Integration means different things to different vendors – and advisers

A technology consultant recently observed that many of his clients were obsessed with integration. I would have to agree.
Integration is on the agenda at practically every adviser-related conference I attend, perhaps because advisers have whipped themselves into a frenzy over the interaction of all their tools. In fact, whenever advisers discuss technology, someone will inevitably ask whether the particular application in question integrates with others. And when shopping for new software, advisers invariably make integration a requirement — sometimes above basic functional requirements. Expectations seem to be boundless.
After all these years, what should advisers expect from integration? Before you invest resources and build business processes around the assumption of deep integration, let’s take a look at the state of software integration and what can be realistically expected from making an investment in greater integration.
First, it’s worth examining what integration really means. When a vendor says their tool integrates with other applications, your response should be: “What kind of integration? Tell me how it works.” Don’t make any assumptions, because the integration can take several forms.
Integration can be a link in one application that will launch another application. Such links often include a single sign-on, meaning that the software will pass your credentials and automatically log you in to the other system. It’s a stretch to call this integration, but it’s at least a click saver.
Then there’s data sharing through export/ import. This is the most common type of integration between the tools advisers currently use. The user will go to System A, run an export and save the file to his or her server or workstation. Then he or she will go to System B and import that file, thereby adding or refreshing data. There is some human intervention involved, as well as the investment of a few minutes of time, but it saves a lot of typing and avoids the errors that are inherent in those steps.
Finally, there are real-time data grabs. These are pretty sweet, but rare. A button will pass on to another system parameters (such as client names and account numbers), retrieve information and pass it back to the requesting database. Advisers can see examples of this in action with the integration from CashEdge to AssetBook and Albridge Solutions to NaviPlan.
If real-time data grabs work, it’s logical to ask why more software makers don’t use them. The answer is that most vendors make their data accessible and available but do little proactively to link to other software. The responsibility for facilitating integration usually falls on the system that wants to enhance its appeal by pulling data from other sources, thus increasing the value of its own tool.

TOO MANY COMBINATIONS

It may seem that most vendors want their systems to integrate with everything else, but when you think about the number of combinations that that would entail — the number of customer relationship management systems multiplied by the portfolio management tools and financial planning tools and document management systems — the magnitude and cost of developing all possible integrations make the chore nearly impossible.
Of course, advisers can create their own integration by engaging software developers to create custom solutions. Bear in mind, however, that packaged software sometimes offers limited ability for outsiders to reach into databases, especially with web-based applications. And when customizing software, advisers should be prepared for the continuing responsibility of maintaining that integration. If one of the systems goes through an upgrade, your integration may suddenly stop working.
Be aware, too, that while the integration of data brings convenience, it also carries risk. Creating redundant data that are not bidirectionally up¬dated can lead to out-of-sync conditions. (An example of bidirectional syncing is when your PDA syncs with Outlook, and changes on either end are passed to the other.) Copying data from one system to another, then updating them in the recipient system, can lead to out-of-date data in the source system. If you have any unidirectional data pushes, the recipient system should be considered “read-only.”
In addition to all the costs and technical difficulty of stitching to¬gether disparate technologies, a practical reason we don’t see more integration is that advisers are an extremely diverse group. The information one adviser wants shared be¬tween systems is probably different from what every other adviser wants.
When I talk to advisers about the integration, only two areas are high on everyone’s A list: 1) basic contact information across systems, and 2) investment information in the CRM.
Keeping in mind that the goals of integration are reduced data entry, increased convenience and improved analytical capabilities within tools, what would you find of greatest value in addition to those two items?
The integrations that will save your firm the most time and improve client service should be your focus, and those integrations should be evaluated to ensure that the assumed benefits are worth the cost of establishing the integration. Such high-value integrations may involve:
• Investment information passed from your portfolio management tool to your financial planning tool.
• Document links inside the CRM.
• Billing information passed from your portfolio management tool to your accounting system.
• Trade records passed to the CRM.
• Information on held-away assets passed to your portfolio management tool from a source such as an aggregation tool.
Of course, instead of grappling with integration of stand-alone software and multiple databases, there is always the option of selecting tools that perform multiple functions. In fact, some of these come close to the ideal of one software system that does it all.

MAKING A CHOICE

But that leaves the adviser with another dilemma: choosing a unified/all-in-one tool or a best-of-breed suite. When making that choice, advisers typically must decide whether they prefer an integrated tool in which all of the components may not be to their liking or a set of tools in which each provides the best fit but offers limited integration possibilities. Two examples of the unified-tools approach are Interactive Advisory Software Inc.’s Solution 360°, which contains portfolio management, financial planning, CRM, client portal and re-balancing tools; and Morningstar Inc.’s Morningstar Office, which offers choices of modules such as CRM, research, allocation, portfolio management and a client portal.
A new alternative comes in the form of “software as a service.” In this new model, the software resides on a vendor’s server, is accessed via the Internet and is paid for by a monthly or yearly subscription. The choices in this arena are growing in quantity and quality, thereby giving advisers the opportunity to shed the responsibility and expense of buying servers, doing backups, managing firewalls, applying upgrades, etc.
SAAS is still a relatively young concept and brings with it additional complexity in terms of integration, which translates into SAAS applications’ being a tad behind server-based applications on that front. But SAAS is quickly gaining ground, so don’t count it out.
Another bright spot on the integration horizon are the custodians, who are stepping up to the challenge and lending some muscle. Fidelity Investments has integrated its proprietary platform with several well-known applications to create a bundle of tools that share data but retain their uniqueness and identity. TD Ameritrade Institutional is also on the road to providing a comprehensive suite to its advisers.
Given the head-spinning rate at which technologies are being released these days, we’re in the somewhat unfamiliar situation of a business need for which there is no clear, mature technological solution. Certainly, the many good folks who provide software to the financial advisory industry have a crystal-clear understanding of the sense of urgency around integration. They are leveraging numerous techniques and technologies to improve integration capabilities, and have made good headway in the past couple of years.
The biggest integration changes, however, may not come from software companies but rather from deep-pocketed players such as custodians. They have considerable influence over advisers and the companies that serve advisers, and may well lead the charge into a world where the multitude of adviser software options actually work as one.

Kerri Russ, founder of Level 5 Business Services, can be reached at [email protected].