For financial institutions, a considerable proportion of their investment has centered on the attempt to add incremental capabilities and features to their legacy mainframe back office systems. These systems were designed during a time when the financial advisor/client relationship revolved much more around transactions involving individual securities, and when advisors stayed close to their terminals and conveyed information to clients over the phone.
Times have changed, of course, and advisors and their clients interact with each other and with financial data in more dynamic ways. Clients have easy access to abundant consumer-oriented financial data and sophisticated investment analytical tools. They also expect their advisors to produce answers whenever they want them -- no matter where the advisor might be at the time the question arises.
Legacy-based wealth platforms have been challenged, at best, to meet advisors’ needs in this new environment, and thus system utilization rates by advisors have been low.
In the second quarter, Aite Group conducted an online survey of 200 financial industry technology executives. “We asked advisors to identify their needs and pain points,” says Alois Pirker, research director for the wealth management industry at Aite Group. “The results revealed that advisors have many challenges, and high on their list of priorities are system integration, desires for mobile functionality and real-time streaming market data.”
“The majority of firms will have to look externally to address their needs comprehensively, rather than try to reinvent and adapt their own home-grown solutions,” Pirker says. “Advisory firms realize they have to make changes, because we live in a new world. You have to invest in your business in order to move forward.”
The central industry dynamic, Pirker believes, isn’t so much about large versus small, or even large technology budgets versus small, but a divide between investment firms that are “willing to innovate and move the business model forward, and those that aren’t.”
Today, the competitive landscape has changed. It is no longer just the advisory firms competing against one another. They are now challenged by self-directed, online trading services that have additional capabilities at their fingertips that the advisory firm may lack.
What are the hallmarks of a wealth platform designed from the ground up around the needs of advisors in today’s “new world?” We offer some thoughts in the form of a checklist to guide your consideration of this important question. These questions outline what advisor firms should ask themselves when developing their next generation desktop platforms.
1. Can the system achieve "anytime, anywhere" access?
That is, does it deliver the ability both for advisors and their clients to leverage the system from any computer, at any time? This capacity is based on a web-based framework, without a requirement for a dedicated line. A system should have “anywhere” access from any web browser, and solid strategies for future technologies such as mobile and HTML5, the latest markup language for structuring and presenting content on the Web.
2. Is the system cloud-based?
Investment firms with large internal legacy systems can take months to complete system updates. In contrast, a cloud-based Software as a Service (SaaS) model enables immediate updates and requires much fewer resources than in-house systems. The “anywhere, anytime” nature of cloud-based systems enables efficient access from multiple devices.
3. Is the system built on a platform of interoperability?
That is, can it integrate with other systems and tools, while also offering freedom from existing back office and clearing provider systems? A basic test of a system’s interoperability is being able to share real-time market, client and account data with any third party system that may benefit from it.
4. Does the system facilitate full integration into back office and other third-party systems, bringing together market, client, account and transactional data?
Advisors should be able to showcase a client’s real-time portfolio to clients using market research and data tools without burdensome navigation. The system should also offer a full application programming interface (API) that can allow data and applications from third-party systems to follow one another.
5. Does the system provide real-time streaming market information?
The systems should offer all the advantages of a web-based, cloud-based solution while simultaneously delivering the crucial streaming market data that investment advisors demand. Future-focused solutions don’t require advisors to decide between browser-based or streaming capabilities. The same solution should now be able to deliver both capabilities.