Fully integrated technology is key to advisor success

Posted by James Capps on April 10, 2017

While technology may provide a range of benefits for financial advisors, the success of these solutions depends in part on how well these various software applications work with one another in a connected office environment. This depends on their degree of integration. Integration refers to the extent to which individual software applications – from billing to CRM to financial reporting – communicate and share data with each another. Not surprisingly, full and deep integration has become a priority for many financial advisors.

While integration has become a watch word in the financial services and financial technology markets, it’s important to recognize that the term may mean different things to different people. At its most basic level, integration may refer simply to “single sign-on” (SSO) integration. SSO integration allows users to access different applications without constantly reentering login information and passwords. While SSO integration can be useful, it doesn’t guarantee that these individual solutions will share data or automatically update to account for changes to one single program.

Full integration goes much further. It allows different applications to communicate seamlessly with one another – meaning that any changes you make are automatically and securely saved across your systems. At the most advanced levels, it means that changes to asset allocation models or investment performance will automatically inform processes such as trading and performance reporting. It means you can easily shift between modeling and reporting applications during client meetings, offering investors a comprehensive, holistic view of their accounts.

In the real world, this kind of deep integration remains relatively rare. In an InvestmentNews 2015 Adviser Study, only about one-fifth of advisor reported that their systems were fully integrated, without requiring any manual data entry or adjustments. More than a quarter reported no real automated integration.

While full integration between technology solutions can be hard to achieve, even partial integration can make a difference in your business. An Aite study found that RIA firms with at least some level of integration were spending only about one-third of total staff time on business operations and processes, compared with 50% of staff time for other firms. Consequently, those firms with technology integration were able to spend 30% more time on client services and prospecting.

Solving the integration gaps through APIs

The good news is that financial advisors have more help than ever in reaching their integration goals. This is thanks to the growth in APIs, or application programming interfaces. APIs are specialized software programs that that link together different applications to create a seamless experience for end users. To understand how APIs work, imagine each separate software program as having hooks that interact with the outside environment, taking in data and providing outputs. API’s act like a chain, bolting onto these hooks and helping these different programs communicate with one another.

APIs allows you to interact with your various software programs, from your CRM platform to your document storage program, and ideally will eliminate the needs for manual data entry or adjustments. A successful integration also will allow you to scale, adding new components as your needs change, or as new technology becomes available.

Choosing the right technology partners

Advisors have a wide range of technology partners to choose from. These may include everything from a comprehensive technology platform provides by a custodian to more targeted technology solutions to handle certain functions including CRM, risk management, financial planning, portfolio reporting, and account aggregation.

Your choice of technology platform can have far reaching implications for your business. Yet the very breadth of the playing field has made this decision difficult to navigate. When advisors were asked about barriers to full integration, the most common roadblock they cited was insufficient staff time to plan, manage and implement an integration strategy. Nearly 30% advisors also reported difficulties in identifying appropriate solutions. Another 11% reported frustration with keeping pace with new technology options.

Sourcing and onboarding a new technology can be a complicated and time-consuming process. Nonetheless, if navigated correctly — with the support of a dedicated technology partner — a technology migration can provide tremendous benefits for your clients, staff and bottom line.

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