Ep. 132: Why a Data Warehouse Strategy is Table Stakes with Randy Bullard, Charles River Development

 “When we have that kind of conversation, everybody agrees oh my gosh, if you can use that data then add value in tax management, that’s fantastic. And then the next question is, Okay, so where does that data live in your organization? And the eyes glaze and roll back. Most firms have not really thought that through. They maybe have a basic customer information in their CRM, but real detailed information that’s actionable for investment management decision making, usually not. And so that’s when we really have to lean in and engineer whole new processes for collecting and maintaining that data.”

— Randy Bullard, Global Head of Wealth, Charles River Development

Click here and schedule a Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.

I chose that clip from my conversation with Randy Bullard because it perfectly captures the problem we run into at almost every enterprise wealth management firm. Nobody has a complete picture of their data, which becomes a road block for anything you try to do from enhanced reporting, to analytics, to new platform deployments. I spoke to Randy about how enhanced data strategies have become table stakes for wealthtech vendors, why Charles River built out their own data warehouse capabilities, and a whole lot more on this episode of the WealthTech Today podcast.
Come on in, sit back and relax, you’re listening to episode 132 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group consulting, and this podcast features interviews, news, and analysis on the trends and best practices all around wealth management technology. Our theme for this month is Organizing and Managing Client Data and our guests were selected to deliver best practices, lessons learned, tips and strategies to improve handling of client data wherever it’s used in your organization.
We see bad data holding up platform implementations all the time because the firm’s data architecture has deteriorated over the years and across multiple acquisitions or mergers and no one in the organization is quite sure how all the pieces fit together. That’s why Ezra Group launched our Data Assessment Service to conduct in an depth review of data sources, downstream consumers, data utilization analysis for enterprise wealth management firms and deliver a comprehensive strategy and roadmap to get your data architecture under control. for more information on Ezra Group’s Data Assessment Service go to ezragroupllc.com

Topics Mentioned

  • Data is King
  • The Alpha Data Platform
  • Systematize Your Data Processes
  • Leveraging Held Away Data to Deliver Personalized Recommendations

Episode Transcript

Craig: I’m happy to introduce our next guest on the program, Randy Bullard, Global Head of Wealth for Charles River Development. Randy, welcome man.

Randy: Thanks Craig, how are you?

Craig: It’s been good. Not complaining, everything’s alright. We’re all happy, we’re all healthy, we’re all doing our thing, right?

Randy: Fantastic. Good to see you, it’s been a while.

Craig: It has been a while. You’re one of the people I’ve known the longest in this industry, since 2008.

Randy: No, it’s been before that. Yeah, maybe it’s closer to probably ’02, ’03.

Craig: That’s a long time. But things are changing. So we’re trying to bring it to light and talk about it and, and, and share good stuff with our listeners here. So, give us the 30-second overview of Charles River, if you will.

Randy: Sure. Charles River Development, kind of a long standing well known enterprise technology and service provider primarily to the institutional asset management market. I run the wealth business which represents about a fifth of the total Charles River business. Charles River was bought by State Street about three and a half years ago, and then about a year after the firm bought Charles River they organized the wealth industry vertical after State Street and looked at the business and then came to the conclusion that the wealth business was really interesting fast growing, and needed some purposeful direction and product strategy and so they carved it off, created a vertical around it and brought me in to lead it about two and half years.

Craig: Yeah, time flies two and a half years you’ve been there.

Randy: I know. It’s been fun.

Craig: That’s what’s important, right? You have to be doing stuff you love and I remember when they hired you I was really impressed, I thought it was a great move on State Street’s part because you need someone like you with the connections, with the knowledge, and you’ve got the arrows in your back from many years trying to build stuff that people said would never be built. And you did it.

Randy: Right.

Data is King

Craig: So this podcast is part of our series for managing and organizing client data, so we’re going to talk about that. And we’ve got some really interesting topics I’m anxious to get to. Let’s talk about how the industry has changed, things that you’ve seen, let’s talk about table stakes. Can you kind of give us an overview of how you see things have changed in the the wealth management platform business related to data?

Randy: Sure, it’s an interesting topic. I mean, data is king and has been for a long time or really since I’ve been in the industry. But when I think about data, data management in our industry, my head fills with buzzwords, data lakes data mart’s, data warehouses, and API’s, open API’s, microservices, cloud based architectures. All these buzzwords that are really anchored on access to data, sharing data, fluidity, easy movement of data. And really, these are table stakes. If I run a software and services business and I compete against other software and services companies. And if you open up the three or four first pages of my deck versus their deck, they’re gonna say a lot of those same thing.

Randy: In the end, we’re all trying to do the same thing that we’re trying to share the data that we have and manage and collect in our platform so that we can polish it out and give other systems and processes within our customer organizations access to that data. And we’re trying to get data. I’m an old school guy, I think about relational databases, I just need the table populated please. Thank you very much. We were working on that back in the 1980s and we’re still working on it now. We’re just doing it with different terms and different technologies, but we’re really solving the same types of problems. We’ve just found a better way of doing it a better mousetrap with a lot of new technologies.

Craig: Yeah, everyone’s got that, everyone’s is hurdling so fast into the future. It’s the rate of change is increasing, right, things are changing faster, the tools are getting better. The stuff that we’re working on with clients, they’re able to build what might have taken six months to a year they can build it in two or three months. The time is really compressed, with different frameworks that you can download and you’ve got a whole architecture built.

The Alpha Data Platform

Craig: That’s a good start for what we’re talking about, so going from table stakes and how things are changing into your data services group. You were talking, when we were prepping for the call, about how that group has been growing so fast, and they’re inundated. Can you talk about what your data service does? How do they help your clients and what type of requests are they getting from clients?

Randy: We’ve got a couple of different components of our data offering within Charles River. We’ve got a product called our Alpha Data Platform, and that is effectively our comprehensive data solution for those customers of ours that are looking for Charles River and State Street to provide a comprehensive data solution and we’ve built that in partnership with Snowflake is a core enabling technology. We’ve integrated a large number of specific datasets into Snowflake so that we can readily get access to them. And in doing that, we decided to ride the rails of an industry leader, and it gives us an easy button for being able to get access to data so when we go into a new customer situation, every firm either has a data platform or is looking for a data platform and we get into a customer situation, and they’re looking for a data platform and they view State Street and CRD as a primary provider and very often we get pulled into that and provide not just the core portfolio management and compliance and performance, all the other things that we’re known for in the middle office, but also a complete data infrastructure that undergirds that. We have that now. We have a really strong capability with ADP, but for our customers that have that they’ve got market, they’ve got whatever kind of data infrastructure, we can easily fit into that and effectively interface to that platform and pull whatever data we need to out of that platform and turnover on a daily basis or even a real time basis. Or likewise publish data out of Charles River and into their data infrastructure.

Randy: So that ADP product gives us a compelling capability to address the broad data access needs of a customer and just it really outsources the problem by having a technology partner like that, access to data, it really is kind of the easy button. That the protocols for publishing data into Snowflake and all the vendors that are pre integrated and the open architecture that they employ, really you know, as you were saying used to be the getting data was kind of point to point connections, I got a VPN that you’re going to leased line that you can FTP that over, how’s that going to come? What’s the format gonna be? All of those questions, the how and the format and all of that they just disappear. And now if that firm wants this firm to have data, they just click Publish and boom, it just happens. That’s an amazing service, and ADP is one but there are other technologies now you know that do that. So that’s the ADP product. We also have a data services organization and these are related the data service organization can operate there.

Craig: Oh, I was gonna jump in, ADP is the Alpha Data Platform.

Randy: Alpha Data Platform, right. So that is our offering that leverages Snowflake as the underlying.

Craig: Which is a great product. A lot of our clients use it, works on AWS or Azure, whatever you like, fully functional. The developers they talk to you say it’s really easy to use. But I just wanted to talk about how old we are when I was looking now we talked to ADP actually worked at the public company ADP when they were at a brokerage business, before they spun off Broadridge as a separate entity, and I was going through old papers, and I found a list from our Customer Support Center of all of our client sites, it all had direct channels a direct feed, they had 56k lines to every single office, and it was like, “don’t touch these clients – before you do you’ve got to call supports before you mess with any of these circuits”. And there’s hundreds of them listed hundreds at Goldman and Lehman and Solomon all these guys. “Don’t mess with their circuits!” and now it’s all in the cloud. Just go boop now I got a virtual machine, spin it up and go was before you got to order 30 days, 60 days for an ISDN line. It’s just amazing. So I just want to throw that out there. Yeah, the ancient times. So tell us more about the data services group and the kind of data they’re bringing in.

Randy: When we work with a new customer, the customer says I want access to ICE I want access to Refinitiv. I want access to MSCI risk model data. We’re open to all of this. What we find though is very often they need that but they also need a level of enriching beyond that. And they also need someone to call when things go bump in the night. So they’re not just looking for raw data, they’re looking for postprocess data they’re looking for enriched data and they’re looking for a service that wraps that to ensure data integrity and delivery. And we also find that a lot around you know, set master maintenance, corporate action processing, pricing data, there’s a lot of complexity in there are a lot of opportunities to get it wrong. And a lot of opportunities for the data feeds to happen, but the data in the feed is wrong. And so if you don’t have a really good service that’s watching that and managing i things can go bad. And so we’ve got a lot of our customers where they asked for, hey, I know I want my pricing data from ICE and blah, blah, blah, and then we really get under it they just want that they want that but they want it in this way. It’s very specific to them. And so that’s what our data services group does. So when you take that data services capability in the services element, and you put it together with ADP is effectively an enabling technology platform. We really have a very robust offering to help our customers and partners figure out how to you know how to build out and manage their data infrastructure.

Systematize Your Data Processes

Craig: So you’ve seen a lot of issues with clients not having their data organized. You show them your product, and you show them your platform. And the Charles River platform, you’ve got a lot of different components and you build it up over many years. But it requires the client to really have their data organized. So what are some of the things you’ve seen when it comes to the data solutions and what are they coming to you and asking for?

Randy: Probably the best, most current topical example that I’m dealing with on a daily basis right now is around our new tailored portfolio solutions product and that’s our new optimization based portfolio management engine that delivers higher order portfolio customization, through optimization for direct index portfolio management, tax optimization, custom ESG portfolio construction, risk transitions, tax transactions, all those custom types of mandates. And those are powerful features, and it’s all over the press and is driving a lot of M&A activity, but all of those features are triggered by client specific data that require client specific data. And as we have sales and partnership and development deployment dialogues with partners about tailored portfolio solutions, we inevitably end up having deep conversations about OK, so you want us to do tax optimization, you can just push the button that says Tax Optimize, that’s going to give the same kind of tax optimization for everybody, which means it’s only right for maybe half of people. If you want to get it right for everybody, you need to know individual tax rates and external gains and losses and tax budget and things like that that are very specific to the individual customer and some of its static, a lot of its dynamic.

Randy: When we have that kind of conversation, everybody agrees oh my gosh, if you can use that data then add value in tax management, that’s fantastic. And then the next question is Okay, so where does that data live in your organization? And the eyes glaze and roll back and we’ve got 5,000 financial advisors, which means that information is stored in 5,000 different ways, in various file folders on those FA desktops. And so that’s the type of thing that we have to unravel as we look to implement these more advanced feature sets that require data. How do you systematize the processes for collecting the retaining that information, getting it into the process so that we can act on it?

Randy: Most firms have not really thought that through. They maybe have a basic customer information in their CRM, but real detailed information that’s actionable for investment management, decision making, usually not. And so that’s when we really have to kind of lean in and engineer whole new processes for collecting and maintaining that data.

Craig: We’re hearing the same thing. We built out some some products on the consulting side for data assessment because we hear this from other vendors we work with that say the same thing, they come in, they sell their platform, they get a deal, and they can’t implement for six months. Because the data isn’t there. It’s not organized well, it’s not managed well. It’s overlapping, it’s duplicative or it’s not available. So we’re seeing exactly the same thing and it requires decent data requirements and a requirement gathering process, current state assessment, understand everything they’re doing, where the data is located, how to optimize it, how to utilize it. They often have overlapping systems providing the same data that they didn’t realize, the downstream systems, and they can consolidate that from Charles River or from another vendor that’s got the same feeds rather than bringing from multiple places. So that requires a process of digging through that and meeting with people and finding out what’s going on.

Leveraging Held Away Data to Deliver Personalized Recommendations

Randy: You remember the old industry construct of unified managed household?

Craig: Old.

Randy: You don’t hear about it as much anymore. But at the end of the day, UMH is a data construct, because no financial advisor typically has 100% of the client assets. There’s always some assets somewhere else. And if you’re really going to deliver a complete quality solution for a customer you got to get information about those assets. And in fact, it needs to be investable, actionable information. So a lot of the kind of data aggregation providers maybe provide some good information, but is it good enough to actually make investment decisions based on? And so again, as investor expectations around how personalized will my portfolio be, and how will it act on information about me imagine a customer does something in their self directed account, make a significant investment and having a real time data feed of that, that effectively influences directly in real time how the managed assets that the FA has control of are managed?

Randy: That’s a that’s a really interesting use case. And it’s a very common use case. But engineering those data flows is still, even with modern data architectures, really hard to do at scale and systematize well. I think we’re just at the beginning of how it is that a lot of this customer level data is shared without tripping over PII and data, InfoSec and a lot of those types of claims.

Craig: I think your data warehouse you the Alpha Data Platform, should be able to do something like this in the future, where it can bring in data aggregation information, and then make decisions, feed it to a rules engine, feed it to some sort of AI based machine learning system that says, when we see this in a client’s held away account, then most likely 80% of the time, 57% of the time, that means something else is happening and you should do this. You just take this action.

Randy: Yeah, yeah. Those are the exact types of use cases and scenarios we’re looking to leverage.

Craig: And one thing we’re doing, and you mentioned data aggregation not being actionable, that’s we found for years and years, that the data that’s coming in from the data aggregation vendors and it’s not their fault, they’re just aggregating data that they’re being given, but it’s not actionable. You can’t trade on it. Nobody would ever trade on that data. You can use it to give yourself an idea of what the client has in other places, but nobody trades on it, you report on it, but nobody actually takes action on it.

Randy: Absolutely. And that is a big difference. If it’s gonna be actionable, it’s got to be reliable, accurate and complete. And so it usually, historically data aggregation is not then used for that purpose. I think we’ll get there and as you said, Alpha Data Platform, your mechanism for ingesting that data and maintaining it.

Craig: And is that mainly middle office, data source or data provider?

Randy: It is, but it’s not tied to that, Snowflake is not even an industry specific. So it’s really kind of a generic data platform. But certainly, it can be the mechanism for maintaining price data, risk data, all the all the top end information to support portfolio management decision making. That’s a primary function of our platform. And then it can also be used and this is new, because normally custodial data feeds which is a huge part of how our industry has to operate is you always got to get a custodial data feed. You got to import it. You got to reconcile it, you got to make sure your pricing is right, set masters right, and you’re processing corporate actions, right and all that stuff. ADP can be a platform and we’re viewing it as a platform where we’re going to build out all of our custodial connections and so effectively one pipe, one clearinghouse, where all of that data can come in and be cleansed, routed and accessed by our customers.

Craig: As opposed to the old way where you built a separate feed manager for each custodian, each one had its own and you tweaked it every time. So as you built over the years, when you first started out in the wealth business back in 2008, Charles River started then they built their first pipe to Pershing I remember, because I was consulting at Pershing at the time. So then they built that a certain way then maybe they went to Fidelity next and they built it a different way. So you’re bringing them all in the same place with the same, the same system, the same templates that just kind of tweak it for each one based on their file formats.

Randy: And that’s table stakes now. I’d like to say that’s all really smart stuff, but you don’t get a word for getting a custodial data integration into the end of the system. Just get it and get it, make it right, make it bulletproof. Because you know, it’s foundational.

Craig: You’re not gonna get a cookie for that.

Randy: No, no, not at all.

Craig: So talking about some of the other other systems and platforms. So you’ve got your IBOR, your investment book of record. Can you talk about that, because that’s a relatively new product, so you had a portfolio accounting engine within you built IBOR.

Randy: That’s right. So we started a journey about five years agoin partnership with two of our biggest wealth customers, they looked at the market, investment portfolio accounting and investment book of record platforms and wanted to get off of some of the legacy platforms, all them out there in the space. And really, when we survey this happen well before I got to Charles River, survey the landscape and came to the conclusion that you know, there really wasn’t in the market, a modern technology sleeve or really accurate sleeves of accounting, investment book of record and we felt the sleeves up accounting for unified managed accounts was something that was largely added onto existing IBORs and you know, with user defined fields and other things. It was kind of jammed into a legacy portfolio accounting system. We kind of took a fresh, you know, fresh clean approach said, looking at all of the industry best practice, how should sub accounting happen, and how you delineate various responsibilities and how do you manage cash and duplicate security across leads and all the minutiae of the operations of a sleeve sub accounting UMA infrastructure. Accounting is boring, but you got to get it right. And so, we basically started from scratch line, line of code 1, let’s write a fresh investment book of record that’s anchored on sleeve subaccounting and does it accurately foundationally.

Randy: And so that’s what the system is, it was built about five years ago. It’s now operating at massive scale, eating huge numbers. It’s engineered for the volumes and it’s it’s kind of the foundation because. It’s got the tax law level data all the way and it can be effectively a shadow book of record against any or multiple back end custodial platforms. So it really provides that unified at least from a custodial data holdings view, that unified robust sleeve subaccounting view that you can then make all kinds of really sophisticated investment decisions off.

Craig: And you mentioned tax law data. We’ve had a number of other vendors talking about this on the podcast, and they all mentioned tax law data, that that’s the biggest bane of their existence, trying to get the tax lock data right. Everyone thinks it’s easy. It’s not gonna be a big deal. And then when they start bringing it in, it’s a nightmare.

Randy: I hear that. I mean, I’ve been dealing with every platform, every thing I’ve done in the entire review always had been tax law level logic. And so to me, again, it’s just table stakes. It is dealing with the tax lots, there’s you ultimately, you know, which is going to be the official, you know, view of tax lots is what’s in our IBOR, or is it what’s reflected in the custodial platform. That’s it. So we have to ensure just like we do with no holdings level tax law levels, got to be reconciled. It’s got to be clean. And so every one of our customers, we’re we’re maintaining tax lots. There’s a real rigorous process, whether it’s a wipe and load or you’re doing Delta tax slots, where you’re just looking at the deltas every night. There’s multiple ways to do it. But again, you know, table stakes, you got to figure that out. Because if you don’t have good, accurate actual tax law data, you’re making the wrong investment decisions, and that’s not good for anybody.

Craig: That’s right. All right, Randy. I think you have said it all you’ve covered everything we wanted to cover and we are out of time. Tell everyone listening where they can find out more information about Charles River Development.

Randy: crd.com We’ll be at the UMI Summit in the end of March. Really looking forward to COVID lifting and we can all kind of get back out on the road and start to engage in some of the industry events that we’ve been missing each other at so we’re out there but a CRD.com for information, our new TPS product and CRD.com/tps.

Craig: And that’s it. Awesome. Randy, thanks so much for being here. Appreciate it, man.

Randy: Thank you.

Craig: See you soon.

Click here and schedule a Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.

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ABOUT ME

The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com

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