The trouble with tech integration for advisers, vendors

Onboarding a new technology platform or software system is often not what it seems

Jun 10, 2015 @ 1:55 pm

By Alessandra Malito

+ Zoom

The promise of a seamless technology integration in which advisers get up to speed quickly and use all of the software programs and data available to them with ease isn't a reality at most advisory firms. Not yet, at least.

Although in more recent times one of the more attractive features of some software platforms is their open architecture, which allows them to tie in with other software, advisers are finding that once they have the programs they want, they hit a proverbial wall with technology issues.

“The term integration is thrown around pretty loosely,” said Neal Quon, co-founder of QuonWarrene, a technology consultancy firm for advisers.

Technology providers are ramping up their efforts to work with each other — even those that are considered competitors. Advisers can reap the benefits of these relationships because they can tie in their work on various platforms such as client relationship management, financial planning and marketing software, to efficiently run their practices and spend more time working with clients.

DIFFERENT TYPES OF INTEGRATION

While integration is slowly becoming more common, there are numerous types of integration, and they are all capable of different levels of connectivity. That distinction often isn't made clear to advisers.

The single sign-on functionality, which is often the first layer of integration, is almost unnecessary. Although it allows advisers to move from one platform to another, it does not include any data flowing back and forth.

There are also common slip-ups with bi-directional integration, in which advisers' data is being fed back and forth among programs without manual input. For example, when the programs are not completely synced up, one platform's user interface can differ substantially from another.

David Edwards, a wealth adviser and the president of Heron Financial Group in New York, said he is experiencing this problem now. His firm is in the middle of a major technology renovation, and integration of the eight software programs his firm uses was his main objective.

“If you talk to the marketing department at vendors, these products are integrated,” Mr. Edwards said, adding that when his firm spoke with tech support, they said those same products were in beta. “We understand there will be pain and suffering involved.”

He said it took two weeks when his firm tried to connect two programs because ultimately, the company was placing the account titles into the wrong field on one program as opposed to the other.

Edmond Walters, founder and chief executive of eMoney Advisor, a financial advising software firm recently acquired by Fidelity Investments that is collaborating with 28 companies on its platform, said integration of various technology platforms is a huge undertaking and often involves the participation of many stakeholders.

“When you launch, you have to have everybody in standby mode,” Mr. Walters said of his recent integrations, such as with Redtail, a client relationship management program.

“It has always bothered me when everyone says they have integration with another company when all it is is a single sign-on,” he said.

With each integration, Mr. Walters said there is a high volume of adviser data that must be accounted for and organized properly.

“We didn't even understand what the demand [for data integration] was until it happened,” Mr. Walters said.

TD Ameritrade has two integration-focused platforms, Veo Open Access, which has open architecture, and Veo One. The former has integrations with 90 third-party vendors. The latter is a dashboard with 10 connected vendors that serves as a launchpad for integrated products.

Jon Patullo, managing director and technology product management at TD Ameritrade, said rather than choosing which vendors to work with, Veo's open architecture will work with any companies an adviser wants. Integration, he said, is a time-consuming process.

“It will continue to get easier and easier,” Mr. Patullo said.

BETTER RELATIONSHIPS WILL HELP

Greg Friedman, president of Junxure, a customer relationship management (CRM) service provider, said in an InvestmentNews' video from Pershing INSITE that integration will get easier with a better relationship between custodians and vendors.

“The custodians are finally really embracing and opening up the data, because they are the purveyors of the data,” he said.

Patrick Yip, director of Pershing's advisory market technology strategy, and Tim Foley, managing director at Pershing, said the process of integration onto its platform can be tedious. Vendors and clients approach the company about a technology they would like to see integrated, and then a drawn-out process of meetings, coding and testing ensues.

The clearing and custodial firm responded to this by creating an application program interface (API) store that will provide approved vendors with coding and documentation to more efficiently create and test integrated software products on a self-service level.

“It will still be a collaborative effort, but it will greatly enhance their ability to get functionality,” Mr. Foley said. “The hope is the overall process will become more efficient.”

The company plans to launch a beta version of the API this year. It will be available to all of Pershing’s clients next year.

Mr. Edwards said despite the fact that the process is far from seamless, integration is worth the effort when advisers weigh all of the factors.

“Now that we are on the far side of this process and working with our clients, we have tripled our client acquisition rate,” Mr. Edwards said. “That's because those platforms are remarkable.”

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