In the battle to control financial advisors’ desktop, integration is a key weapon.
Custodians, broker-dealers, advisor networks, fintech vendors and even asset managers are investing in digital dashboards that tightly connect advisors’ various tools in a single location.
Wirehouses are often left out of the discussion, dismissed for having out-of-date legacy systems, mandating which technology advisors can use, or both. But Merrill Lynch’s new dashboard — dubbed Client Engagement Workstation and hailed as a new industry standard by some analysts — demonstrates wirehouses may have an advantage when it comes to providing advisors with an integrated technology experience.
Why? Merrill uses its own investment products and strategies, controls its own client data and owns its advisors’ technology. As Alois Pirker, research director of Aite Group’s wealth management practice, puts it, “If you control the environment, you can integrate data better.”
That control means data is consistent. As a result, developers can more easily implement next-generation tools, such as CEW’s artificial intelligence features, “Insights” and “Ask an Advisor.”
The firm can also pull Bank of America’s consumer banking data into financial planning without worrying about accuracy or a third-party aggregator that could expose the firm to cybersecurity risks and privacy concerns (the firm does use Yodlee to let clients sync outside accounts). And with its browser-based design, advisors can customize the layout and functionality of the workstation to fit their individual needs, addressing a popular complaint about wirehouse’s mandated tech platforms.
“Capabilities like our virtual assistant, Erica, having a single CRM system, unified financial planning tools and a centralized CIO model that all advisors work from, are all massive advantages,” says Kabir Sethi, Bank of America Merrill Lynch head of digital wealth management. “When you can use these tools consistently, across teams and lines of business, it allows us to make heavy investments in fewer systems and ensures that each of these systems are best of breed.”
Firms serving independent advisors don’t enjoy this luxury. RIAs especially want freedom to select best-in-breed technology, forcing developers to build integrations between the firm, the custodians and an ever-expanding technology ecosystem. For example, Fidelity Institutional has nearly 200 fintech integrations, says head of platform technology Lisa Burns.
RIAs can hope their technology works together, but without a single, custom-built data layer, it remains difficult to build integrations as deep as what Merrill has with CEW, Pirker says.
“It will always be hard for the independent space,” Pirker says. “They want to give freedom and choice; those two goals are biting each other.”
It will always be hard for the independent space. They want to give freedom and choice; those two goals are biting each other.
Alois Pirker, research director of Aite Group’s wealth management practice
Wirehouses only have to solve for their own advisors while firms like LPL have to provide technology for advisors across a range of business models and brands, says Rob Pettman, LPL’s executive vice president of investor and investment solutions. Giving different advisors freedom to choose which technology works best for them is important, but “it adds a lot more complexity,” Pettman says.
“Too much choice can be overwhelming,” he says, explaining LPL’s strategy of offering a curated menu of tech vendors. By focusing on a narrow list of options, LPL can build the types of integrations that will be most beneficial. “We believe that tighter integration helps advisors get more out of their technology.”
It remains to be seen if the wirehouse’s next-generation advisor technology is powerful enough to keep advisors from leaving. Independence can still offer higher buyouts, more autonomy and the opportunity to build a personal business, and custodians’ open-architecture strategy remains an advantage in capitalizing on the trend.
“We know technology is not one-size-fits-all, so we offer the choice that advisors are looking for,” says Burns. “We support clients in building the technology stacks that address their unique and specific needs.”
Yet it’s clear the independent market no longer has the high ground in the battle for the advisor desktop. Technologists often say that when it comes to innovation, small and nimble beats large and lumbering. The speedboat can turn more quickly than the aircraft carrier, they say.
But the aircraft carrier makes it eventually and with drastically more firepower.
The wirehouses have arrived, and they’ve brought the big guns.