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“I think that there’s an assumption that the acquiring platform that you then have to adapt everyone to, that that’s not always going to lead to the most successful consolidation or project. I think it is sometimes about thinking about it like a new platform. So let’s look at the processes holistically for something like back office workflows or account opening and then let’s implement the correct new process for this consolidated platform versus just assuming that one of the existing ones needs to win.”
— Molly Weiss, Head of Product for Wealth Platforms, Envestnet
The WealthTech Today podcast features interviews, news, and analysis on the trends and best practices in wealth and technology for wealth management, asset management, and related areas. This episode is part of our January focus on platform consolidation. We’re talking to influential industry leaders who can provide technology solutions that help advisors build stronger relationships, improve outcomes, and enrich their clients’ lives. A quick shoutout to our sponsor, the Invest in Others Foundation, please go to InvestInOthers.org, and be sure to subscribe to our show wherever you listen to podcasts so you don’t miss future episodes.
Companies Mentioned
- Wheelhouse Analytics [19:45]
- Yodlee [18:00]
Topics Mentioned
- Pain Points in Platform Consolidation
- Avoiding Back Office Disruption
- Tips for Preempting Consolidation Problems
- Grouping Advisors by Business Practices
- Streamlining Your Data Architecture
- Prioritizing Front-End vs Back-End Consolidation
- Integrating Systems vs Replacing Them
Episode Transcript:
Craig: I’m excited to introduce our guest for this episode is Molly Weiss, Head of Product for Wealth Platforms for Envestnet. Molly, welcome to the program.
Molly: Thanks Craig, I’m Glad to be here.
Craig: So glad you can make it. Glad you had some time available. I know you’re really busy, especially this time of year things are just starting off. How’s your year going?
Molly: So far so good. It feels like we’re a few months in not just 19 days in.
Craig: It does seem like time has flown a lot farther. I’m in New Jersey. It’s freezing cold here but I know you’re in the Bay Area, you probably have a little bit better weather.
Molly: A little bit better. I feel a little bit bad about telling you but it was 68 I think over the weekend, so we were enjoying some good weather and some 49ers win too, so we like that in the bay area as well.
Pain Points in Platform Consolidation
Craig: So we’re happy with the 49ers with the Cowboys. That’s a good thing. In New Jersey we’re all happy, half of New Jersey is Giants fans, they’re happy, the other half are Eagles fans, they’re happy. So good job 49ers. We can talk football all day, but we’re gonna skip that and we’re gonna move on to platform consolidation. That’s the theme for January, that’s why we brought you on, your leadership in the industry and your experience and your work we’ve always admired so let’s just dive right into it. Can you share with us some of the pain points of some of the challenges that you’ve run into with platform consolidations in your experience?
Molly: I’ve been a part of many, Envestnet helps support both RIAs and broker dealers through platform consolidations and the industry has been so acquisitive that there have been a lot of new acquisition that we’ve been a part of in the last you know, few years and definitely in the last year. The the pain points, it always seems to center around what the advisors experiences and what’s most disruptive to the advisor and what I think advisors find most disruptive is anything that affects their billing or the way that clients see the fee schedules or the billing that they might be presented with, that is often a major pain point. And often sort of the back office processes get disrupted even though ultimately the goal from consolidation is usually to streamline service, to streamline back office processes. I think the the bumpiness of getting there sometimes is really disruptive to the advisor. So those are some of the pain points that we’ve seen in the past.
Craig: We’ve seen the same thing. We work with broker dealers and who are doing acquisitions and need help consolidating as well as working with PE firms
that are investing and then they’re rolling up, or they’re bringing firms together. Acquisitions is the biggest driver of these platform consolidations because you know, the firm’s all want to get to growing again, faster, and the multiple platforms are in their way. So what are some of the best practices you’d recommend, if you were talking to a room of broker dealer CTOs and CIOs, what are some of the best practices you’d recommend for getting the platform consolidations running as smoothly as possible?
Molly: I mean, obviously, planning is is key. So it really all does start with planning and having a really thoughtful strategy. I definitely recommend understanding things like the way that the advisors are using programs on the platform and looking for ways to simplify the options that are available to them. We see the UMA being leveraged a lot more heavily than in the past so that it reduces the complexity of the configuration and implementation of technology to support advisors’ investment solutions, or the investments that they’re proposing to clients. So really looking for ways to simplify the choices that the advisor has to make, thoughtful planning around that. And then I mentioned billing before, understanding all of the ways that advisors are configured and sometimes that’s the biggest undertaking of the whole process of doing platform consolidation. It’s just going through and understanding all of the flavors that have been implemented on the multiple platforms over time. And I definitely recommend focusing on something like billing and fee schedules to get that process really well understood, and then a good strategy for how you bring that together into something cohesive and then roll it out to your advisors. Those are two places where we really, you can I think reap the benefit of strategic planning ahead of time.
Craig: Billing is huge, we’re doing a billing project right now, and what’s funny is that as you as you mentioned, they need to investigate all the different ways they’re billing. Most firms don’t know because it’s hidden away, firms that have been in business for 20 years or more, they have so many different billing options, so many different tiers and levels and ways they do things, one offs, and edge cases, exceptions, everything’s an exception. We’ve been doing billing projects since 2009 was our first billing project and the level of complexity is tremendous. As you mentioned, understanding all the ways advisors collect fees, we do a current state assessment, we go and look at all interview the accounting people and the ops people, and all the different groups that are involved and we start finding stuff. We’re doing all these workflows, and asking, “Did you know they do this”? Did they do that, did you know they take checks? They do all these different things, so it’s you hit the nail on the head there.
Molly: So your comment there about interviewing advisors and and understanding how they run their practices, I think that one can’t be underestimated because they just feel so often that there’s an assumption about the way advisors are using technology to facilitate their client engagement or to run their practices. And we’re not always right in the way that we’re making those assumptions. Spending time really understanding those practices and when we tend to group things based on how much AUM an advisor might have or what their specific investment preferences are for clients, but I think ultimately, it’s really getting a better sense of how they’re using platform technology to manage their business so that you handle those edge cases and you create streamline processes for that new consolidated platform that you’re trying to roll out.
Avoiding Back Office Disruption
Craig: We recommend thinking about it like you’re building a new platform, so doing the workflows and walking through. They think it’s simplistic but we see this every time we do the workflows like the here’s the new account opening, here’s a new adding new client to the billing system. Here’s the steps like Oh, you forgot this, oh, we’re done that we got to call this person before we do that or no, the accounting team does this. And we have all the people in the room compliance, revision, account
ing, billing, and they’re finding us stuff they didn’t even know they did. And just documenting all those but also once we document it all, giving it to the vendors like we’ll give it to you, we’ve done that before working with Envestnet, here’s what they’re doing. And you guys love that because now you don’t have to go look at and find
things later. And you can see, okay, we do this. We don’t do this. Here’s how we have to configure our platform to support this and it saves so much time. So we did billing, so with best practices from successful platform consolidations that you’ve seen, what about back office? What are tips for the back office that you recommend they do to avoid disruptions?
Molly: So you just said something that that I think is interesting, and I think that there’s an assumption sometimes that there is either the acquiring platform or there’s kind of a lead platform or process that you then have to adapt everyone to, and I think that’s not always going to lead to the most successful consolidation or project. I think it is sometimes about thinking about it like a new platform. So let’s look at the processes holistically for something like back office workflows or account opening and then let’s implement the correct new process for this consolidated platform versus just assuming that one of the existing ones needs to win. Really doing what you just said, which is documenting existing workflows, understanding what the target state workflow should be, using the best of the technologythat’s now consolidated into this new experience. And then understanding what the disruption to the advisors existing practice is going to be so that you can communicate that effectively and plan how that’s going to be rolled out and make sure that it’s, I keep saying the word disruptive, but I think that what you really are trying to do is disrupt the advisor’s business as little as possible while taking them to a better target state of this consolidated platform that should serve them better ultimately.
Craig: It’s about minimizing the disruption while bringing them along the path to a better outcome, and you made a good point, if I could paraphrase, don’t migrate your bad processes to the new system.
Molly: That’s right. Come up with the new target state best practices.
Craig: Fix things if you see things that are broken.
Molly: It’s an opportunity to progress and get to a better end state ultimately.
Craig: Another area we talked about with best practices was contracts. Can you talk about contracts and what you’d recommend firms do with those?
Molly: When I think about contracts, and platform consolidation, I think about two areas. One is usually if you’re consolidating platforms, there is you know, recontracting that’s taking place with the actual advisor and potentially the client as well. And so I think that really being thoughtful about planning how you’re going to roll that out to advisors and their clients and the communication that takes place, and that migration that might need to take place to new systems, I think is really important. But then also third party contracts. Things like data vendors, data providers, it could be a CRM, whatever sort of third party partners you might be working with, looking to consolidate those contracts well ahead of actually doing any of the platform consolidation, I think really can help streamline and reduce the complexity as you’re getting to that end state target new platform. We definitely have supported some of our client firms through having to find out a little bit later that they were receiving data from the same place but with two contracts and that just creates a headache down the down the line.
Tips for Preempting Consolidation Problems
Craig: Another great suggestion, because we see that all the time when we’re working with firms, and we start going through their contracts and they have things that they’re not even using. We found a vendor that was paying 10k a month for data, they weren’t even using it because no one picked up on it. So those are all good best p
ractices to look at. Let’s talk about rolling things back. So preemptive strikes, what can enterprise wealth firms, broker dealers and others do, preemptively before they’ve got a platform consolidation because it’s going to happen at some point. They’re gonna acquire somebody, they’re gonna get acquired, so how do they make things easier? What some suggestions you have for them?
Molly: I go back a little bit to that concept of simplification. I do think that there are a lot of platforms out there and broker dealers that are kind of in a complicated situation when it comes to things like programs and investment offerings. So where they can consolidate ahead of time, maybe using the UMA as an example, if they can create less complexity for their advisors and things like running proposals or managing programs that they’re using, I think that can really help a lot. And then the other thing I think that can be really helpful is more about data, organizing data and making sure that there’s a really clear strategy around where data is stored what data is stored, how that data is used throughout the existing ecosystem, and then doing scenario planning. What if we were to do an acquisition, what would that look like for us if we were to acquire a new portfolio accounting technology or a new broker dealer or something like that, how do you make that as seamless as possible? And I think that that just naturally leads to questions and probably identifying some of the things that you were just saying, which is maybe you’re getting data in two places, and you don’t need to do that anymore. So I think that kind of planning can really help a lot.
Craig: That’s an excellent point the scenario planning, because a lot of firms don’t think about that they do an off site, just get all your leaders together and
say, Well, what if this happened, what would we do? And that can generate some good thoughts and some good discussion. You mentioned data strategy, what are some of the things you see when you’re working with a firm that has a well designed data architecture? What are some of the best practices around that that helps with platform consolidation?
Molly: I think really understanding where like I said, where data is stored, but then also how that data is used? I think where that is really well documented, what data is being used to support the trading application or what data is being used for CRM, what’s the book of record of that data? What’s the source, a source of that data? Really well documented and thoughtful strategy strategies around that organization helps to avoid surprises when you’re actually doing the platform consolidation. So you don’t all of a sudden run into a case where either you have multiple instances of the data or you disrupt something you weren’t prepared to disrupt because you made a decision without knowing where your data source was. I think that kind of thoughtful strategy around data, how it’s used and how it’s stored, is really key to making a platform consolidation go smoothly.
Grouping Advisors by Business Practices
Craig: Those are excellent points. One thing we do and we’re just starting a strategy project right now for a logic broker dealer, one of the things we’re doing is looking at data utilization and seeing well, here’s the data you need, but it’s available from this system as well and you’re paying for it from that system, and it’s actually better over here and why don’t you consolidate? They don’t even realize they had it available from system A, but they put system B in that they’re only using for one thing, but using system A for 10 things. But it requires us to come in and look at these utilization, your sources, inbound, outbound, upstream, downstream data strategy data models, so another excellent point. You talked earlier about, we’re back to pre emptive steps, what about business practice groupings? You’d mentioned that why should they do that and what benefit is that provide?
Molly: We talked a little bit at the beginning about pain points, and I think disruption to the advisors day to day experience with technology can be one of the biggest pain points, that obviously it’s going to increase the number of inbound calls that the firm or the broker dealer is getting from their field. It can result in less interaction with the client and all the things that we’re trying to actually make better with technology. So as you think about consolidating platforms, and then getting to that target state platform, understanding how advisors use technology in their practices is really important. If you can group advisors into kind of their practice patterns, and then think about rolling out, whethe
r it’s a new experience that they’re going to be adopting, or a new process that they’re going to be adopting, thinking about staging that rollout in phases based on how the advisor is using technology or using that back office system can really ease the frustration and also streamline what the home office teams are focused on. Whether they’re training or supporting or fielding those inbound calls can really help create a more successful platform consolidation experience.
Craig: And the home office is busy, they have their day jobs.
Molly: They are so busy.
Craig: Adding this new thing is not going to help their stress levels or get their jobs done quicker.
Molly: I spend most of my days talking to people in the home office, and so I feel like I have a pretty good sense of what’s gonna cause their lives to be a lot worse and that’s where I’ve seen there be success it’s when they are really focused on their advisors. How their advisors using technology and then making sure that they’re supporting that use case or those use cases as well as possible.
Streamlining Your Data Architecture
Craig: Let’s go back to data a little bit. So Envestnet’s got a tremendous amount of data, you have over 100,000 advisors on your platform, multiple platforms you have Yodlee, we talked about consolidating data, but are there any other data recommendations you can share from some of the experiences you’ve had with your platform?
Molly: I think it goes back to what we said about using data. So what do you do with all the data? I think that data can really inform a lot of what can streamline businesses or make businesses more effective and I think about things like even usage analytics. Using some kind of a data analytics package where advisors are spending 
their time, how often they’re logging in, how often their clients are logging in, I think that type of data is probably underused in our industry to help inform the best technology practices. So while there’s data about the client and data about the advisor, there’s also just data about the activities within the technology ecosystem that can really help create a better technology implementation for advisors. So I think that is probably understated a little bit and then helping advisors know their clients. Whether that’s serving up things like the next best action or what that client might need, I think can also help with focusing the technology appropriately to solve ultimately client pain points, but advisor practice endpoints as well. So that would be my recommendation on the data side.
Craig: And Envestnet that has acquired Wheelhouse Analytics many years ago, and that’s become a very useful tool for you guys to do exactly the kind of things you’re talking about.
Molly: Yeah, exactly. Envestnet data has become something that we leverage both internally in some of the ways that I was just mentioning, but also that are exposing more and more externally, whether it’s in the actual advisor console or the advisor login, or eve at the client level is starting to expose things like insights about the client, peer benchmarking, things that the client might want to know about themselves as well. So we’re definitely data focused at Envestnet at this point.
Prioritizing Front-End vs Back-End Consolidation
Craig: One of the things we see a lot with platform consolidation is the disruption and the the changes required on the front end versus the back end, and how the thinking changes when you’re working with one or the other because the front end obviously impacts the advisors directly, the back end, sometimes not so much, sometimes a lot. What are some recommendations you have for firms when they’re evaluating if they have to do both front end and back end changes, how should they approach that?
Molly: I think the coordination of those two things is really important. And sometimes it’s a little bit tricky because it might be different teams at the home office or within the broker dealer thinking about the back office systems versus the front office experience. But my recommendation is just to take a step back and create a whole more holistic higher level strategy so that the potential for disruption is decreased. And if you know that you’re going to need to change something for the advisor that might be back office, not necessarily in the front office tools that they’re using, but it’s potentially going to be a change, thinking about grouping those things.
Molly: So rather than changing something on the advisor four times over the next year, you maybe change something twice, but you group those changes front office and back office into a single we’re going to roll something new out to you next week, so be prepared. And I think that that’s, that can just help lead to a greater satisfaction with the advisor, ultimately to have fewer disruptions and also to keep in mind that those things may be disconnected from the home office perspective, but they’re ve
ry connected to the advisor. At the end of the day, they want to be able to process business so that would be my recommendation.
Craig: You can also do the same thing with operations staff, look at minimizing their disruption because if they’re disrupted then the
advisors are going to be disrupted if they can’t do a new account opening, if they can’t process billing or invoicing. Those types of thingscould also be an issue.
Molly: Good point. And we don’t want to we don’t want to disrupt them either. They’re very important to that process.
Craig: So when we’re talking about different teams, how with looking at the Envestnet system, if you’re consolidating multiple platforms onto Envestnet, one what are some things you recommend the teams do to move the process forward quicker?
Molly: We definitely want the advisor facing teams heavily involved. One of the things that gets overlooked sometimes is there’ll be a focus on the back office and technology teams but we also need to include the people that are going to be interfacing with the advisor. So whether that’s field support or people on the sales teams or support teams, they need to be deeply embedded in the strategy for platform consolidation so that they can help communicate with the advisor. We spend, again, I go back to planning and actually some of what we were talking about with sort of the scenario planning before there even is consolidation or an attempt at consolidation.
Molly: But the more time that we spend upfront with a broker dealer planning what the consolidation is going to look like, what those phases are going to look like, what the new processes will be, the better off the actual implementation is. There’s trade offs obviously, you want to get to that target state consolidated platform for cost and streamline processes perspectives, but if you rush without a really thoughtful strategy ahead of time you run the risk of it taking longer than it should anyway because you’re gonna have to stop and address problems. So that thoughtful plan ahead of time, strategy ahead of time is really kind of key to everything.
Integrating Systems vs Replacing Them
Craig: So let’s talk about integrations versus replacements. Now you’re a bit of bias, you’d want to replace any other systems that are there with Envestnet obviously, and other vendors would want to the same. What recommendations would you have for a client or broker dealers, when to integrate versus when to replace? And I know Envestnet has made a lot of investments into your own integration capabilities to make those better with API’s and other tools. But what are some of the best practices around making that decision?
Molly: Well, that’s a hard one, Craig, because I do think and I think you and I may have had this conversation on a previous call, I do think that we went from, “take a best of breed and integrate them” to “it’s great if everything can come from one technology or one platform” so I am biased. I do believe that the interconnectedness of a single platform is really the way to go, and that’s certainly what we focus on at Envestnet. But we do realize that there are times when there’s going to be another system that we need to integrate with and I think that, it goes back a little bit to my comment before about strategy. We have invested very heavily in our integration capabilities in our API library. We’ve tried to make it as seamless as possible for third party, both clients and you know, fintech providers or CRM providers to integrate with us. I think that getting the two parties in a room where there is the decision to integrate because that is either, you know, a system that is has legacy value that can’t be replicated or it really is just a point solution that that client really wants to continue to use. I think when that is the decision getting that party in the room with the other tech parties, and maybe it has to be virtual like we are, but that really has to be a part of the planning because assumptions are made lots of times based on one on one conversations with the vendor. Or with the platform provider, and they really need to come together and create a partnership for that client. So I can’t say that enough, I think where we’ve seen the most successful, integrated technology solutions is when the client brings us and the other partners to the table and we talk it through and we’re really clear on who’s doing what and to be honest, sometimes that uncovers things that maybe they don’t need that partner anymore, but that’s how you get to that realization and thoughtful strategy.
Craig: Exactly. And we’ve done that with Envestnet, right? We work with you and your clients facilitating that exact roundtable discussion where we get you, the other vendors and custodian, all in the room together and say who’s doing this and who’s doing that and we’re all on the same team here. Let’s we all our goal is to, as you sai
d, minimize disruption, get the client growing again because that’ll have lifts everybody’s boats and who is integrating and who was replacing and which system is being done.
Molly: Those are my favorite meetings, as much as I say I want I want you to take Envestnet all in, and take everything that we offer, I love those meetings. I think there’s so much fun and I think that they can be really beneficial to the client or the broker dealer because they will understand the way that their ecosystem needs to come together in a whole new way. I’ve definitely had CTOs or the heads of technology for these broker dealers in the room and light bulbs go off because it comes together it starts to make sense. You’ve got the custodian there to your point and they’re sometimes at the center of everything, but these other parties all need to play with the custodian as well. And I actually think those meetings are tons of fun.
Craig: They’re challenging. That’s what makes them fun. You’ve got to think a little differently. Sometimes you have to think outside the box. It’s like a puzzle. That’s why we like I like being a consultant running a consulting firm because we’re always putting the puzzle pieces together. There’s a lot of this overlap, and I’ve been saying this for over 20 years, it’s co-opetition. Everyone is competing, and everyone is partnering in different ways. So custodians have now gotten to the space years ago, when they’re take time to take business in different ways. Whether they’ve got a TAMP, they’ve got a platform, but then you’ve got to partner with them because they’re the custodian and your client is working with them and with other platforms as well that you may compete and you may partner with them. So knowing when to do that and knowing how to work and play nice in the sandbox to get the clients happy, because that’s the ultimate goal, isn’t it?
Molly: Definitely. Absolutely. If that’s your guide and that’s where you’re headed, the competition or co-opetition resolves itself to some extent because you uncover what’s right for the firm.
Craig: You’re absolutely correct and we are now out of time. Molly, thanks so much for being here and sharing with us and talking. I think we got a lot out of it, I think hopefully the audience got a lot out of it. Can you tell us where people can find more about your firm Envestnet?
Molly: Definitely, Envestnet.com is the best place to find out more. We’re also we’ve got a big presence on LinkedIn. Lots of articles, lots of our executives out there, creating good content on LinkedIn as well.
Craig: Fantastic. And Molly, thanks for being on the program. Really appreciate it.
Molly: Thank you.
