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Financial advisors are using more and more digital tools for their everyday activities. But if these tools are not integrated into one platform, they don’t really increase advisors’ efficiency. Switching from one tool to another makes advisors’ work harder.

Alex Chalekian, a wealth management influencer and CEO of Lake Avenue Financial, raised this problem in a previous interview with WealthTech Club. He said that a centralized solution with all the necessary tools onboard could eliminate the exorbitant effort of manually running all the separate tools.

Chalekian is not the only financial expert who suffers from having to stretch their efforts across multiple technologies, which is why WealthTech companies aim to integrate all necessary tools under one roof.

We talked to three industry influencers about the role of integrations in WealthTech:

  • April Rudin, Founder and CEO of The Rudin Group
  • Lex Sokolin, CMO and Global Fintech Co-Head of ConsenSys
  • Timothy D. Welsh, Founder and President of Nexus Strategy

Why are tech integrations trendy?

Almost every WealthTech company, no matter whether it produces a communication tool, financial planning software, CRM, or any other digital tool for financial advisors, intends to provide its users with as many possibilities as possible. Lex SokolinMainly, companies focus on one type of service and seek to integrate it with providers of other services. Thus, their platforms become more valuable, and advisors may have no need to leave such platforms to use other tools.

“Integrations may be increasingly impacting digital wealth now, but they are part of a broader trend of how technology is built, packaged, and sold. Most software today is designed to live on the web and to interoperate with each other through APIs. There is also a recognition that developer communities—or operating systems in the case of mobile phones—are more powerful in delivering feature sets to users that single developers. While one company may have the right vision for a broad set of features, it is very expensive to try and do everything right yourself. Leaning on partners is a quicker way to get there, though you may get discordant results.” — Lex Sokolin

Influencers-April-RudinWe have already discussed the potential pitfalls of integrating WealthTech platforms without thorough preparation. If tools are integrated blindly, the entire platform may lose its value and become hard to use by a financial advisor.

“Some integrations can save time for some advisors, but they are overtasked with competing priorities. Many integrations are not optimized for productivity and are too feature-rich and cumbersome to use. Still, others are not integrated with each other, making workflow difficult.” — April Rudin

Some leading WealthTech companies create integration marketplaces to enable tech vendors to test integrations and check whether they fit their existing platforms. Fidelity’s Integration Xchange is one such marketplace.Influencers-Tim-Welsh

 “Integrations have been a hot topic in the advisor tech industry for decades. But with the big TD Ameritrade Veo Open Access initiative ten years ago, it has become the primary way to drive advisor efficiencies. Based on the TDA success, the industry acknowledges that innovation is being driven by the tech community, not the custodians and BDs.” — Timothy D. Welsh

Are integrations required?

Even though some WealthTech companies, such as AdvisorEngine, try to build an autonomous all-in-one platform, they still need to integrate with custodians to receive data necessary for financial advisors and their clients.

“It is indeed possible to cut through the noise and select the most important features and then build a platform around them. This is what we did with AdvisorEngine. But even in that case, you are reliant on custodians for integrations because they hold your assets and on other applications (like CRMs or document storage) that your users may want to access. We are part of a broad economic tapestry, and thinking about point solutions that are very tightly designed only works for markets with narrow needs. Financial advisors have very diverse practices, which leads to the flexibility requirement.” — Lex Sokolin

Welsh agrees that custodians become the only obstacle to creating a fully independent wealth management application.

“Yes, through cloud-native applications, we can initiate new accounts without having to use digital signatures. It just takes cooperation; however, the custodians do not want to cooperate, so it will be a perennial problem to have a universal, industry-spanning solution.” — Timothy D. Welsh

Building an all-in-one solution without integrating third-party services requires a WealthTech company to extend more effort to keep every service up to date and the entire system easy to use.

“It is possible to create an ideal centralized solution with the necessary tools, but this will iterate as technology improves and more adoption occurs along with increased demand for client experience.” — April Rudin

Access the whole Fintech integrations ecosystem in one place

Apart from integrations, what can improve advisor efficiency?

Even a best-in-class WealthTech platform with all the required tools and systems integrated into it can’t make advisors efficient if they don’t know how to use all those features.

Advisors are responsible for completing many processes, so their workflow should be well established. In this case, utilizing technology will boost advisors’ efficiency.

One of the most important ways to be efficient is to sort out priorities. From time to time, advisors may review their tasks and delegate or even outsource some of them. The same process may concern their client base.

“The best way to improve efficiency is to do less and focus more. This is very hard, especially for people trying to grow their practice. Earlier in your career, you try to say yes to everything and grow your opportunity set. At some point, you have to revisit what is important and prune your client book. That might mean saying yes to lots of retail clients and using automation and private labeled digital wealth to serve a thousand accounts. Or it might mean saying no to this channel and only having 20 ultrahigh net worth clients. Or it might mean saying yes to YouTube and posting a daily video about the markets. This all really depends on personality.” — Lex Sokolin

Bottom line

Advisor efficiency is the primary topic for every WealthTech company. All technology is created to save advisors a few minutes on a task or an hour of a workday to help them boost their efficiency and grow their business. Today, almost every task advisors perform can be automated. If done right, integrations allow creating an ideal centralized solution with all the necessary tools on board.

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