Coming to a firm near you: An optimized digital wealth experience

Digital transformation has shifted expectations about what technology should be able to do. Advisers and investors want personalized investment products and intuitive digital tools. The assumption is, “If I can do it on my phone, I should be able to do the same in my practice and in my portfolio.”

This demand for better technology has outpaced the availability of enterprise-grade solutions for wealth management firms. Firms are constrained by legacy technology stacks that can’t keep pace and are costly to maintain and challenging to upgrade.

Many are also bedeviled by point solutions. According to InvestmentNews Research’s 2022 Adviser Technology Study, 57% of advisers say the lack of integration between core applications is their biggest technology pain point. Additionally, technology issues factor into adviser attrition and firms’ inability to attract high-producing teams.

CLOSING THE GAPS

It’s not easy for firms to pivot and deliver the connected digital wealth experience their advisers want. Today’s legacy systems may be inefficient and costly, but replacing technology comes with other challenges.

Building a platform requires resources and expertise that most firms don’t possess. Buying technology “off-the-shelf” comes with limitations, compromises and the inability to differentiate from others using the same technology.

Platform consolidation and the elimination of point solutions may address some challenges, but there is still more to consider. A comprehensive platform may eliminate the infamous “swivel chair” and better manage data, but without the ability to integrate third parties, choice is limited.

Solving for these challenges requires a new approach. Broker-dealers that are serious about integrating their existing technology need to rely on their technology providers for an optimized platform solution.

THE OPTIMIZED END-TO-END PLATFORM

Optimized end-to-end platforms start with a solid data foundation. A unified, enriched data layer underpins the platform and powers its capabilities and workflows, enabling a holistic, near-real-time view across the enterprise so the adviser can make faster and more informed decisions.

The applications on top of the data foundation should scale to meet the needs of today’s wealth managers. The ability to support multiple asset classes, wealth programs and structures is also essential to addressing demands for more complex financial solutions.

The final component — open architecture/interoperability — is an important differentiator for an optimized wealth management platform. Enabling integration of the firm’s operating environment with access to third-party providers allows firms to tap into emerging technologies and industry-leading providers.

For example, many advisers consider their CRM to be the hub of their technology stack. It’s our experience that when multiple divisions of an organization — i.e., wealth management, insurance and bank trust — use the same CRM, the individual divisions need technology platforms with an open, integrated architecture that can accommodate it and other tools used across the enterprise. Cross-product data models must go beyond single sign-on or one-way synchronization, so that data can be translated and augmented into reliable, actionable information and harmonized into a single source of truth across tools.

With a software backbone that intelligently facilitates high-quality and deep data integration from multiple sources, firms and advisers can get the most out of their CRM and the other tools in their fintech stack. The end result is an optimized end-to-end platform that ties everything together, streamlining workflows and improving the advisor and investor experience.

CONCLUSION

Wealth management technology has been outdated for a long time, with no meaningful pathway to level the playing field with other industries. By understanding their advisers and leaning on technology providers that are grounded in optimized digital wealth experiences, firms can help advisers provide more personalized investing solutions and be more competitive and more profitable.

Rich Hart is senior vice president of corporate development at Advisor360° and Nick Diodati is director of wealth product strategy at Charles River Development, a State Street company. They can be reached at [email protected] and [email protected], respectively.