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Making It Your Own

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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.”

Brown says ING makes its “buy versus build” decision with rep input, and for SmartWorks settled on a “combination of buy and build”: the CRM system and the consolidated view are builds, but the planning program (MoneyGuidePro), the reporting (Morningstar), and the forms software (LaserApp) are buys.

The stable of B/Ds under the ING Advisors’ network is quite diverse, so will all reps need to avail themselves of the entire SmartWorks package? “The client data needs to be in one place, in our data warehouse, so activities regarding client data will be mandatory,” says Brown.

At Raymond James Financial, the company says it is exploring a new financial planning program to be chosen “in the near future” for the 4,500 advisors who are affiliated with RJFS through its various channels. To help determine what to include and what to exclude from that platform, Mike Shelly, VP of technology, says his group “lives off financial advisor feedback,” including branch office meetings and focus groups at its national and regional conferences. “If you have 4,500 advisors, you can’t please them all,” notes Shelly. “The top 20% do very high-end [planning work], so no matter which third-party package you pick, there will be a handful who won’t want to use it.” John Catalano, a CFP who is financial planning software manager for the company, says that any software that gets rolled out “needs to be as user friendly and intuitive as is reasonably possible. There is a tradeoff between functionality and extreme ease of use, and you have to find the happy medium.” As for what their advisors want, “Monte Carlo always comes up,” says Shelly, along with any features that make the planning process less “manual.”

Smaller independent B/Ds are moving forward, too. For example, Cadaret, Grant & Co., a B/D based in Syracuse, has partnered with Efficient Technology Inc. to provide its nearly 900 reps with the ability to prepopulate forms online as part of a 12-month Web site upgrade.

That same goal–to save time–was the impetus behind the account aggregation movement. Harry Groom, president of AdvisorCentral, which was formed three years ago to provide broker/dealer reps with mutual fund account aggregation for their clients, says it has found a receptive audience, with more than 100,000 rep IDs. “The very first value of aggregation,” he argues, “is that you allow the rep to find out through one or two different portals what he previously would have had to search through a half-dozen to a dozen fund companies.” AdvisorCentral provides access to mutual fund data, and now to 529 plan data, from 45 mutual fund companies, including the fund companies that founded the company–Fidelity, Franklin Templeton, and Putnam (its fourth founder, the PFPC unit of PNC Bank, provides the tech platform). In addition, Groom notes that AdvisorCentral provides “linkage to three large independent transfer agents of Fidelity, Franklin, and Putnam, and to Bisys and SunGard. We’re linked to everyone except DST.” DST offers a competing product, called DST Vision. AdvisorCentral has added certain other services, including research and a referral system, and is working on providing insurance and annuity data to its users.

But Which Should I Use?

Many advisors just want to know which program is best. One of the best arguments for joining your local chapter of the FPA or NAPFA is to learn about the tech solutions your peers have found. For further help, read Dave Drucker ( and Joel Bruckenstein (, sign up for “Kip’s Tips,” from Kip Gregory (, and use the tech resources of your custodian or B/D.

To stay current and figure out which applications to choose, however, you can’t beat Andy Gluck’s column in this magazine. Over the years, Gluck has reviewed PMS and financial planning and CRM programs with the help of advisors who put the products through real-world tests. What becomes clear from Gluck’s work in this area is that each application must match the specific needs of the practice in order to be “best.” So in picking a program, make sure it can do what you need it to do, and make sure you talk to current users–or beta testers if the software is brand-new–before you buy. Any reputable company will provide you with names of current users whom you can contact to get their views, and as you know, planners tend not to pull any punches when they’re talking to other advisors.

Despite the frustration over imperfect technology whose parts aren’t quite integrated yet and which needs customization to meet each advisory firm’s specific needs, we may be in a golden age of advisor technology. Taking a look back at where planning technology has come in this, IA’s 25th year, might be proof enough. A scant eight years ago, you could rarely run more than one application at a time on personal computers whose memory was insufficient, whose connection to the outside world was a 56 kbps dial-up modem, and whose backup systems were clunky at best.

While some products may never be online, the unparalleled communication medium that is the Web has changed the business environment, mostly for the better. Charlie Davidson of Financial Profiles sums it up nicely: “You know,” he says, “it’s an exciting time. We’ve never had a network that covered the entire world. We’ve never had the security that we have now.” In the future, there will be more integration, information sharing, and comprehensive technology. Advisors will still customize those offerings, however, to meet their business needs and their clients’ planning needs, and to differentiate themselves from their competitors. Yes, it’s an exciting time.

Editor James J. Green can be reached at [email protected].


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