With the migration of advisor technology solutions over the past several years from local servers to existing in the cloud, the ability for software to be continuously digitally connected has led to a massive rise in software integrations. That allows an ever-increasing amount of data to flow through the “Big 3″ technology hub for advisors, going more and more efficiently from one software platform to the next.
Yet as information and data flows more freely across the advisor technology stack, it is becoming increasingly frustrating for advisors to need to log into so many different software packages to manage their business, and for clients to have several different portals to access their document vault, their financial plan, their investment account information, and more. If the software is becoming more integrated, will there soon be a single centralized dashboard for advisors to manage their practices and monitor key performance indicators, and a single portal for clients to effectively manage their personal financial information?
The convergence towards a single advisor practice management dashboard and a single client portal, though, raises the question of where exactly these software tools will be anchored. Should client portals be built around client vaults, or planning software, or portfolio reporting? Should advisor dashboards be built within financial planning or portfolio accounting software, or the advisor CRM instead? Ultimately, it remains to be seen where the winners will come from – or if an entire new software category for advisors may soon emerge. For advisor technology companies, they may soon come to the crossroads about whether the purpose of the software is to be the engine that powers and manages the data, or the portal to interface with it.
The “Big 3” Technology Hub for Advisors: CRM, Financial Planning, Portfolio Accounting Software
For financial advisors actually engaged in providing financial advice for clients – beyond just doing investment management alone – there are typically three core technology tools that drive the practice. They are: CRM software to manage the client relationship (and the staff serving them); financial planning software to analyze the client’s financial situation; and portfolio accounting software to track (and manage, and report on) the client’s investment accounts (primarily those under management).
Around the big three are attached a wide series of additional software tools and supporting technologies that help the advisor to implement. Those tools range from portfolio analytics/reporting and trading/rebalancing software tied in to the portfolio accounting software (along with a connection to the custodian themselves to download and reconcile data) to account aggregation and data input tools that push information into financial planning software. Finally it includes a document management system to both manage documents themselves, and tie them back to clients in the CRM.
For most of the past 20 years, though, the challenge of the Big Three is that they have each run independently, with little if any data flowing between them, forcing advisors to interact with each software platform independently—and often redundantly, such as entering client information separately into each. The situation was so problematic, that for years advisors have lamented the lack of a “Holy Grail” solution, packaging the big three together into a single unified system. Though a few attempts have been made historically, they have ended up being mediocre in each category in a failed effort to try to develop them all simultaneously.
In recent years, though, the shift of software from local servers to the web, and the expansion of APIs, has kicked off a massive change in the world of advisor software. Suddenly it’s not relevant to seek out a single unified system, because integrations make it possible to simply obtain the best-in-class in each category, and allow the software platforms to push and pull information to/from one another. As these integrations continue to unfold, though, and data increasingly flows across the big three, a new problem has begun to arise: which software should be the central dashboard for the advisor’s practice?
The Central Dashboard to Manage an Advisor’s Practice
When none of the big 3 software tools “talked” much to each other, advisors who needed information from each would log in to each. Want to know the client’s account balance? Log into the portfolio management software. Want to know the status of the client’s financial plan? Check out the planning software. Need to set up the next appointment for a client meeting? Go to the CRM.
Ultimately, though, the opportunity that comes from integrations is not merely to eliminate the redundant data entry across the platforms but to reduce the necessity of logging directly into those platforms at all. For instance, if the current status of a client’s financial plan (e.g., the current Monte Carlo probability of success) was shown in their CRM record, there’s less need to log in to planning software unless it’s to do a specific plan update. If the client’s account balances are pushed directly into the planning software, there’s less need to log into a portfolio accounting platform to see where the client stands. If address updates entered into the CRM are pushing into the portfolio accounting software—which ideally then push all the way out to the investment custodian—it’s not necessary to log into the portfolio accounting platform to manage investment account information.
Yet when information can push all the way around the circle, it starts to become confusing about which platform is the “central dashboard” of the advisor’s practice. In other words, if the advisor was just going to log into one piece of software to “run” the business, which would/should the advisor use?
Thus far, the answer still seems to be all of them, as the software companies vie for dominance as the advisor’s central dashboard. CRM tools like Salesforce, with middleware enhancements like AppCrown, have made the case that CRM can be the center, and pull in the relevant information from other locations. Investment custodians have tried hard to support advisors building their practice around their portfolio accounting software, and/or around the investment custodian’s own advisor portal that provides a connection and interface to the investments accounts held there. Now financial planning software companies like InStream Wealth are making the case that the financial planning software can/should be the central dashboard of the practice.
Ultimately, the effectiveness of software integrations will break down across the Big Three if they all simultaneously vie to be the central portal for the advisor managing their clients and the practice. Not every part of the Big Three can or should be the “portal” used to peer into the advisor’s practice. In the end, there must be one practice management dashboard, providing easy access to all the key performance indicators (KPIs) of the business. Ultimately there will be just one, either because one of the Big Three becomes the dominant portal itself, or because a separate advisor portal solution comes along to draw information from them all.
The Central Portal for Clients
Unfortunately, the uncertainty about which of the Big Three should be the central dashboard for advisors is matched by a similar challenge when it comes to clients: what should be the information hub for clients to interface with their advisor?