Come on in and sit back relax, you’re listening to Episode 158 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 topic this month is buying and implementing enterprise software where we speak to executives from broker dealers, asset managers and other large firms on how they make buying decisions and how they implement enterprise software, when do they know they need new software and they also share some lessons around implementations and support.
We chose this topic because at Ezra Group we work with a lot of enterprise wealth management firms. They come to us for exactly these types of problems. They have a current software platform that isn’t working so well. How do they optimize it? They have issues when do they know when they should be replacing a platform? What is the time or what is the cost they need to think about the pros and cons of when they replace different software? You need advice on how to optimize your platforms and processes, managing RFPs to replace them all things that we do a lot. So we thought we tried to share some of the tips and strategies from the actual people who are doing the work.
I was excited to speak to today’s guest John Rajes from LPL. John has been working in wealth management since 1998, sorry, John, telling everyone how old you are. He’s had stints at Goldman, Deutsche Bank, Barclays and most recently at UBS which is right before he came to LPL where he was head of digital advice, CRM and client operations technology. John has got some serious experience in working with and deploying enterprise wealth management software, you’re really going to like my interview with John.
But if you are listening now you’re an executive at a broker dealer, an asset manager or an enterprise RIA you should run not walk to a website, EzraGroupllc.com and fill out the Contact Us form on the homepage to meet with us about your technology platform issues. Our experienced team can assist with software vendor evaluations systems integrations, improving operational efficiency, software implementations and a whole lot more. You can take advantage of our free initial consultation offer by going to EzraGroupllc.com.
- How to Get into LPL’s Vendor Affinity Program
- Affinity Integration Levels
- Don’t Bring Us Vaporware
Craig: I’m happy to introduce our guest for this episode, is John Rajes, SVP of technology partnerships at LPL Financial. Hey John, welcome to the program.
John: Hi Craig, thanks for having me on the podcast.
Craig: I’m glad you’re here, I’m glad I could get you away from your new responsibilities at LPL, pull you away for a bit to talk about technology, technology partnerships, vendor broker dealer relationships. But before we jump in, tell us where are you calling in from?
John: I am calling from sunny Charlotte, NC.
Craig: John, you are a reformed New Jerseyan, correct?
John: That is correct, I moved down to the Charlotte area in the middle of the pandemic, back in 2021, it feels like a long time ago but it’s been about a year, we had a tremendous experience in the Northeast but it was time for us to explore. I always tell my friends and colleagues that you typically leave in New Jersey either on your terms or not. We decided that now the time is right so here we are.
Craig: Fantastic. I’m still in New Jersey. Hopefully I’ll get out one day and can be just like you. But we’re going to jump right into our topic today, which is basically broker dealer interaction with vendors. How broker dealers and vendors work together better some tips and advice, best practices, and maybe some horror stories about your time working with different technology vendors in the wealth management space. But first, can you give us a quick 30-second overview yourself in your current role at LPL?
John: Yes, absolutely. As the leader of the technology partner organization, my group is responsible for managing all of the business relationships with our FinTech providers to be covered the full gamut of technologies that we offer to our advisors across all aspects of the capability set and an advisor might need and of course, that also includes our core and foundational tech vendors, as well as those specialized capabilities that we bring to life.
Craig: That’s excellent. And you haven’t been at LPL that long, you’re only nine months into your role?
John: I joined LPL at the tail end of 2021 as part of LPL’s venture to really formalize how we effectively manage, onboard and maybe even discover fintechs. Now we’ve had this program for quite a few years, and the core mission was really around trying to formalize both operating process and procedures, but also really accelerate how we bring new technologies to life. There’s a core premise to why this is a worthy adventure for us to pursue. And that’s really centered around the fact that we’re trying to accelerate how we innovate for our advisors. So that’s really the epicenter of growth, my focus in this particular role.
How to Get into LPL’s Vendor Affinity Program
Craig: That’s excellent. So I really want to dig into this a bit since this is a topic we hear a lot. At Ezra Group, half our clients are broker dealers like LPL, but the other half our clients are the fintechs that work with you guys. And they’re always asking us, how do we work better with large broker dealers, such as LPL? What kind of things are they looking for? Every broker dealer has got some kind of program or something that people deliver those technologies to their advisor, so really love to dig in on this. Can you talk about how your procedures work. So if I’m a new vendor, I’ve got a great product that advisors need, what’s the process for getting into your affinity program?
John: That’s a great question. So the way we approach the fintech ecosystem is really, as you can imagine, a large firm like us attracts an awful lot of attention from from the broader ecosystem. Rightfully so, I think we do have a large user base that’s very appealing attractive from fintech growth stands for and we are acutely aware of how we can partner with fintechs to accomplish both sets of goals. But our focus is really always on the advisor experience. As you probably recognize most firms tend to have an online kind of mindset. We obviously are also focused on partnerships as a key mechanism for us to bring innovative products to life, but it always starts with the experience. So the process itself is multi dimensional and really focused on how do we bring the best of breed technologies to our clients?
John: What does that really mean though? Every FinTech out there has a differentiating value proposition, theywork a little differently. They always have a unique spin on how things how things are developed and how their products manifest themselves in the ecosystem. Now that differentiation is obviously very valuable from from a FinTech standpoint, and from a product and platform for the fintech. But our real question that we’re trying to answer often what question is always, how does the FinTech product experience continue to bring new capabilities into advisor practices? This is not just about bringing new things to life if you can, there’s an awful lot of new things out there that we can bring to life, but it’s really about trying to figure out how do we make sure that the capabilities that we put on our shelf is additive to their practice and their personas because salaried finance, who they are, what they are, how they plan to run their business.
Craig: So you started to ask the question I’m about to ask you, how do you define value? So how do you measure whether a new piece of software is bringing in enough value to spend the time? Every application you integrate takes time, not just the time to integrate, but the time to evaluate, the time to look into them, time to bring them on board, do the security evaluations, and then manage them maintain that integration basically forever. So how do you make that value decision? What’s the methodology around that?
John: Yeah, another big question. So actually the whole process is really an inside out approach. So rather than trying to distill the ecosystem or boil the ocean, we’re actually starting from the other side. So our line of sight into what an advisor needs and how they run their practices is really grounded on a very large set of data that we have from our client base. And so the inside out approach allows us to be able to identify both tactical and strategic needs for our advisors and we do have a strategic needs framework at the enterprise and corporate level. But that’s less of a priority, our focus is really on trying to figure out where do advisors struggle? Where do advisors face the greatest amount of pain? What’s happening in the ecosystem that’s driving some of that change in dynamics in the advisor community?
John: And so that inside out approach is really about trying to define an ecosystem in terms of how do we see an advisor and their needs, both from a personal perspective, their persona, but also from a practice standpoint. So that’s kind of that inside out approach. We know of course, that no two advisors are the same. And of course, advisor practices might fit into various categories. But there is a lifecycle element of course to where they are in their journey as building a small or large business. And so the set of capabilities that we’re looking to bring to happen is really sensitized to where they are in those journals. Of course, we can’t solve every problem all at once. So we have to pick and choose when a greatest priority really is.
Craig: Are there any criteria you can share when you talk about the inside out approach, the line of sight into advisor needs the biggest pain points. Is there any inside baseball you could share or methodology that says well, we value this particular piece or this particular criteria highly. So when I’m putting on a vendor comes as I’ve got a new meeting automation tool you can always say, well, that’s a huge need. Advisors struggle with meetings. That’s a big pain point. But how do you decide if that’s a big enough pain point, if that’s all for meets a big enough need. Is there some scoring methodology you use? How do you do that?
John: That’s an excellent question. There’s obviously some best practices around how do we effectively uncover client needs or user needs? Standard product management practices would suggest that we would use a combination of customer service channels, market research, what we hear directly through focus groups and surveys. And of course, we know as a large enterprise, we have the infrastructure and processes to constantly channel feedback from all parts of the organization into a central focal point that happens to be in my my team and my organization. So we use all of those constructs to identify what the needs are, of course, lots of needs. And so it’s important to also create a framework where you can kind of prioritize what makes sense for whom and where.
John: So maybe there’s three dimensions that they consider. One is the thing I spoke about, you know what type of practice or what type of advisor practice to be have, that they’re looking to address their needs. Now, there’s a lot of planning centric practices, folks are more geared towards holistic wealth management. There are still traditional practices that are geared around the broker dealer business and commissions and trading based business, although that’s rapidly deteriorating over time, and degrading over time.
John: The other dimension is really where are they from my practice maturity standpoint? We know that there’s a general maturity arc that an advisor practice follows starting from obviously forming the practice and growing the initial book of business through to mature that book of business, scaling it up and then eventually looking for opportunity to exit. So that lifecycle also needs to be considered because the needs vary based on that. Then I think we all recognize that in the tech world and tech stack, there are layers. And so to recognize that there’s always a core or table stakes set of capabilities that every practice needs, every advisor would need. So these would be core technologies like CRM and reporting and etc. that are value added capabilities like financial planning, maybe even how folks will look to engage with their investors.
John: And then finally, there’s what we consider collect the specialized layer. So now we won’t see everybody operating in that space. But we do see a significant amount of specialization that’s starting to take place, whether it’s moving into the tax planning world, or maybe estate planning law. So we do see some opportunities of specialization that’s starting to take hold in our industry. So we use all of those dimensions to determine where the needs are, of course, like you said, we call it invest everywhere. So it is important to recognize where the greatest demand is, and that’s always coming through the organic channels of feedback.
Affinity Integration Levels
Craig: Excellent, that’s super helpful, John. When a vendor comes in, and they want to they want to get to the affinity program, what are the different levels of integration available?
John: Yeah, great question. So, our fintech ecosystem at LPL goes through a relatively systematic process that’s kind of focused on what type of partnership and what type of engagement we wish to have with a particular vendor. And of course the type of partnership and type of engagement we have with the vendor is obviously dependent on the type of experience we’re trying to create for our advisors. So there’s dozen common themes. So number one, obviously want to make sure that whenever we’re really engaging in the vendor, it’s not done in isolation. So it’s not a vendor outreach. It’s always based off of a scan of capabilities available in the broader ecosystem. Some of those scans will result in us identifying very mature products and solutions where we potentially already have partnerships or we may find capabilities that are perhap not quite ready yet to scale up with the size and shape of our organization. So it’s important to recognize that every time you’re making a decision, a partnership decision is based with that full view of what’s out there. That’s number one.
John: Number two, it is critically important that we have a crystal clear understanding of how is it additive to the advisor. Ultimately, we recognize that when we bring partnerships alive, we invest time and energy to do that. We recognize that it’s important that the value to the advisor knows that without the value for the advisor. It’s not beneficial to the vendor, it’s not beneficial to the vendor, so it’s important that we understand how is it valuable to the advisor that’s critical. Ultimately, they’re the ones who choose to adopt a piece of technology. So it’s important to make sure we get it right for them.
John: Thirdly, we are always keen on ensuring that any piece of technology and the capability in the feature set works alongside the overall advisor experience. And what I mean by that is, there’s an awful lot of different types of technology. And the way that features get implemented vary, in some cases quite dramatically. So we want to make sure that when someone is given a piece of technology to solve a specific problem, that it actually fits with everything else that they have in their stack. So maybe there is an opportunity for us to say well these curated experiences can lend itself to say, well, maybe we do need more than one type of capability doesn’t have to be a one size fits all. That really largely depends on what’s the existing experience. What is the desired target experience, and how does a product fit into that experience? All the basics, we don’t want to wait for duplication. We don’t want to have to do an entry anything. That’s all table stakes. It’s important to make sure that that all fits and functions correctly. It’s also important that everything is seamless from an experience standpoint.
John: And then finally, from a from a business standpoint, it’s crucial that the way we choose to implement a piece of technology, we do have the appropriate construct that the engagement is both material and meaningful from all parties. So, choosing the type of implementation is crucial. I think you your question was really related to how do we decide how deep we integrate with a particular vendor. We have choices to make a light integration can be valuable from some perspectives. A deep integration could be incredibly enabling and empowering from an advisor experience. So that really depends on how we how we choose to bring the technology and the capability to life as part of experience.
Craig: So since these programs don’t exist in a vacuum, and they need to fit with everything else in the visors tech stack, would you recommend that a new vendor who comes to you and says, Hey, you’re John, we’re a new software vendor. We help advisors with whatever particular areas of software, would you recommend that they integrate with as many of the core applications that are already in the affinity program in order to get a leg up on things?
John: Great question. So I think what I noticed is really two types of inbound requests from from fintech vendors. Quite aside from fintechs are highly motivated to drive adoption and scale up quickly, which is a given, the other big motivation is really about how does a product or platform especially when it’s early in its lifecycle, integrate with a broader fintech ecosystem? There’s a couple different ways to think about it. Yes, fintechs can talk to each other. They do. They do spend an awful lot of energy trying to integrate with each other, especially wherever they think that they fit into the journey and where they fit into the overall experience. But I think we all recognize collectively especially as those larger firms that kind of act as these these hubs platforms, we do have access to both the advisor community and the data powers their core services, so it’s probably more important for a fintech vendor to be integrated with with the larger broker dealers, largely because it’s obviously beneficial from a fintech business standpoint. But more importantly, it’s important to recognize that by doing so, they have the unique ability to be able to integrate their product into an overall experience. Just a collection of fintech platforms and capabilities that are loosely integrated with each other is not sufficient to provide the kind of holistic experience that advisors are relying on. Every one of our advisors are using our core platforms. So the moment you create a layer of capabilities, integrated or otherwise, that are disconnected from that poor bread and butter systems that they absolutely rely on day to day, every hour of the day, the more of a disservice it is especially from an experience and workflow standpoint. So my recommendation would always be to say, hey, let’s look for opportunities to come up with integration points and integration depth that’s mature and meaningful with the core systems that that our advisors rely on. So that should really be the priority number one.
Craig: Those are good recommendations. We launched our integration score WealthTech Integration score, just for this purpose, really to understand what those integration points are and the integration depth, since a lot of vendors don’t provide that information on their websites and many broker dealers and RIAs don’t have the capabilities that LPL has to do your own research on this integration, depth and maturity. So we came up with a score to make it easier for firms to compare different vendors and what their integration depth is. You mentioned a couple things integration and a deep integration. Can you explain the difference between those two, in your terminology and how you guys see it, and how you determine which one you select when a new vendor comes on board?
John: Yeah, so I think the way the way we think about integrations is really about, you know, what do we need to have in place for advisors to maximize the experience? And what I mean by that is, we know that there’s an awful lot of capabilities that they can enable by virtue of even a basic integration, however, really opening up a set of capabilities from from a fintech standpoint, why don’t require a deeper, deeper integration, maybe bi directional, maybe workflows would be enabled through through these bi directional interfaces.
John: So when we think about it is not just from from the lens of should we integrate or not, I think in most cases, we reach the conclusion that hard to dispute that, having said that, the level of integration should be should be meaningful, ultimately, it’s an investment on both sides. And so it’s important that everything that we’re going to invest in for the advisor is actually added to the experience. Notwithstanding the basic set of things that you’d have to do to facilitate even activation and use of a particular capability. Some things are just going to be naturally deeper. As an example, you know, supporting a consolidated reporting platform will require a deeper level of integration from perhaps a simpler integration that will be required for a tool like a scheduling application.
Don’t Bring Us Vaporware
Craig: Indeed. That’s an important distinction, understanding how the different applications integrate with advisors workflow, which some are more important or less important. Some are required for the daily operation they can’t live without, and some are just nice to have. Alright, so before we run out of time, I want to hit a couple of other questions with you, John, can you talk about some problems you’ve had with vendors tryin to integrate? Now don’t mention any names, we don’t have to hear the names of the vendors. But what are some problems like a vendor came and said, I can do this and they couldn’t do it or they said I’ve got these integrations and they didn’t really have them, something you’ve run into issues with?
John: An excellent question. I think for those who have been in this industry long enough, almost everybody has an example of things that didn’t quite go exactly to plan and I’m no different. Lots of examples over the years. A couple that really stand out or are the ones that generally sit in the spectrum of technology that doesn’t quite rise to the occasion. And I mean that from from a few different perspectives, historically, and that’s less so nowadays given given that there’s a greater degree of focus, and real time, evaluation of capabilities, but historically fintechs have been notorious to promise capabilities that don’t exist as yet. So obviously that’s an easy one to catch or should be to catch, but the depth of analysis and evaluation before you start any kind of integration is crucial. And that includes having the product and engineering organizations with the appropriate subject matter expertise, deep dive into the architecture, not just not just the functional and feature set architecture, but also the actual technical integration architecture that’s available.
John: In modern times as we are generally integrated in using API’s and cloud based technologies. This becomes probably easier to prove out. Having said that, it is still important to understand that the depth and scale can be supported using different tech platform. Now, my particular in that particular case, we uncovered issues only after we entered into a preliminary pilot phase, and ultimately decided that we’re gonna have to invest a significantly longer journey into a longer term, to be able to get the fintech provider ready to scale to the broker dealers needs. So there’s plenty of examples of that. That’s one that really springs to mind. It is important that we get the assessment and evaluation deep enough upfront so that you’re not surprised later on. That’s one.
John: The other example that I have is actually a little bit different. And that’s actually less to do with the product and the platform architecture and more to do with experience assumptions, but it’s the way you bring experiences to life to advisors has to be perhaps more seamless than perhaps most people appreciate. So thinking through what the user experience is, from end to end ahead of time is crucial. And making sure that the integrations that if your plan actually works as such, and that’s actually also inclusive of everything from response times and through to what is the support model and architecture behind it. And so so there’s lots of examples of this. One particular one that that occurs to me is that in isolation, fintech provider was able to provide an amazing experience, but integrated with an overall journey that starts to degrade quite quickly and so it’s important to recognize those aspects of what it takes to integrate with a fintech product.
Craig: Those are all things you’ve heard before. I mean, you’re talking about doing the depth of analysis before starting the integration, right? That’s always been the surprises occur. When when the marketing and the sales speak hits the fan, and he said, Well, he promised us they can integrate with x and then they signed the contract and now we’re here and that doesn’t really do that. Or the or it’s something they’ve never really tried before. Or it doesn’t do exactly what or maybe it’s just a lower level integration, as you mentioned before, the depth of the integration, how much data is being passed, how easy it is to do, and it’s not the case. And a lot of firms don’t have the capabilities to do that deep dive into the architecture of these vendors and to have an SME on staff that can answer questions or know what even the right questions are to ask. So I imagined the your your affinity program is incredibly valuable to LPL’s advisors.
John: Yes, that is correct. And that is from our process itself is is actually declayed so we have many rounds of review. That gets deeper and deeper as the conversations and the engagement progresses. So what starts off as, as maybe, you know, basic demos to a variety of different stakeholders within our organization. Eventually evolves into a fully comprehensive architectural assessment by our engineering teams, to be able to make sure that the products are truly fit for purpose. Ultimately, though all of these things, the more you can shift left and do that ahead of any kind of formal finalization of plans and being explicit about it. Does that mean that you will get zero surprises down the road well, is to make sure that we get those promises. So we’re not aiming for perfection but what we are doing now is making sure that we have certainty on launch time. But more importantly, certainty over time, as our business continues to scale. And the fintech capability continues give us more and more. It’s actually good for me.
Craig: And now at the end of this podcast, I’m going to tell the audience something they don’t expect that this was John’s very first podcast he was on.
John: That’s right. Craig, thank you so much for inviting me to this podcast. After after a couple of decades in this industry, it surprised me too, but I’m so glad to do this. I really appreciate it.
Craig: Everyone’s surprised because you did great. You don’t sound like your first time on the podcast. You did fantastic. You are really, really pleasure to talk to you. Lots of great information. I know people are gonna enjoy listening to this. And thanks so much for being here, John.
John: Thank you greatly appreciate the opportunity.