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Schwab’s Neesha Hathi Explains Company’s New Approach to Advisor Technology: The Weekend Interview

By James J. Green

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“Think of it as eco-system where all the applications live together,” says Neesha Hathi, describing Schwab Advisor Services’ nascent Intelligent Integration approach to its technology platform for RIAs who custody with Schwab. In an interview in Schwab’s San Francisco headquarters on Oct. 5, Hathi, Schwab VP for Advisor Technology Solutions, described the philosophy behind this new approach to advisor technology, hints of which have already appeared in other media reports.

Hathi also disclosed that at the opening session of the Schwab Impact 2010 conference on Oct. 28, Bernie Clark, who heads Schwab’s advisor unit, will announce the first “partners” for the eco-system, which will include more than one CRM system which has been vetted by Schwab and will integrate with Schwab’s platform. In a separate interview the same day, Clark called the intelligent integration project a “big deal” that’s “mostly about workflow, mostly about efficiency.” Advisors, he said, “need to be better organized,” but rather than taking a “build it and they will come” approach, Schwab will “overlay technology that uses your [existing] technology, and use your CRM as your navigator, making sure that all of our information flows through that single point of entry. At Impact, we’ll be naming partners.”

Hathi further explained the approach and the philosophy during the interview.

Q: What do you actually call this “Intelligent Integration”? Do you call it a platform? And why start with CRM?

A: We do call it a platform, but I think of it as an eco-system, a network of different providers. At the very beginning of this endeavor, we thought about all the different applications there are for advisors out there. Advisors often use our technology consultants to help them think about portfolio management—“I’ve been using this application for 20 years or so, should I change?” There are so many applications, and instead of using one or two like they might have 10 years ago, now they’re using five or six. It causes complexity for them and frustration. Advisors are often left flat-footed, trying to figure “Where do I go?” and maybe “I should stick with what I know because I don’t have the time to figure out which new applications to use.”

With my strategy background, we asked ourselves that if advisors want to grow, which we continue to hear is their top priority, then how do we help them grow in an increasingly

competitive environment? Over the long run…how do we help them grow?. How do we help them get their shops in shape so that when growth comes back, they can scale their offices to be more efficient?

This desire for growth, how do they scale, how does Schwab help?

We decided we should work through this selection process of providers, so when they choose a provider, they know it has some legitimacy in the marketplace, and that works well with the applications that they’re already using…

We decided we should focus on creating choice in the marketplace, creating relationships with a few different providers, but also create integration with those providers…

So the Intelligent Integration principles have always been about creating high quality integration with a number of providers, a few in each category that we identified, and making sure that it’s not just technology integration, but helping the advisor work through the process of selection, implementation, how I change my workflow? How do I change my business to take advantage of that integration?

Ten years ago, those applications would have been just their custodian’s platform and their portfolio management systems. Now, the application most used is their CRM system. So we asked, how do we make that more powerful, how do we bring data to the CRM? The approach is all designed to improve an advisor’s workflow, to help advisors act out of the CRM.

Q: How did you decide which CRM systems to include?

A: At the end of June, we had a nomination process from 1,000 advisors. We asked which CRM providers we should partner with, and which portfolio management systems. The third question we asked was “What’s the next category [of applications] we should work on? Is it trading and rebalancing or model portfolio or document management?”

[At the opening session of Schwab Impact, Bernie Clark will announce the first partners for Intelligent Integration, which will include several CRM systems.]

We want to offer diversity; by next November we will have rolled out the other partners.

Q: Will these applications live on the cloud? How will they integrate?

A: We could have gone the API route [application program interface, a common protocol for building Web applications that work with other apps], but we couldn’t be confident that the integration would work or continue to work.

Instead, for [application] designers, we’re putting out a best practices workflow. There’s lots of validation we’re doing; it’s more costly but thes approach provides better integration. We’ll have a place where all Web-based services can live, and where the applications providers will plug in.