Archive

Can advisers’ dream of tech standard come true?

Advisers often tell me that they dream of the day when someone develops technology standards that allow the software programs used by advisers to work together and exchange data easily.

Well, advisers can take solace in the fact that such standards for the advisory community may actually be more than just industry chatter.

In an attempt to make data integration and software programs work in harmony, members of Your Silver Bullet LLC, a non-profit industry consortium, today were expected to an-nounce that they are creating and publishing two initial frameworks for software companies to work from.

While these frameworks are not an overarching standard that will sway the entire industry, they represent a tangible step in the right direction.

‘CRUCIAL’ EFFORT

“I think this effort is something that is crucial to helping the industry, especially in the area of building better software,” said David C. “Dusty” Huxford Jr., a member of the Financial Planning Association’s national board of directors and former chairman of Your Silver Bullet’s standards committee. He held the latter position two years ago while still the owner of Financial Computer Support Inc. That firm was the maker of dbCAMS portfolio management software, which Mr. Huxford sold to Morningstar Inc. in 2008.

“Because [the new framework] is based on an open architecture and is open in format, and can be easily web-based, it is going to help standardize the sharing of data to make the lives of advisers easier,” he said.

These frameworks come in the form of two documents, “Investment Management Software Data Standards” and “Customer Relationship Management Data Standards.”

The documents are 16 and 14 pages in length, respectively. To be honest, if read in their entirety, both documents are certain to make the eyes of advisers glaze over. So as a service to our readers, here is a simple explanation.

Each document provides a set of high-level definitions and documentation that will allow technology companies to integrate their software offerings more efficiently.

Think of them as a lingua franca between software vendors — a common language and file layout they can use as a starting point in allowing different programs to talk to one another.

For example, in the investment management guide, all developers using the framework agree that the definition of “price” refers to the net asset value or the value tied to a given security as of a specific date or point in time.

The document then goes on to lay out dozens of data fields and data points crucial to account and portfolio management programs that have been agreed to by the YSB membership.

As I pointed out in last week’s column, many advisers feel trapped when it comes to extracting data from their portfolio management systems. To be sure, these frameworks do not directly address that issue, but they will lay the groundwork for any portfolio system to share data with any CRM system more easily — that is, if the software manufacturers use the frameworks.

The 25 independent software companies that make up Your Silver Bullet have agreed to abide by the frameworks in their own continuing development efforts. A third set of standards for financial planning software is in the works.

“Vendors will see this and know that it gives them a head start to building out their application programming interfaces, and it is very important to note that we are making this standard framework available to both member and non-member companies,” explained Eric Clarke, chairman of the YSB data standards committee. He is also president of Orion Advisor Services LLC, a third-party performance-reporting software company.

From a practical standpoint, many experts and representatives from large technology vendors important to the advisory industry say that such frameworks — not a true standard — are the best that advisers are likely to get.

“You have to bite off something that is reasonable, and true cross-industry standards are a little bit of a utopia,” said Anthony Sperling, senior vice president and general manager of the investment management group at Advent Software Inc.

“Making good on the idea of a perfect data standard is not the most practical way to spend time and energy,” he said. “You can spend years and not solve all the problems for your customers. Build the integrations that make the most sense, and in a broad sweep.”

Inasmuch as Advent is not a member of Your Silver Bullet and has not been involved in the development of its frameworks, Mr. Sperling’s statement indicates that the group is probably on the right track.

It is now up to advisers to weigh in and support development efforts by not only becoming familiar with projects such as this one but also by being smarter shoppers.

In addition to patronizing companies that use widely adopted frameworks such as those from YSB, advisers need to challenge big non-member vendors by asking intelligent technology questions.

ADVISER RESPONSIBILITY

To that point, advisers can show many providers that they are interested in the future direction of technology by asking them the status of their own application programming interfaces. In other words: How open are they to working with other technology companies?

“The end-user needs to participate in this; advisers all want one button to push, and no thinking,” said Your Silver Bullet co-founder Greg Friedman. “But they have a responsibility to take advantage of the resources that the vendors provide, and to date, many of them have simply failed to avail themselves of a lot of training and resources that are freely available, or have overlooked them.”

Mr. Friedman is also an adviser and principal of wealth management firm Private Ocean as well as founder of CRM Software Inc., which makes the popular Junxure customer relationship management software.

So what does this all mean, and what is the next big step, other than coming up with additional frameworks?

“The vendors, including the custodians, need to come out with [interfaces],” Mr. Clarke said.

That, he said, will ultimately bring the costs down for everyone, including other software vendors and advisers, because it will foster real synergy and make it far less daunting to work on future integrations.

On my blog (InvestmentNews .com/technology) next week, I’ll share excerpts of the standards documents themselves as well as additional insights from those we interviewed that could not fit into this column. I’d really like adviser input, so please share your opinions with the community on the blog, in the comment section of the online version of this story or on our LinkedIn group page, where we will post a discussion as well.

E-mail Davis D. Janowski at [email protected].