Technology integration at custodians moving into second wave

Big Four have their own strategies for simplifying advisers' and clients' lives

Feb 6, 2014 @ 12:43 pm

By Joyce Hanson

technology, custodians, integration
+ Zoom

Technology integration is the name of the game at custodians these days, as the biggest players seek to outdo one another by simplifying and coordinating processes to draw advisers.

TD Ameritrade Institutional made a splash this year in promising a summer rollout of Dashboard, an update to its Veo platform that will let advisers log in once and get access to all 62 — and counting — of the platform's integrated applications in just one view.

For third-party technology partners, TDAI is a leader among large custodians in terms of offering “plug-in” products that make advisers' work flows more efficient.

“Veo Open Access has been a huge success,” said Jon Patullo, TDAI managing director for technology. “We have built a truly open-access platform that is different from our competitors'.”

To be sure, up-to-date software integration on TDAI's tech platform is a big selling point for the firm. Advisers want to pick and choose software that best meets their needs, which is why TDAI is constantly working to add to the third-party customer relationship management providers, financial planning programs, portfolio management applications and other integration partners that already reside on the Veo platform.

But make no mistake — TDAI's three biggest competitors are nipping at the custodian's heels. Over the past few years, advisers have become increasingly dependent on custodians' platforms to give them a primary access point to tech tools designed to make advisers' lives easier and give them more time to engage meaningfully with clients.

According to Brian McLaughlin, chief executive and chief technology officer at Redtail Technology Inc., which offers a popular CRM application that sits on Veo, work flow efficiency is the primary driver of the integration trend.

“We're trying to solve the problem of quick access to multiple sources of information,” Mr. McLaughlin said. “Advisers are still trying to figure it out. It's confusing to them. We're trying to educate them on what to do, and the custodians are taking a very hands-on approach to solve this.”

Five years ago, custodians didn't view integration as their problem, he said. But the proliferation of third-party providers, as well as adviser demand, has made it appealing for custodians to make the providers' products available on their platforms.

But not all custodians are equal, Mr. McLaughin added. Advisers have to do their homework because the custodian playing field is not level, he said.

“The adviser should choose what kind of platform they care about and what integration partners they want,” Mr. McLaughlin said. “One thing that differentiates [custodians] is the way they do third-party integration.”

While Veo may be the plug-in king, as TDAI continually connects new vendors to its platform, Fidelity Investments has “deep” relationships with fewer integration partners, according to Ed O'Brien, senior vice president of Fidelity Institutional's platform technology, who said the integration trend is not new at Fidelity.

When the firm launched its WealthCentral platform in 2009, it had heard that advisers were using third-party tech apps for tasks such as portfolio accounting, CRM, re-balancing and financial planning, Mr. O'Brien said.

“There was a need for those systems to talk to the Fidelity systems,” he said.

Last April, Fidelity announced a cloud-based desktop product for advisers that gives them access to the Fidelity platform from anywhere via a web browser, including from mobile and tablet devices.

Looking to the future, Mr. O'Brien said the firm plans to better integrate services with e-signatures and account openings. So while the first-wave tech integration centered on efficiencies for the adviser, the second wave's goal is to make life easier for the client, he said.

Fidelity spokeswoman Erica Birke said that the firm has about 70 third-party integrations available through WealthCentral.

Similar to Fidelity, Charles Schwab Advisor Services is seeking deeper relationships with fewer integration partners.

“Schwab is doing a CRM-centric strategy,” said Brian Shenson, vice president of adviser technology solutions for Charles Schwab Advisor Services. “We have chosen a variety of CRMs because we know that advisers value choice.”

Those CRMs include Junxure, Salesforce and Microsoft CRM through relationships with Salentica Inc. and Envestnet|Tamarac.

“This is a trend that's not going away,” Mr. Shenson said. “It's table stakes for everyone.”

Meanwhile, Michelle Gutierrez, director of customer engagement and client technology solutions at Pershing Advisor Solutions, said the big news out of Pershing in the first half of 2014 will be the bringing together of Pershing Advisor Solutions and BNY Mellon's Wealth Management Advisor Custody Group on Pershing's NetX360 platform.

“We have an initiative under way right now to give advisers the ability to bring custodial information with banking data and trust data into NetX360,” Ms. Gutierrez said.

And countering TDAI's boast that it has more integration partners than any other custodian, Ms. Gutierrez asserted that Pershing has already made more than 230 integrations with CRM providers, trading platforms, portfolio management software providers and more over the last decade.

“We haven't publicized all 230 of them,” she said. “It's a core service that we've always provided.”


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