InvestmentNews' survey gauging financial advisers' satisfaction with their technology found that fewer are happy with the integration of their systems than last year.
In the survey, 8.6% of the respondents reported being very satisfied with tech integration, down from the 17.1% that reported being very satisfied last year.
Platform building continues at all four of the major custodians, but there hasn't been any movement toward creating industry standards — data or otherwise — among the source-of-record custodians.
That leaves advisers' hopes for product integration at a dead stall. Simply put, they are dealing with an industrywide hodgepodge, with each of the four major custodians, along with many smaller ones and the largest broker-dealers, building separate ecosystems of integrated systems and applications.
LESS DISSATISFACTION TOO
Although there clearly is less satisfaction with tech integration, the survey also shows there is also less dissatisfaction than there was last year. Just 2.7% of the respondents reported being very dissatisfied with integration, compared with the 8.2% who reported being very dissatisfied last year.
MIXED FEELINGS
In interviews, advisers express mixed feelings about their technology.
While they decry a lack of standards, they tend to be resigned to theirs being a fragmented industry and accept that their best solution is often to find providers whose products work with as many others as possible and move on.
The issue of integration usually comes up when advisers consider replacing a particular core product or service, usually because they perceive it to be outdated. In that case. they seek a replacement that will best integrate to the other technologies they use or rely on.
Many advisers have simply adapted their technology to fit their business processes despite the lack of efficiency or scalability.
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Larger firms that have thought through integration and sought out such products — or that settled on some of the big custodial initiatives — appear to be happiest.
“What we are coming to realize is that custodian-agnostic integrations are where it's at,” said Anthony Schembri, a managing director at the large registered investment advisory firm of Clarfeld Financial Advisors Inc.
Clarfeld has 400 investment management clients, manages $3 billion in assets and relies on Schwab Advisor Services and TD Ameritrade Institutional as its primary custodians.
CONSOLIDATION PROJECT
The firm has almost 80 employees and completed a large tech consolidation project a year ago.
Mr. Schembri led those efforts, which took more than a year, and involved reducing the 25 different systems used by various business units within Clarfeld.
All were consolidated onto the customer relationship management application from Salesforce.com.
“Now that we've been up and running for over a year and have taken the initial big leaps as far as implementation, training and user adoption, we are digging deeper to continue adding efficiencies,” Mr. Schembri said.
“Here is my problem, though. We don't have all our assets with one custodian,” Mr. Schembri said.
“Let's say I have a client who has, for example, restrictive stock units or options, things not held at a custodian,” he said.
Even on an integrated custodial platform “you are not getting a holistic view,” Mr. Schembri said.
According to solo practitioners and advisers at firms with less than $200 million in assets under management, advisory tech providers aren't moving fast enough or with enough depth to meet their needs and budgets.
“Integration is important for two main reasons,” said Sunit Bhalla, principal of OakTree Financial Planning LLC.
“It allows us to use our time more efficiently, and it allows us to avoid mistakes,” he said, adding that manually rekeying data because two applications don't talk to each other is the ultimate waste of an adviser's time.
"ZERO TOUCH SYSTEM'
In his own practice, Mr. Bhalla aims for what he calls a “zero touch system,” meaning not having to key in any data.
He uses an application and service called PreciseFP for getting clients to input their own data, which are conveyed into his Redtail CRM system.
For client account data, Mr. Bhalla uses the feeds available from Shareholder Services Group Inc. and Pershing LLC's NetX360 account system. He relies on account aggregation provider ByAllAccounts Inc. for the remainder of held-away client accounts.
“I had to spend a lot of time thinking about what would make me efficient and scalable, and think through what providers were offering,” Mr. Bhalla said.
Although he said that he is a firm believer in industry data standards and that the custodians are the natural choice to be the parties most responsible for establishing them, he sees it as unlikely, for now.
“If you look at MoneyGuidePro and Redtail, they have really good and deep integrations between them, but that represents just two vendors working closely together,” Mr. Bhalla said.
Twenty companies would provide a total of 380 possible integrations, he said.
The only thing that would make such collaboration possible would be a set of industry standards.
Attempts have been made or suggested by groups of independent tech providers to create wider levels of integration among products and to propose standards (See “Data standards elusive,”
InvestmentNews, Feb. 6) but only a tiny number of integrations have resulted.
SOMETHING LACKING
Sheila M. Chesney, principal of Chesney & Co. Private Wealth Management, is another strong proponent of technology and standards. After all, she spent the early part of her career working for IBM.
When she set up her firm in 1996, Ms. Chesney realized there were no standards. She said she has been able to build her business without them but continues to lament their absence.
Ms. Chesney served on the
InvestmentNews Technology Round Table in 2008. Since then, despite the turbulent markets and economy, she has increased her assets under management to $100 million from $75 million.
“We have a pretty good platform,” she said.
In describing her use of Salesforce.com for CRM and Black Diamond for performance reporting Ms. Chesney lauded how well the applications communicate with each other. She was quick to point out, however, that the key to her firm's growth has been more about creating its own work flows and efficient internal processes.
That has meant a combination approach that puts a lot of emphasis on outsourcing as many time-consuming, unprofitable tasks as possible, including data entry.
“I have anytime, anywhere access to everything,” Ms. Chesney said of her web-enabled applications.
Even a recent trip to Tokyo didn't slow her down.
“I have just two direct employees and three independent contractors, all working remotely,” Ms. Chesney said. “Because of those people and the technology I have carefully selected, we have been able to stay really small — and profitable.”
[email protected] Twitter: @ddjanowski
