Dreaming the adviser software integration dream

WHEN it comes to the thorny issue of integration, software companies serving the adviser market are making progress.

Still, after almost two decades, a state of “data nirvana” remains elusive, said Greg Friedman, a principal of Friedman & Associates, a wealth management firm in Novato, Calif., and president and co-founder of CRM Software Inc. of Palm Beach Gardens, Fla., the maker of Junxure customer relationship management software.

Recently, most vendors have stopped charging for integrating their software with complementary products, and custodians have been instrumental in moving the integration process forward, he said, but much remains to be done.

“The techie guys tell you that it’s all a piece of cake — like those Microsoft commercials where they promise you can invite kids to Sally’s birthday party, order a cake and start the oven all from your smart phone,” but then there’s the real world where it doesn’t quite work like that, Mr. Friedman said.

“I’ve learned how difficult true integration really is,” said Mr. Friedman, who is the co-creator of Your Silver Bullet, a consortium of 22 software companies committed to open architecture.

Still, the picture is probably brighter than it seems.

“Most advisers are already using bits and pieces of software that they can link together and get most of the way to integration by building the solution themselves,” said Naomi Scrivener, principal of BackOffice Solutions LLC of Colleyville, Texas, a firm that provides financial planning support services to advisers. “What they need is often sitting out there; they just need to be more proactive — or maybe use a consultant to pull it all together.”

Custodians and broker-dealers also have helped move integration forward.

“They’ve put many resources toward furthering technology, integration and development of solutions,” said Brian McLaughlin, founder, chief executive and chief technology officer of Gold River, Calif.-based Redtail Technology Inc., which serves independent registered investment advisers and broker-dealers.

“Individual RIAs get a benefit from all the solutions that companies like Fidelity [Investments], Pershing [LLC] and the broker-dealers are putting into this,” said Mr. McLaughlin, who along with Mr. Friedman and Bruce Moulton of Moulton Strategic Partners Inc., a consulting firm in Flower Mound, Texas, were panelists at the recent Financial Planning Association Business Solutions conference in Rosemont, Ill. The FPA is based in Denver.

“As an independent investment adviser, it makes me nervous to have the value of my company so inextricably tied up in a custodian’s solution — but the solutions continue to get more and more open and independent and interesting,” Mr. Friedman said.

On the brokerage side, clearing firms should open their data models more to developers and vendors, and work together for better solutions, Mr. McLaughlin said.

“They’re still looking at it as if it all has to be done inside,” he said. “They need to open up and present best-of-breed products — along with their own — and be willing to integrate them to provide additional enhancements that advisers may not have thought of or aren’t using, but should be.”

When considering integration strategies, Mr. Friedman suggests, advisers should first try to understand the technology they already have, and then find compatible products.

Mr. McLaughlin recommends that advisers be persistent with vendors, pressing them to describe their products’ functions in detail. Specifically, he suggests that advisers ask whether the software can be integrated with what they already use.

“And if you can live without some of the features that are in a resident-based system, then absolutely, push out to the web,” said Mr. Moulton.

Regardless of whether the software is resident or online, Mr. Friedman reminds advisers not to get so carried away by technology that they forget to ask critical questions:

“Does the software have value to you in your firm? Is it something you can then use to leverage to do something with your clients? Those are the key questions,” Mr. Friedman said.

E-mail Davis D. Janowski at [email protected].