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“I think when we look at recommendations, best practices, at the end of the day, these projects are garbage in, garbage out. You do want to do everything you can on the front end to make sure that your data is in good order, before providing it to a new provider for migration. Throw us something you think is going to be a curveball. And let’s talk about it on the front end. You don’t want to take shortcuts on these projects because it will come back to you because oftentimes the curveballs, the complex cases, they tend to be large clients too.”
— John Mackowiak, Business Development Officer, Advyzon
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 February focus on organizing and managing client data. 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.
Topics Mentioned
- Good Data Management Policies
- Staying Diligent With Recon
- Ask Your Vendors About Their Off Boarding Files
Episode Transcript
Craig: I’m pleased to introduce the next guest on the program is a John Mackowiak, Business Development Officer at Advyzon, John, how you doing, buddy?
John: I’m great. I’m great. How are you, Craig?
Craig: Wonderful. Thanks for being on the program. We appreciate it. We’re here to talk about organizing and managing client data. But before we do that, can you give us the 30 second elevator pitch for Advyzon?
John: Sure. So Advyzon is a comprehensive technology solution for independent investment advisors. Six key pieces of what we do; at our core were reporting and billing solution. When we launched back eight years ago now, reporting hadn’t been done. So how are we going to differentiate? Answer to that is we’ve included most if not all of the pieces of the puzzle a firm is going to need to run their business. A full CRM system, SEC compliant document management, white label client portal and mobile app, and then a couple years ago, went beyond maintaining a client base to helping our users grow. So we added in what we call the Advyzon growth suite to help collect data and manage the prospect process working with potential new clients. So what we’ve been doing on that end, and then within the next several months here, you will see the long awaited launch of Advyzon Quantum our rebalancing solution that will be part of our platform.
Craig: We’ve been keeping an eye on that we’re excited to see it.
John: Product team keeps adding to it so we want, as the old shampoo commercial say, never get a second chance to make a first impression. So have a few bells and whistles we’ve been adding this year. I hear
Craig: I hear you, it’s never done. Software development is never done.
John: It shouldn’t be at least. Keep keep pushing. That’s what we go for.
Good Data Management Policies
Craig: So we’re talking about organizing and managing client data. Just to kick things off, can you just talk about how your company approaches it? Do you have any company wide policies and how it should be organized, stored and managed?
John: As our founder and CEO likes to say data management and security should be proactive and built in by design, not reactive because there was a problem. So we’ve done a bunch on our side to save our clients from themselves in some cases. So for example, two factor, the advisor is going to get regular reminders if they’ve chosen not to enable two factor authentication for logins. What we’ve done there is similar to how Chase Bank approaches it where we have a trusted device policy. So we’ll bypass two factor if they’re on their own machine on a consistent browser, but we will hit them with it pretty regularly if they’re moving around or if they’ve chosen not to enable it.
John: Other things we look at on that end, data encryption, of course, is standard for a cloud based system. We’ve built in a number of audit logs. So if data within the system is changed, you will be able to see which user changed it certainly had some questions, someone someone changed a billing setting, now I have to call support. Our support team is able to identify who and when the billing setting in that example was changed.
John: We’ve also got permission controls. So for a firm that maybe has 10, 20, 30 advisors, they’re able to silo things out so they can see only the appropriate client and account data. Personally Identifiable Information (PII). Social Security, that is not visible within the user interface by default, that’s going to be hashed out. A user would need to click it to see it. So someone standing behind them is not going to be able to access social. Data redundancy is certainly very important, I think that’s covered with most cloud based systems. Deleting data is another one that people can can accidentally delete something in many systems. We’ve got some tools there to put a safeguard in place, you have to type the word “delete” if you want to delete something. But it also goes to a recycle bin so you can restore it if need be.
John: And then when it comes to organizing. We have really extreme extensive relational databases built underneath. So generally speaking, any objects within Advyzon can be related to another. So an example would be a contact as a person that’s going to relate to a household, accounts are going to relate to both contact and household. So just a simple example there, but being able to interrelate those notes is another example. You can add a note to many different objects there. Having the CRM and the reporting tools in one place gives you a bit more than you typically see with an integration.
Craig: It also makes things a little more complicated when you have more data.
John: On the front end, potentially, but once you get things implemented and cleaned up, I think the benefits far outweigh the setup cost.
Staying Diligent with Recon
Craig: Can you share a couple examples of serious problems you’ve seen at companies you’ve worked out in the past or clients would no names of course, there were due to poorly organized or managed client data?
John: So one thing we could look at is reporting systems, especially legacy technology. There are still plenty of firms out there managing their own data, reconciliation process on a daily basis. For those unfamiliar with reconciliation, it’s not just loading the data, but it’s ensuring that everything is in good order once it is loaded. Oftentimes, there’s going to be some minor adjustments that need to be made to account for things appropriately and ensure everything matches with the custodian.
John: So for firms that have been managing that themselves, if they’ve been very diligent about it, you usually can get a good sense of that on the front end. If there’s some hesitancy it might be because they’ve had some staff turnover, they’ve assigned that to someone who has no interest or skill set in doing it themselves. Maybe some things weren’t done correctly, inadvertently maybe some people just didn’t really worry about it. So you want to be careful with that. We have tools to service that if we do migrate someone if there are reconciliation issues. On the CRM side, again, usually people are aware if there’s some sort of cleanup needed, so you can generally ask the question about something like duplicates, that can be surfaced. Some people are going to want to do that prior to a migration others will be more interested in just getting get moved over and then cleaning things up on the back end.
Craig: Doesn’t everyone feel like they need to clean up?
John: I can speak for myself here. Our database has plenty in it that needs to be updated as well. It really is establishing those processes and making sure you adhere to them to keep things as good as possible. I don’t think anyone looks for perfection there. It’s a lot of effort to get perfect, but I think you can get really good with minimal amount of effort as long as you’re consistent.
Craig: So clearly, it’s better to clean as you go as they used to tell us when you work in fast food, cleaning as you go rather than waiting till the end. But oftentimes, an implementation or conversion is the one time where a client might have they been clean things up. So do you have any recommendations or best practices around that?
John: I think when we look at recommendations, best practices, at the end of the day, these projects are garbage in, garbage out. So you do want to do everything you can on the front end to make sure that your data is in good order, before providing it to a new provider for migration. The reconciliation piece is important. Again, I think everyone has good processes here when you’re looking at migration, but we have ways to identify what may not be good. We actually go so far as to ask a new client for any of their complex cases and or problem children. Provide them to us on the front end so we can put eyeballs on it. We believe it’s really important to get out in front of these things, especially with a larger firm that may not be able to manage all this themselves on a regular basis, it’s important. Hey, throw us something you think is going to be a curveball. And let’s talk about it on the front end. You don’t want to take shortcuts on these projects because it will come back to you because oftentimes the curveballs, the complex cases, they tend to be large clients too. So we will get out in front of those.
John: Other best practices, if you think about migration when we’re looking at Advyzon specifically you could have data coming in from 2, 3, 4 different sources if you’re migrating a reporting system, a CRM system and you’ve got two custodians that’s four sources right there. So we’ll provide data to help with duplicates. For example my dad and my son both share my name and if you have those multi generational relationships, that’s not something we’re going to be able to programmatically surface for you so you’re going to know where those are and be able to guide us on those . But our team will take on most of it.
Craig: Multiple generations of Mackowiaks, is that what you’re saying?
John: There are, yes we all have different middle names, but if that’s not in the system, you may run into trouble there.
Craig: And names are becoming a problem, firms are realizing that the amount of space they have for names in the CRM isn’t enough. Because of some cultures that have many names are very long names that are causing problems.
John: My last name is not short, neither is yours.
Craig: We’re like child’s play compared to some people’s names.
John: I mean the CRM provider that’s a that’s a fixed data point. That should be pretty easy to to adjust at the vendor level.
Ask Your Vendors About Their Off Boarding Files
Craig: So back to best practices. We mentioned checking your data is in good order, giving a very complex example, consolidating from multiple systems. What about saving data locally? Is there any recommendations you have around that?
John: Yeah, so your legacy systems, there’s still a ton a ton of firms using Portfolio Center as an example. That’s a local install. There are some other legacy systems out there. Everything’s cloud based now, so there’s really two big best practices, one on the front end, any potential engagement, ask about what is your offboarding file look like? You know, we’ve all got multi year contracts at this point, I want to leave in three years. What do you provide me on the back end? I’d asked that question. I’d get the answer in writing.
John: Make sure that you have everything buttoned up there and you understand the implications. Usually, when you’re shopping, you’re shopping two or three different providers. Ask them all the same question. Get the answer, see who will explain it. to you in detail. Because we all have the same challenge when migrating, Vendor A produces and offboarding file the new vendor, Vendor B, they have to figure out how to work with it.Vendor A is not going to help them. So standard offboarding file it needs to be translated into the new system. You need to be able to get the full history and you need to have a smooth process. So understanding what that looks like on the back end is important.
John: Secondly, and maybe even more important in the instance that the Vendor B cannot work with Vendor A’s data or will not work with Vendor A’s data, most firms do have the ability to directly download their source data. Source data is going to be your custodial files. It’s like buying an insurance policy on on your performance history almost. Save your files. Every vendor is working with the same source data. Worst case, you won’t work with this offboarding file., there’s a limitation on the offboarding file, whatever it may be. We can always go back and reload the custodial files so long as you save them. You have to do that yourself. You cannot rely on the custodians, they all have different timeframes, different policies around data retention. So I would just say set up an automated process. Save the files locally, you don’t need to do anything with them. But in the event you need them you have them.
John: It’s also really important that there are no gaps in that data. So the process needs to be daily. And you need to have an appropriate check in place. However frequently to ensure that there’s no disruptions, you can usually go back at least a few weeks or a few months. To grab historical data, but you could be cut off at some point. So it’s just important to make sure you don’t have any gaps in the data or else you have a an issue.
Craig: So firms should talk to their IT staff about creating a script, some sort of simple automated process to pull the custodial files and save them off.
John: Potentially the IT staff needs to be involved, depending on the custodian it could be just a few clicks to set up the automated daily download process and just map it to a particular folder doesn’t have to be overly complex.
Craig: And nowadays even our cloud storage is so cheap everyone with OneDrive and Dropbox, I know OneDrive gives out a terabyte free forever user. So that’s more than the space.
John: They do. These are not huge file sets and storage is free or cheap and just from a best practices perspective, it’s something that I recommend all the time.
Craig: Excellent. And as you mentioned, you don’t want to wait because each custodian has different timeframes that they allow you to go back where Schwab might be two years and Fidelity might only be 90 days. So if you forget your past 90 days, you’re not going to get those files.
John: Correct. Correct. So it’s always a good idea, I don’t know that any approach is right or wrong and custodial end but the firm should take responsibility for their own data. Direct business is another one DST. I’d say most firms have DST in place, and for that data, they don’t have any history that they save. You start it up and connect the sources into DST and you need to start saving that.
Craig: So save you DST files as well.
John: Any source data that you want to get into a system potentially in the future make sure that you have the source data. With Advyzon and all our contemporaries we’re all doing the data management for our users. We certainly are saving it. We provide an offboarding file, but users should always take that into their own hands because at the end of the day, it’s their performance history that they’ve worked hard to achieve.
Craig: So one of the best practices you mentioned was sending your most complicated, complex client and you said don’t take shortcuts. Can you give me an example of a shortcut you’ve seen someone take that caused them problems?
John: I would say if you automate too much for onboarding or put it in the users’ hands I mean, on the surface, CRM migration seems like a pretty straightforward thing. Last name is last name. Having done our migration of our sales and marketing database myself, I know that there’s a lot more involved there. There’s customizations, so leave yourself enough time to to get that done. I don’t think these things can be fully automated. So that’s why our team on the front end of these we ask, give us something that you think is going to cause an issue let us look into it and address it appropriately on the front end, rather than trying to pass off the project as delivered and then spend time going back and forth when you’re expecting to be using the system. So the automation is a double edged sword.
Craig: That’s for sure, we’ve seen that as well. Another best practice you had mentioned earlier was contract terms, know your contract terms. Why is that important?
John: A few things. One is you could see an auto renewal of a contract. We don’t do that in most cases. I just personally think a heads up is appropriate on a contract renewal. If you’re going to hold someone to a contract, give them a heads up, if they do want to make a change. Not everyone shares my opinion on that.
John: I think if firms know my contract is up in July of 2022, and there’s some reason to shop around even if it’s just staying current with the different technology offerings out there. We’re all evolving quickly, which is great for the industry, but I think there’s potential that there’s some really cool stuff going on that just doesn’t get looked at. So if you know your contract terms, you can say, every year I’m going to take a look 6 months out from my contract and then 12 months out from my contract renewal, that way if I do want to make a change, I have time to evaluate, the vendor has time to do their migration process. Those could vary on how long they take. So you leave some time there. And then you have a really smooth process comfortable, no fire drill and getting the new system implemented. So it all starts with knowing the contract.
John: You asked about horror stories earlier, my contract is up in for four months and I have to give a 90 day notice to my current vendor. If that need is urgent and not an option, you do end up working on a compressed timeframe and have a bit of a fire drill to get things implemented. So pretty easily avoidable if you know your contractors.
Craig: You don’t want to do that. Trust me. We’ve seen enough conversions of firms of all different sizes.
John: We’ve been through it and you know you do what you can to accommodate but sometimes you just can’t, in a one month timeframe get everybody’s data moved over.
Craig: We what we found is even with the largest broker dealers, they underestimate the complexity and the amount of time it takes for a conversion. It always costs more than they think, i it always takes longer than they think, and they always cut it too close. You’d mentioned the the size of the firm is very important. Maybe for our firm, it’s under a billion in AUM six months or less, could be doable. But over a billion you’re talking 9 to 12 or if you’re 5 billion or more, it’s even longer because of the complexities, the different types of data you have, you might have multiple custodial files, you might have more advisors and more staff that need to be trained. So it’s never going to be as easy as they think.
John: Absolutely. The training piece is important to take into account too, that’s something that we do well with but ultimately you have to have to buy in the engagement from from your client on that to bring the advisors and ensure that they do get trained appropriately before the incumbent systems cut off.
Craig: And the problem we see is that you’ll get a contract, and no one charges list price when you get a contract, so they may have a list price of X dollars and your contract says X minus 20%, X minus 50%. Well, once that contract’s up, you revert to the list price. So if you don’t get it done in time, and you go over the end of the contract, you are now in a bonus period for the vendor, so they’re not charging you full rack rate and you’re paying the other vendor, you’re paying two vendors now. So that’s another problem
John: That depends on the vendor. I don’t believe in that sort of thing. So we don’t have that.
Craig: Well you guys are nice, but a lot of vendors don’t do that.
John: If you play nice in the sandbox, yes, you’ll get burned a time or two. But in the long run, it’s going to work out to your benefit. You’re going to have happy clients. I don’t believe in these types of negotiations where one person wins and the other loses. So that sort of stuff doesn’t need to be there.
Craig: Glad to hear that. But again, just warning to firms large and small, don’t time it where you’re going to cut over the last day of the contract. It’s never a good idea.
John: The more time you give yourself the more relaxed the whole process is at the end of the day.
Craig: Give yourself some slippage. Cool, soo we did best practices. We some really great advice there. What about firms now wealth management firms now that we’ve all got client data, we’ve all got data we have to manage. What are some things that you would ask a firm to like in during your discovery process that you would ask to understand, are they really managing their data?
John: Really three things our sales team, we averaged 13-14 years of experience. Some of this can just kind of be based on experience some of the things that we hear in the evaluation phase. Once we move it into our Client Onboarding team they have also been doing this for a long time. They ask more direct questions, of course. So it is going to be very straightforward, Have you been diligently reconciling your custodial data and your reporting system, yes or no?
John: Secondly, CRM like I said earlier, they usually are going to have a good idea if they have some sort of outstanding cleanup project that maybe they’ve put off. And the bigger thing when we look at these migrations that we ask is, have you migrated systems previously? Who handled it? How did they handle it? We have a good idea on others processes if it kind of aligns with how we see things so we can try to get out in front of any potential issues that we would see upon delivery, just knowing did you migrate, who handle it? Did you do it yourself? Did you have a consultant working on? Was it staff? Are they still on board? Did the vendor do most of it?
John: None of these projects are perfect is an important thing to remember. So while they can be very smooth, if you give yourself enough time and really know what you’re getting into, a good question to ask is you’ve migrated okay, what problems are surfaced? And that’ll help us dig in on the front end of this again, these kind of kickoff calls on these projects go a long way to making sure that the experience is a good one for a new client.
Craig: Why do you ask that question, Have you migrated a system in the past? Why is it important?
John: Different vendors handle things differently. The automations I talked about earlier, those have been in play. Some systems going from Vendor A to Vendor B, that was a brand new project for Vendor B. And maybe they handle it better now but five years ago, it was brand new to them. So we have a pretty good sense of where things stood at any given point in time. Some of those questions can help us, maybe we need to pull a different report to validate the data, as an example, than we might on a standard migration. So we get into a lot of specific situations, we want to provide a smooth experience and ensure that the data is clean on the other side.
Craig: So when you ask them about migrating systems, you said did you do it yourself or was it a consultant why? Why does that matter whether they did it themselves or they outsourced it?
John: Yeah, it’s a great question. A consultant typically, you’re you’re a consultant, you get paid for this sort of thing.
Craig: Don’t badmouth consultants man. Know your audience.
John: I’m promoting consultants is what I’m doing.
Craig: Read the room.
John: It’s not a bad thing to have someone with the data expertise working on your behalf. Advisors are doing relationship management, portfolio management, many of them are managing their business, managing staff so the ins and outs of data if you can involve an expert, huge plus. So big plug for consultants working on this stuff to ensure a good process. If they did themselves is not necessarily a bad thing because a consultant is not going to know their client base as well as they do so there’s duplicates, the example with with my family. An advisor is gonna know that off the top of their head, you’re going to need to ask. There are pluses and minuses to it, I think we do get a good sense of those that are really tech savvy and those that aren’t and that’s okay. We’re here to help. But people that are really tech savvy, it’s probably going to be a smoother migration process if they handled everything on their own.
Craig: That all makes sense. Working with many other vendors as you guys do, do you hve any advice for other vendors that would help reduce complexity increase the consistency of data and lower the overall cost of managing client data?
John: Really three things I would point to there. One is go above and beyond where you can do it on the front end. It’s gonna serve you well in the long run. The worst thing you can have is people questioning their data after it’s been migrated, they no longer have access to the system, or they don’t have confidence so they have to keep extending their income and provider. Not everybody’s super flexible about that. So we’ll go above and beyond on the front end, asking those questions ensuring the right fit, ensuring that it’s going to be a smooth process to the extent we can begin.
Craig: The front end of the implementation process, not the front end of your system.
John: Correct. It starts with the valuation, not just implementation. So asking good questions during the sales process is a starting point. We don’t have to take any and all comers if they’re not the right fit. So we want to ensure it’s going to be a great experience. The implementation process, the onboarding process, we’re going above and beyond there to ensure that data integrity, you don’t want to lose the confidence of a firm on the front end because then you get a lot of questions down the road. You could see the client just decide I’m going to extend my incumbent until I’m comfortable here. So definitely want to take the extra time to ensure that everyone is comfortable on the front end.
John: Data manipulation I talked about earlier. You want to have some guardrails there, you have to be flexible, but the guard rails on security types being appropriate for the transaction types have those two tightly tied together is an example of being able to limit it. Everybody has manual accounts that they need to enter and manage. But being able to say okay, a stock holding has a very different set of transactions than private equity, limited partnership, accounting, so need to be able to do both and keep them siloed. And then automation I mentioned it’s a double edged sword. Automate where possible but have the error checking the monitoring flags that pop up to try to surface potential issues that you manually look into.
Craig: John, you have answered all of my questions in stellar fashion. I really appreciate it. Where can people find more information about Advyzon?
John: Anyone that’s curious about Advyzon, our website, we’ve got a ton of information there. There is a clear link to click to request a demo that’s going to connect you with the appropriate salesperson. We strongly prefer to do all of these evaluations one on one. So if you’re curious, the website’s a good starting point. The Michael Kitces tech study that was released a week or two ago, we scored very well in those categories of CRM and reporting. So definitely getting a little bit of recognition there. But once you’ve done a little bit of homework, the best way to connect with us is just through the website, do the demo. Even if you’ve only got half an hour to get introduced to Advyzon it’s a good starting point. You’ll make the decision if you want to proceed further.
Craig: Fantastic. John, thanks so much for being on the program.
John: You got it Craig, happy to do it. Thanks for having me.
