When will Financial Advisors Have One Integrated Technology Hub?

When will Financial Advisors Have One Integrated Technology Hub?Technology is a key driver of success for advisory firms. The importance of technology rises in line with a firm’s emphasis on growth — the higher the growth target, the more important advisor technology is. Most important, however, is what advisors want to accomplish for their practices via technology.


Integration can deliver enormous benefits. For the firm, it can deliver scale – more productive work, with less wasted effort – generating more revenue for less cost. For clients, the experience may be improved –a faster process, with less waiting between steps; more thorough, with fewer errors; and fewer demands on the client’s time and attention.


Advisors have been grumbling for some time about too much switching between too many programs, none of which speak to each other. Statistics from the Aite Group support this concern. In a 40-hour work week, the typical front-line advisor spends an hour longer keeping the office running than he/she does getting in front of new prospects. In other words, technology has become part of the problem.


When it comes to integration, one of the biggest challenges firms face is that many systems currently in use were not designed to support other products.  While integration is increasingly built into newer systems, many advisory firms have acquired technology over the years with non-integrated systems.


Michael Kitces, director of research for Pinnacle Advisory Group in Columbia, MD, recently asked the question, “Will there soon be a single, centralized dashboard for advisors to manage their practices and monitor key performance indicators, and a single portal for clients to effectively manage their personal financial information?”

Getting technology systems to talk directly to each other, by sharing data and interacting with each other to complete key workflows, will allow business processes to be greatly simplified with greater reliability and efficiency. Reducing manual steps and human intervention will most likely free up personnel from administrative tasks, allowing more time for client-facing activities to generate value for clients and the firm.


“The convergence toward a single advisor practice management dashboard and a single client portal raises the question of where these software tools will be anchored. Should client portals be built around client vaults and (?) planning software, or portfolio reporting? Should advisor dashboards be built within financial planning or portfolio accounting software, or the advisor CRM instead? Ultimately, it remains to be seen where the winners will come from — or if an entire new software category for advisors may soon emerge. For advisor technology companies, they may soon come to the crossroads about whether the purpose of the software is to be the engine that powers and manages the data, or the portal to interface with it,” wrote Kitces.

There are typically three core technology tools that drive the practice: CRM software, to manage the client relationship (and the staff serving them); financial planning software, to analyze the client’s financial situation; and portfolio accounting software, to track (as well as manage and report on) the client’s investment accounts (primarily those under management).

“Surrounding the Big Three are additional software tools and supporting technologies that help the advisor implement daily tasks. Those tools range from portfolio analytics/reporting and trading/rebalancing software that are tied from the portfolio accounting software (along with a connection to the custodian to download and reconcile data) to account aggregation and data input tools that push information into financial planning software. Finally, it includes a document management system  that manages documents and ties them back to clients in the CRM.”

“For most of the past 20 years, though, the challenge of the Big Three is that they have each run individually, with little if any data flowing between them, forcing advisors to interact with each software platform independent of each other — and often redundantly, such as entering client information separately in each one. For many years, the situation was so problematic that advisors lamented the lack of a ‘Holy Grail’ solution, packaging the big three together into a single unified system. Though a few attempts have historically been made, they have ended up being mediocre in each category in a failed effort to try to develop them all simultaneously,” Kitces wrote.

According to a white paper, The Integration Challenge, published by TD Ameritrade Institutional, one of the first steps of effective integration is to put integration in the right perspective. Spenser Segal, the CEO, and founder of ActiFi, a practice management solutions provider for advisors, is concerned too many advisors look at integration in a vacuum — e.g., how to link their CRM system to their portfolio management system. He urges firms to avoid thinking about productivity gains solely based on  technical terms.


He says the right way to think about productivity is in terms of increased accuracy or more efficient business processes.   For maximum impact, integration has to be tackled as a process challenge. Segal uses the example of client meetings: “Most firms I know wish they had a magical prep-for-client-meeting button. It would book a room, send a reminder, print a report, etc. However, prepping for client meetings is different at every firm, so the preparation process is different. An asset manager might need different reports than a wealth manager, for example, and, thus, the technology and integration demands for that process will be different.”


There are many systems on the market today that still exhibit a gap between the CRM and portfolio management functionalities. These systems do one or the other, but do not do a good job of combining the two. However, there are new systems coming to market. At-a-glance, portfolio management system Panoramix, by Sapphire Software Services, not only incorporates information from financial data sources, but also allows advisors to integrate real-time, two-way information from calendar and contact programs, such as Outlook or Google Apps, to give advisors a clean, easy-to-navigate and fully up-to-date dashboard screen.


“The door remains open for new entrants to take control of the ‘interface’ side of the landscape, becoming a leading client portal or advisor practice management dashboard… and perhaps even becoming the de facto data standard that the world of advisor technology has unsuccessfully struggled to establish!” wrote Kitces.



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