Justin Wheatley says we’re getting closer to having the “Drive-thru hamburger joint approach” – where advisors can pull data into an app and it will work instantly
“Ideally, a client should never have any need of consulting or IT or infrastructure, but instead can just select what services they want from a menu and pay a proportionate price for that service based on their need and usage (just like you buy electricity or telecoms)”, says StatPro’s group chief executive Justin Wheatley.
Although the industry is getting closer to that type of seamless approach it still has a way to go before Justin’s vision becomes a reality. Financial professionals have a plethora of decisions to make regarding choosing the right technology for their firms: best-in-breed versus integrated suites; cloud-based versus local; outsourced versus run-in-house. Not to mention anything about how to get high quality data for performance measurement into these apps.
When it comes to cloud-based versus local applications Justin is beginning to see a shift toward the cloud even among the larger institutions. “Nearly all of us in our home lives have the cloud without thinking about it,” says Justin. “Google always works. Facebook works. All these apps in the cloud just work.”
Justin says that cloud-based apps are a far superior way to receive a service. One of the advantages is that when the app gets upgraded you don’t even notice – it happens seamlessly. Larger institutions that have traditionally been prone to inertia and safeguards, Justin says, are realizing the advantages of cloud-based solutions and are starting to make strides in switching to them.
If you are among the many operations or IT managers tasked with selecting new solutions, and are evaluating a cloud-based application, questions about security are bound to be part of your due diligence process. After all your CRM, portfolio management system and other applications contain personal financial information for valued customers.
Justin says that “because cloud based solutions are modern they are far better written than older programs that were built in a different spirit.” He likened it to a house telling me that old software, locally run on your computer, was built like a traditional home. You built the foundation, walls and rooms. And then perhaps you decided to add locks and a security system. “A house is designed to live in. Security came as an afterthought. A cloud based solution is more like a fortress, it is being conceived of initially as a secure place.” Justin’s belief is that cloud-based solutions are architecturally much better for security.
So, what should you ask to validate that any cloud-based solution you are considering meets your security standards? Below are types of documentation to request:
SSAE 16 Type I
SAS 70 Type I and II audits
Integration with Other Solutions
If a cloud-based solution is right for your firm, it will likely be one of several platforms/tools in use. How will it “communicate” with other platforms? Seamless integration among multiple platforms, along with seamless movement of data between those same platforms, is the proverbial Holy Grail.
“It is much easier with the cloud to make connections”, Justin says. “If you have SalesForce and Revolution you can connect the data together using an API and build exactly what you want.” He says that integration of cloud based solutions is far simpler than with traditional software.
Instead of connecting best-of-breed applications many opt for integrated offerings that provide all-in-one solutions (e.g., portfolio management, reconciliation, risk, reporting) in one platform. Case in point, the Advisor Xi® Suite from Envestnet | Tamarac offer rebalancing, reporting and portfolio management for RIAs.
Justin believes that best-of-breed applications will eventually become one stop shops as they expand their offerings. “The other way around is a platform solution where products are pre-integrated and sold in a store.” StatPro has taken a hybrid approach by promoting partner products in its store. These products are already pre-integrated with the StatPro solution.
Powering Solutions with Data Suitable for Performance Reporting
The next frontier with connectivity among advisor solutions is with the data flow. “When doing performance measurement, if one asset is not put into the tool properly the whole thing is wrong and that continues over time. In other words, if any one day out of 100 is wrong the whole thing [performance] is wrong”, says Justin.
Accurate, complete and comprehensive financial account data that is suitable for performance reporting is a strategic necessity. So whether the solution you choose is cloud based or local, a best-in-breed app or an integrated suite, the intelligence it delivers will only be as good as the transaction-level (or position information) it has. When selecting a cloud-based solution ask about:
What types of financial account data are available? (e.g., price, duration, index data)
How comprehensive is the data? (e.g., sweep accounts, offshore funds, 401(k)’s, REITs)
Which data sources are available? (e.g., large custodians, 401(k) plan providers,
Is the data sufficient for performance reporting, cash management, trade matching, shadow accounting, and other uses? (e.g., CUSIP info, accurate transaction-level data)
Financial account data from ByAllAccounts flows into more than 40 platform and service providers, from Envestnet |Tamarac, to Orion Advisor Services to WealthTouch to Blueleaf (for a complete list click here).
Justin says “We are getting close to the drive-thru hamburger joint approach. What advisors/asset managers want is to drive in and put their hand out of the car with a credit card” In the end, it is all about having solutions that work for your specific business situation, which improve your operational efficiency and speed your time to market with new solutions for your clients.
Justin Wheatley is Group Chief Executive, StatPro, has a proven track record in delivering innovative solutions to the investment industry.
You may also be interested in:
The Data Automation Imperative: 10 Tips for Keeping Management, Operations and Compliance In the Know (Complimentary Whitepaper)
5 Steps to Simplify the Movement of Data Through Your Organization (Blog post by James Carney, CEO, ByAllAccounts)
The Definitive Guide to Account Aggregation (eBook)