all-in-one platform provider, certain names come up: Orion, Morningstar, Envestnet/Tamarac, Advyzon. Good companies attempting to solve a system integration problem, but the idea that any one of the above-mentioned providers can deliver greatness across each one of the main feature categories (e.g., CRM, planning, reporting) is inherently flawed. The moment one of the single platform features falls out of favor or is identified as being buggy or simply not that good, the advisor is left with the difficult task of once again managing multiple systems that are not integrated.
While adoption of the single provider platforms is growing, most advisors still work under the a la carte model which allows them to pick and choose best-of-breed applications. This method allows advisory firms to select the applications that work best for their business and staff, but it perpetuates the inefficiencies that arise when these systems don’t communicate. You and your staff are likely spending countless hours each month manually entering data, dealing with data conversions if/when you switch out a system, bouncing between multiple dashboards, have clients that are dealing with multiple client portal logins, etc.
Your Silver Bullet
Where does this leave us? Well, it leaves us in a better place than we were at 13 years ago when a group of technology and platform providers came together to fix this system integration problem. This group known as the Your Silver Bullet consortium, had a single mission to "make separate programs play well together, so that advisors can spend more of their time managing clients’ money and not managing software."
Your Silver Bullet was "NOT a platform." Your Silver Bullet was a group of 24 member companies from the world of CRM, Financial Planning, Portfolio Management/Reporting, Aggregation, and other services. This group had a goal to make their software programs "play well" with the other member programs. And by play well, we are talking about true end-to-end bi-directional data integration across multiple systems.
The idea of being able to select best-of-breed software and have all the software communicate through bi-directional data integration was the holy grail. The problem, however, was the method to get to the point of full bi-directional integration. The Your Silver Bullet members decided the path forward would require rewriting each underlying database to a common format that all systems could understand. That is and was the showstopper because technology providers are not going to rewrite their systems to support integration.
Application Programming Interface: APIs
Fast forward a bit and we come to the most obvious solution to deliver the holy grail technology play - A technology stack comprised of best-of-breed disparate technology that is fully integrated with bi-directional data flow. And the answer to getting to this point are APIs.
An application programming interface (API) is a set of routines, protocols, and tools for building software applications. In a more practical sense, APIs allows users to unify their data and processes across different components of their business. Timothy Choi has a great bank analogy to explain how APIs work.
While a set of APIs does not in and of itself solve the integration problem, multiple vendors with a robust set of APIs and a commitment to integrate would be a huge step in the right direction. I hear you saying, "but there are API integrations in the industry." Yes, there are. But they are limited at best, and useless at worst.
Can We Get There
We are not too far away from the single technology stack that is fully integrated with best-of-breed, and there are options today:
1. There are several companies trying to solve the integration problem: www.investcloud.com, www.invent.us, www.baersoftware.com
2. Re-evaluate your existing technology stack and identify if there are better integration options available. Being that the technology landscape is filled with providers, you may want to consider a consultation with our team at AllBackoffice. We will take the time to discover how you use existing technology and offer guidance on system compatibility and integration options.
System integration is an important topic for our industry, and we will continue to do our part in helping advisors deploy an ideal technology stack. If this topic is of interest to you and you want to share ideas, send me an email and we will let you know about a new system integration focus group that is coming together. I can be reached at julien@allbackoffice.com