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Tech lessons to learn from the iPhone interface

The pace of registered investment adviser-focused technology development in the past 12 months feels like 10 years wrapped into one.

My team and I have had a bird's eye view of this development across some of the most profitable RIAs in the business.

Whether it is a partner firm or one of the prospective RIAs I sit with each day, the same questions get asked: “What is going on in the RIA FinTech space?” and, “Should I buy XYZ to solve my issues?"

No matter which reporting provider or wealth management platform operator we speak with, it seems that they are all waking up to the same issue: Building technology in-house may not be the winning strategy anymore. Instead, tech providers across the country are in a race to build what we call the iPhone operating system for wealth management firms.


When I joined Focus Financial Partners from Fidelity Investments five years ago, my job was to perfect the process of building the infrastructure for advisers leaving wirehouses, allowing them to become some of the most profitable RIAs in the business. Any entrepreneur who has experienced the difficulty of building an RIA from scratch (real estate, infrastructure and payroll) knows this.

Now picture that infrastructure being as beautifully integrated as the functions on an iPhone. Why couldn’t RIA operations be as seamless

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The concept is disruptive, and those already embarking on it may well be the early winners of asset flows. Further, the use of expanded application program interfaces will allow the RIA of the future to have better business intelligence and to run a more profitable business.

To top it off, everyone is in a race to possess a single sign-on: The adviser will log in, see one screen and then choose the desired wealth management apps for research, reporting and billing, alternatives, separately managed accounts, custodian and customer relationship management.

What does that look like? A fully integrated RIA with all bi-direction APIs.

We have seen impressive demos from clients with real integration, demos where the interface and use of logos were so consistent that we couldn’t tell which system we were in as the client transitioned from Salesforce to eMoney, passing through billing, trading and performance reporting in the middle.

We are seeing RIAs migrate to this school of thought because they are tired of speaking to providers who say, “We integrate with XYZ,” only to find out that they have to upload and download something.

Worse yet, without the APIs built, RIA staff members still must enter data into multiple systems, which increases overhead and hurts business efficiency.

Custodians have announced a similar strategy where everything will act in the same manner via their core suite of technologies and/or companies that they acquired to host them.

This has been covered in great detail recently, but my view is that they will need to be multi-custody to succeed, which means they will need to share data with one another. The biggest challenge for them will be opening up their trading applications to a multi-custody universe.

The custodians’ strongest opportunity may be with the RIA under $100 million in assets that wants a product with single custody that also has a lower fee.

If a custodian can save a firm 90% by processing invoices and billing, will that firm hand them the keys to do it? A firm should if it frees up time that can be devoted instead to working with clients and getting their financial plans on track.

After all, clients don’t say, “Thanks for making my invoice look good.”

They say, “Thanks for helping me meet the goals we set out to achieve.”

There are many unanswered questions and a host of emerging competitors. We are still in the fourth inning of this industry shift and in two years may very well be writing about a completely new company.

Some of the most profitable RIAs will say it is going to be a wild ride, with independent advisers and their clients winning, while wirehouses burdened with poorly integrated legacy systems struggle.

This story is part of a 30-30 series on ways to upgrade your practice. It was originally published on April 19, 2016.

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