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Today, in a world that is changing more rapidly than ever, knowledge becomes the most valuable of all assets. For example, if an investor or financial advisor is able to find out useful information in good time, they can make worthwhile investments. With leaders of WealthTech companies, we discussed the API landscape and the APIs provided by their companies. Below, are some of their ideas and insights.

Aaron Schumm, CEO at Vestwell, said:

In today’s technology landscape it’s crucial to be able to establish connectivity across any industry player that either brings value to you as your core business or to your clients and their core business.

Open APIs provide a range of market data and information. Harry Temkin, Chief Information Officer at DriveWealth, spoke about the advantages that API users can access: “In the API today, we provide basic history performance. We can tell you how the equity of the account has changed, deposits, withdrawals, cash balances. You can pretty much build historic performance from inception of the portfolio while breaking out any cash infusions or withdrawals, aside from straight equity performance.”

Using open APIs in wealth-management platforms provides access to financial data and facilitates communication with banks. All sides of the process can benefit from it:

  • Banks can increase their assets under management by providing financial infrastructure to new industry players, and improve own offering due to integration with new financial services.
  • Wealth-management technology firms can create new products thanks to the increased availability and access to financial data.
  • Investors can enjoy a better customer experience and access to all personal financial data in one app.

Lex SokolinLex Sokolin, Global Director Fintech Strategy at Autonomous Research, said,

Since the financial advisory industry is very entrepreneurial and decentralized, advisors can choose any technology they want. And that in turn drives the diversity of FinTech solutions that are able to build software. As apps compete for similar functionality (i.e., rebalancing, CRM, planning), they are evaluated not just on features, but ease of use within the rest of the ecosystem. And similarly, platforms are evaluated both on native functionality, as well as third-party integrations.

To be useful, open APIs should be valuable—i.e., backed by data or services that are in demand. According to Lex Sokolin, open APIs should be “a byproduct of modern software design methods, not a separate initiative that is scotch-taped to large humming engines from the 1980s.” Lex emphasized that CRM, client portals, planning apps, and data aggregation should have an easily accessible and permissioned infrastructure.

Greg Vigrass, President of Folio Institutional, believes that “a good API is one that should be clear and easy to work with, and should be very straightforward for a third party to make work with their systems.

Folio Institutional

Folio InstitutionalAccording to Greg Vigrass, President of Folio Institutional, the API strategy is a huge part of what they do. The company provides a full set of REST APIs that allows third parties to integrate with the platform and get the full functionality of the Folio site. This includes everything from account opening APIs to trading APIs, information on cash movement APIs, etc.

The third parties that are interested in integrating with us via API are typically companies that are very conscious of the experience that they are trying to promote and provide to their clients. They want to be able to maintain and reinforce that, and still get the full functionality of the Folio platform.

Greg VigrassWith a great number of third-party integrations, Folio tries to provide generic APIs so that they don’t have to support a number of custom installations. Greg said, “One of the things we’ve found is that if we’re able to simply support a generic set of APIs, we do so on a consistent basis. Then the quality is much higher. We’re not in a position of having to do a lot of customer one-offs. We simply provide the specification.

To maintain a high standard of APIs, each one goes through a rigorous testing set. This allows Folio to provide clients with the current, top-quality version of the API set.

The primary consumers of Folio’s APIs are enterprises, larger institutions, and financial advisors. Greg explained, “We have a number of advisors operating on the platform who do so exclusively on an API basis. They’re trying to create and maintain a very unique experience for their users. From an enterprise basis, some enterprise firms that we work with, the API is purely an efficiency tool. For them it’s far more efficient to interface with us on an API basis. So there’re a number of firms that are taking maximum advantage of APIs, that do virtually everything on an API-driven basis.

Folio Institutional is consistently expanding its APIs to provide API support for all the existing and new functionality. In the near future, tax optimization and training tools are going to be supported by APIs. “We have something called the Tax of Football, which is a patented inventory tax optimization tool. We will add APIs to support that. We also do a lot with model-based training. We’ll continue to add APIs as additional trading methodologies.

Vestwell

VestwellVestwell facilitates a lot of API integration. For example, the Riskalyze retirement solution was built by Vestwell and its partners. This solution is centered around a risk number based on a series of questions. The whole process is carried out with end-to-end (E2E) APIs.

The company also uses APIs to design retirement plans and structure legal documents required by their record-keeping partners.

Aaron SchummAccording to Aaron Schumm, CEO at Vestwell, its APIs are created to work with its partners behind the scenes, and are not outwardly focused.

When working with other firms, whether on the advisory side or on the end-user portal, Vestwell’s API framework allows the company to provide data to its partners and receive data augmented by its partners’ experiences.

DriveWealth

DriveWealthDriveWealth provides the following sets of APIs:

  • Front-end APIs that allow financial advisors to provide onboarding, execution, clearing, etc.
  • Back-end APIs that allow financial advisors to monitor their customer activity from their own dashboard in real time.

According to Robert Cortright, CEO at DriveWealth, these sets of APIs allow advisors to create a sophisticated product and not have to worry about its implementation on the back-end. All they need to think about is the customer experience.

Harry TemkinAll their APIs have a JSON format, and are REST-based and SALT-secure. Harry Temkin, CIO at DriveWealth, commented,

Every client is given a specific API key that they must use for each of their requests alongside of an additional session key that is granted on a per-session basis. That session key is only valid for a single user. It must be accompanied by a specific API key that we grant the customer, and so the combination of those two pieces across an SSL-encrypted request is how our clients engage with us at this point in time.

DriveWealth is continually enhancing its API set based on customers’ requests and the products that they’re trying to build. Harry said, “We’ve recently built out a series of JavaScript APIs, JavaScript toolkits that make it easier for a customer who’s building a web-based application to work with our APIs.

According to the company’s CIO, DriveWealth is servicing five to seven million API requests per day. “But the system is scaled in such a way that if we see a significant increase in the number of calls coming from the system, we can easily scale up and handle it.

DriveWealth plans to build portfolio management APIs that will allow registered investment advisors (RIAs) to effectively manage their customers’ portfolios. Harry explained, “The APIs would provide a system whereby the client doesn’t need to do the rebalancing and drift factor calculations. We can provide that service, so effectively an API would allow a client to define the portfolio that they are providing to their customers, or a series of portfolios that the client is specifically assigned to. Through an API, RIAs tell the system how often they want to check the portfolio allocation, what the drift factor is that would trigger a rebalancing event, and a series of parameters around it. And the system would realistically do all of the rebalancing and trading for the customers.

Hydrogen, designed by the Hedgeable team

HydrogenHedgeable has created the Hydrogen platform with API-based functionality. Mike Kane, CIO and co-Founder at Hedgeable, explained,

Our whole platform is just an API that third parties use. Typically we’re not doing the implementation for our clients, but we’re providing them with all the APIs they need. We’re helping people by providing all the infrastructure API activity and API financial calculations. People who are using us are looking for an API architecture, and they’re looking to build applications using an API, versus coming to a custom software provider.

Matthew KaneThe company offers E2E APIs that allow users to provide specific functionality (e.g., goal planning, goal investing, onboarding), automate certain actions (e.g., sending alerts, pulling marketing information), or build an application on top of the Hydrogen platform. According to Mike there are about 400 endpoints on the API set, and these may be used to build five different kinds of platforms, including wealth, investing, savings, wellness, and insurance.

Hydrogen has also an Ethereum-based infrastructure that allows API users to integrate blockchain into their applications and provide smart contracts and authentication in a more secure, transparent, and innovative way.

The company’s AI APIs enable users to make applications more intelligent and facilitate the application of machine learning. Mike said, “Users don’t need to know how the machine learning works. It doesn’t matter if you’re just going to hit an API point and it’s going to do the whole thing for you, including get out all the antsy stuff. So what we’re trying to do is a little bit ahead of the market. What we’re selling to people is that they will need a very small data science blockchain team if they use our API. A person who’s using that app doesn’t necessarily know that they are using AI or machine learning. We’re trying to do things in a more usable, functional way for the end client.

Trizic

TrizicTrizic understands the great demand not only for wealth-management capabilities and functionality, but for integrations. Steve Lewczyk, Chief Revenue Officer at Trizic, said, “The most important thing with any integration, be it a file-based integration or API integration, is understanding who you’re building for, who are the target markets, who are the key clients that will benefit from whatever you’re going to build.

Trizic has three target markets: RIAs, enterprises, and the bank marketplace. According to Steve, for Trizic it’s important to enable clients to either explore a standard user interface (as most RIAs do) or build their own user experience (as many enterprises choose to do). The company has to be flexible enough to deliver its framework and services and provide enterprises with the capability to build everything (e.g., CRM, portfolio management system, rebalancing system, etc.) themselves at the lowest total cost and effort.

Steve LewczykSteve believes that custodial integrations are the most important aspect for any wealth-management firm because they give access to data. Before considering integrations with custodians, Trizic first looks at workflow, user experience, and ease of deployment.

To build a comprehensive omnichannel solution, Trizic spends a lot of time and resources on multiple integrations, including a trade order management system, financial planning system, and mobile banking platform. Steve Lewczyk considers ideal partners as those who have APIs available. Unfortunately, most custodians are still file-based.

Everyone’s going to be communicating via APIs. However, it’s going to take an institution that’s been doing it for 50 years a lot longer to get their API store in place than somebody who is a relatively new upstart.

Trizic has built an open API infrastructure and publishes APIs to make them available to all of its clients and integration partners.

MyVest

MyVestCharlie Haims, Vice President of Marketing at MyVest, explained that MyVest likes to keep things at a high level. The company has integrated with key partners for several functions across its enterprise wealth-management platform. “Some examples include trading connectivity with the SunGard Transaction Network and GXS, portfolio accounting from Eagle, multiple custodians, and data vendors like Morningstar, S&P Global, and ICE.

The company also has a broad set of web services built on REST API that enable integration between MyVest’s platform components—such as model management, and rebalancing and trading—and its customers’ systems and their preferred applications (e.g., CRM, financial planning, and account aggregation).

Charlie HaimsRegarding challenges that MyVest faces when integrating with other systems, Charlie underscored the following: inconsistency in data models, a lack of readily available interactive online documentation, and limited testing and sandbox environments.

Today, MyVest is expanding its API sets to improve the ecosystem around account and data aggregation, analytics, and goal-based wealth management. Charlie explained,

Our strategic plan includes extending our current integrations, as well as expanding our API ecosystem. We also continue to strengthen our API’s infrastructure for things like documentation and endpoint consistency.

Bottom Line

Open APIs are having a significant impact upon the entire wealth-management industry. Above, we have examined several WealthTech companies in terms of the APIs they create, and the functionality and integrations they provide via API sets. Some have a specific focus (e.g., data-focused APIs), while others offer APIs that allow users to offer either the entire wealth-management process or separate services. Companies can offer integration into their platforms or integrate into third-party solutions to add value to their own platform and offer clients high-quality services.

 


About Folio Institutional
Folio Institutional delivers complete solutions to financial advisors, professionals, institutions, and their clients. The focus on investment innovation has enabled the company to build a leading platform for low-cost diversification suitable for clients of any size. Read our research.

About Vestwell
Vestwell is a turnkey solution for financial advisors, providing them with the ability to offer clients a retirement plan without taking on the risk and costs typically associated with creating one. Read our research.

About DriveWealth
DriveWealth was created on the vision that investing in the US stock market should be accessible globally. The company continues to grow, with current partnerships reaching users in approximately 150 countries. Read our research.

About Hedgeable and Hydrogen
Hedgeable is an innovative company that delivers a wide range of options, features, and services. Hydrogen was founded to expose its light, modular, global REST APIs to firms small and large, with the goal of helping to digitize the world’s financial systems. Read our research on Hedgeable.

About Trizic
Trizic provides enterprise-class, digital investment technology to wirehouses, brokerages, asset managers, banks, RIAs, and credit unions. Read our research.

About MyVest
MyVest combines best practices in wealth management with best-in-class technology. It has created a scalable, configurable enterprise platform to foster client-centric wealth management throughout customer organizations. Read our research.

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