Custodians putting all the technology pieces together

While both custodians bristle at any suggestion of a race, Schwab Institutional and TD Ameritrade Institutional are charging ahead in their efforts to deliver a unified technology platform to their registered investment adviser clients.

While both custodians bristle at any suggestion of a race, Schwab Institutional and TD Ameritrade Institutional are charging ahead in their efforts to deliver a unified technology platform to their registered investment adviser clients.

At the same time, the firms are taking fundamentally different approaches. Schwab is designing and supporting its platform in-house, while TD is partnering with third-party providers.

Schwab Intelligent Integration ultimately will offer advisers a range of software choices bundled within two distinct solutions. In addition to seamless connectivity with Schwab’s client accounts, trading and other back-office systems, each will contain multiple third-party applications, including customer relationship management, portfolio management, financial planning and document management, among others.

For example, Schwab OneView Office, a turnkey platform that is the first offering slated for completion, will include as its central hub a highly customized version of Salesforce.com, a well-known web-based CRM application.

The second solution, to be called Schwab OpenView Gateway, will provide advisers more, if still limited, choices. For example, in terms of customer relationship management, advisers will be able to choose between Microsoft Dynamics and Junxure from CRM Software Inc.

HOLDING OFF

As for the many other applications that will populate the platform, Schwab has kept those close to the vest, ostensibly waiting until this year’s national Impact conference to announce these, as well as the progress made thus far.

When asked for a progress report, Adam Moseley, managing director for technology consulting with Schwab Advisor Services, issued the following statement:

“We are pleased with our progress, and continue to further our testing with advisers and gather their feedback,” he wrote.

“With Schwab Intelligent Integration, it is important that we take the time needed to build a quality technology solution supported by work flows by involving both our clients and our providers so we have a solid platform for the marketplace.”

Perhaps because it is working with several outside vendors, TD Ameritrade Institutional and the third-party technology companies with which it has partnered have been less reticent about discussing the progress of their open-application programming interface.

Taking a fundamentally different tack from Schwab, TD Ameritrade is providing a development environment to its partners that mimics the open-application programming interface for its Veo production environment — its back-office account management and trading platform.

Such access follows a rigorous and lengthy series of security audits of partners prior to their being granted access to the TD API.

According to Jon Patullo, director of technology product management at TD Ameritrade Institutional, there are now a total of 30 third-party firms actively in the process of gaining access to the API.

While a few are still working through the security approval stage, Mr. Patullo said that two dozen are currently working with the test API, double the initial number invited to TD’s first summit on the initiative a year ago.

“These firms are at different stages in their work, but many are at the point of using a lot of test data,” Mr. Patullo said.

He added that advisers likely will be seeing several third-party technology providers beginning production use of their integrations in the coming months — some as soon as a few weeks out.

On this short list are the popular financial planning application MoneyGuidePro and three CRM applications: AppCrown, RedTail and Ebix.

One firm that is already actively using an integration with Veo is Orion Advisor Services LLC, which serves 275 mostly large RIA firms with web-based portfolio management and performance reporting.

“We bring in more [account data] from TD Ameritrade than any other custodian right now,” said Orion president Eric Clarke.

He cited several real-world examples of how his firm’s customers are making day-to-day use of the integration.

Take alerts, for example. When an account has been opened or a trade transaction has been processed, that information is passed directly to Orion’s user interface dashboard, where many advisers spend most of their day. This negates having to log in separately to the TD Veo interface to check on alerts.

Another example is the ability to pull in real-time pricing data for stocks and exchange-traded funds. Mr. Clarke added that these represent just the start of what is to come, but building the integration will make subsequent additional features far easier to build out.

LEARNING EXPERIENCE

While he acknowledged that the security audit and approval process were not easy, and the development process has been a learning experience and tedious at times, Mr. Clarke applauded TD.

“They could have done what everyone else did and pick two or three market leaders, and say, “Here is who we are going to integrate with,’” he said, referring to the approaches taken by the other major custodians, including Fidelity Institutional Wealth Services and its WealthCentral platform, Pershing LLC with NetX360 and the approach being taken by Schwab Institutional.

“Frankly, we would have been happy if they just came to us and said, “You are going to be our choice [in the portfolio management and reporting category],’ but they have created a much more level playing field. And I think you are going to see the other custodians ultimately have to follow suit,” Mr. Clarke said.

That or risk alienating their increasingly large contingents of independent-minded RIAs.

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