Making It Your Own

Chris Kiley and Mike Huett stood in the front of the meeting room, taking their medicine as several dozen advisors demanded answers to a raft of questions about the current technology and the planned upgrades for the system that connects them to their custodian and the two men’s employer, the DataLynx unit of Fiserv ISS. One advisor began his question by asking if the online system that Kiley and Huett are rolling out to replace the Windows trade order software would continue to support his portfolio management software: “I’m probably the only advisor you’ve got who’s still using Trinity,” a piece of software released during the Mesozoic Era. Another, older advisor said he was having trouble signing on to the DataLynx portal; Kiley graciously told the advisor to call him directly and he would walk him through the process. At that point a reality about the advisor business hit home: advisors are independent people who make a habit of customizing every part of their business, from investment policy statements to employee compensation to marketing. Nowhere is this more true than in the technology that advisors use to write financial plans, manage portfolios, communicate with clients, and stay compliant. It’s not at all uncommon to speak to an advisor who admits to running some homegrown Excel spreadsheets to fill in the gaps of his off-the-shelf planning software, for instance. It’s no shock to hear an advisor admit to using an application that the vendor has stopped supporting.

This approach is enough to prompt sympathy for folks like Kiley and Huett and their counterparts at Schwab, Fidelity, Waterhouse, and the other custodians. It’s enough to make you understand the frustration of software vendors who must balance the robustness of their applications with the provision of enough features to meet the specific needs of the broadest cross-section of customers. Then there are the broker/dealers who can offer technology companies access to a big installed base of users, but have to figure out how to pay for it and how to retain sufficient compliance control over a rep’s activities.

Far from being immobilized, however, those custodians and software vendors and broker/dealers are actively moving forward to offer the functionality demanded by advisors, the account data and access to products that clients want, and the control required by B/Ds.

In this special report, we’ll explore how advisors’ partners are meeting their technology needs, with separate articles on account aggregation and outsourcing, and our annual directory of technology providers.

Give Me Integrated Info!

One of the pioneers of financial planning software is Financial Profiles Inc., which was spawned by an insurance company general agent in 1969 and has grown since then into a major supplier of planning software to broker/dealers, insurance companies, and individual advisors. Charlie Davidson, VP of strategy and business development, says advisors want integrated information and “applications that talk to each other.” Davidson argues that his firm’s offerings, particularly its Profiles + Professional, provide advisors with the ability to assess one aspect of a client’s financial life, such as whether he has enough money in a portfolio to pay for his kids’ college or enough life insurance, and then tackle the other areas of planning, if that’s where the advisor wants his practice to go, and is what the client needs. Also spurring interest in planning, especially for RIAs, is that “even some of their clearing firms are providing planning tools,” he notes. While some observers argue that RIAs are slow to adopt new technology tools, Davidson has a different take, saying that from his perspective, an RIA’s office looks a lot like the big banks and insurance companies. In those big companies, users complain, he says, that “I have too many tools I have to use every day; I need somebody to build one comprehensive tool. I need fewer databases. I can’t get these things to talk to each other.” At the moment, he says, “RIAs have a lot of different technologies on their desktops and on the networks in their offices, but the same problem exists at a top-20 bank or broker/dealer, and they’re trying to address the same problems.” Independent advisors, he predicts, “will be the direct beneficiary of the work that is now taking place in the larger enterprise market.”

Davidson says Web-based applications present a particular quandary for RIAs, “because they lose control of that data. They have to weigh the convenience of a Web application with the lack of control.” For many advisors, Davidson thinks, “the best of all possible worlds [is] a rich desktop environment with connectivity to the rest of the world.”

Fiserv ISS isn’t hesitating: It is moving its affiliated advisors from its PC-based trade order management system to a Web-based system this year, says Chris Kiley, manager of technology for Fiserv ISS Advisor Services, starting with mutual fund trading, then ETFs and stocks. Kiley says the company decided that when better technology is available to “buy” rather than “build,” it will do so, as it has in an application that provides online gain and loss information through a company called GainsKeeper in Boston. DataLynx has clearly decided to put its technology money where its competitive mouth is: Kiley said his technology budget for 2005 is “more than 50% higher” than it was in 2004.

The Broker/Dealers’ View

DataLynx serves 365 independent advisors; the ING Advisors Network, comprising FNIC, Multi-Financial Securities, ING Financial Partners, and Primevest Financial–has about 7,600 producing representatives. The ING Network’s president, Valerie Brown, argues that its reps are seeking tools from their B/Ds to help grow their practices. So ING Advisors launched in March a new technology platform, called SmartWorks, which Brown says will go a long way toward providing the tools reps need, while also providing the control that the B/D requires for compliance purposes. Reps would like to control their own technology, but Brown says two developments now make that impossible. “To supervise my reps–putting on my OSJ hat–I’ve got to have a consolidated view of all the data.” Second, “it’s difficult to bring value to clients unless you leverage technology.” So SmartWorks integrates customer information, commission reports, MoneyGuidePro planning software, Morningstar market and mutual fund information, and CRM software, all through a single logon. Over the next six months, the platform will accommodate additional features, including online account opening, OSJ approvals, and compliance reporting.

“One rep who’s very tech-savvy” and was a beta tester of the platform, says Brown, estimated that SmartWorks will save him five hours a week “just in client meeting prep time.”