Ep. 171: Top 10 Most Downloaded Episodes of 2022 – Part 1

Come on in, sit back and relax. You’re listening to episode 171 of the WealthTech Today podcast and I’m your host, Craig Iskowitz, the founder of Ezra Group Consulting.  The content of this podcast is designed to share thought-provoking industry analysis, best practices, in-depth discussions, and lively conversations all around wealth management technology.

This is the last episode of the year, so it must be our Best of 2022 episode!  We ran the numbers to find the top ten most downloaded podcasts from this year.  We’re thankful for all of you for spending so much time listening! And that includes everyone around the world as we have people downloading from over a dozen countries such as Canada, India, the United Kingdom, Germany, Ireland, Australia, Hong Kong and Singapore!

Our crack podcast team pulled a clip from each episode and I recorded a short intro to each.  If you enjoy these clips, I’d recommend going back and listening to the full episodes. There’s a ton of terrific content there!

  1. Ep. 138: Orion Buys Redtail with Kristen Schmidt
  2. Ep. 141: The Anatomy of 401(k) Trading with Dave Goldman, Pontera
  3. Ep. 127: $1 Million Worth of Advice from Kevin Adams, Edward Jones
  4. Ep. 134: The Anatomy of a Healthy Client Data Infrastructure with Don McHenry, ByAllAccounts
  5. Ep. 154: Embracing External Trends in the TAMP Space with Daniel Needham, Morningstar
  6. Ep. 139: The Connective Tissue Between Processes and Technology, with Matt Reiner, Benjamin
  7. Ep. 157: Don’t Go Broke! Tips for Keeping Tech Vendors in Line with Jason Albino, Grove Point Financial
  8. Ep. 129: Garbage In, Garbage Out – Getting Your Client Data in Good Order with John Mackowiak, Advyzon
  9. Ep. 140: Automating Advisor Workflows with Anand Sheth, Pulse360
  10. Ep. 126: The 3 Biggest Pain Points of Platform Consolidation with Molly Weiss, Envestnet
If you are an executive at an enterprise wealth management firm and you’re having issues with one of your software platforms, you need to call Ezra Group — our consulting team has decades of experience with all aspects of wealth management technology, data and operations — whether you’re looking to optimize an existing system, revamp it, integrate it or replace it entirely, Ezra Group is the first call you should make. We help firms exactly like yours make the right decisions regarding their technology for smooth front-to-back office operations. go to ezragroupllc.com for more information.
I’m going to squeeze in a quick housekeeping note before we start:
  • Be sure to subscribe to Wealthtech Today wherever you listen to podcasts, so you don’t miss future episodes. The outlets where this podcast is distributed has grown over the years and now includes not just  Apple Podcasts, but also Amazon Music, Audible.com, and Spotify.
  • Now let’s kick this thing off!

Ep. 138: Orion Advisor Buys Redtail Technology with Kristen Schmidt

Our first clip is from episode 138: Orion Advisor Buys Redtail Technology that we recorded in April. My special guest was my good friend and colleague, Kristen Schmidt, founder of technology consulting firm, RIA Oasis.  In this clip, Kristen and I discuss why it’s so difficult for advisors to change their software and what this acquisition means for competitors both in the portfolio management and CRM spaces.

Advisors Just Don’t Want to Change

Craig: The way that each advisor handles portfolio management can be very different. And the way the way they feel about it often decides which platform they go with. Tamarac does portfolio rebalancing and trading in a very different way than Orion’s Eclipse does, which is a very different way than Black Diamond’s rebalancer does and so on. Sometimes even though there might be a better solution, you just can’t get them to switch because you don’t do things the way they do. They’re quite resistant to change.financial advisor technology trends

Kristen: That’s exactly right. And I also think that there are some firms who choose to have a Maserati of a portfolio management platform and some more of a Volvo in a sense of a CRM. And then there’s other firms who choose to have the Maserati as the CRM, it’s a Salesforce, it’s something much larger, and then maybe not have much of a gusto of the portfolio management system. But I’ll tell you this, the portfolio management systems and all of these platforms are very well defined by are you financial planning centric, or are you investment centric? And a lot of that is driving platform decision. What does my financial planning tool look like? What do I outputs look like? You’re an icon and influencer on Twitter, you’ve seen it all one page reports and everybody’s talking about what’s being released. I do have to mention since we’re alive when this info just came out that Altruist and their integration with RightCapital got buried in this and they should get a lot of credit.

Craig: Poor RightCapital!

Kristen: And poor Jason, right, over at Altruist, because I think that was a great integration and one of the first over there that’s really impactful on the financial planning side for Altruist. So with that said, I think that there are a lot of these pieces and the unknowns can be impactful. A CRM, you need one no matter what to run your business, no matter if you’re investment centric, financial planning centric, or mixed. So is this going to drive higher adoption of the CRM? Absolutely. Absolutely it will, and it’s going to make some of the competitors probably wonder what’s next.

Kristen: Again, just to lay it out, Orion no has bought Redtail, Franklin Templeton owns AdvisorEngine aka what used to be Junxure CRM. SS&C Advent, which also is Black Diamond is underneath them owns the Salentica platform for CRM, which has a Microsoft Dynamics platform and the Salesforce platform Wealthbox owned by Starburst Labs, but I think that they just got some amazing influx of money to innovate, which I think is going to be impactful to see how they become competitive, but again, not owned by any larger platform. And it’s the only one out there besides the Salesforce overlay companies like Practifi, Accelerate.

Craig: Let’s do a quick rundown of market share. So according to the KItces AdvisorTech Survey, Redtail is the leader with 33% , Wealthbox 23%, Salesforce 13%. And then I think the next one is Other at 9%.

Kristen: That’s a little scary, especially for a CRM implementer like myself,

Craig: Other than Junxure, which is now AdvisorEngine CRM is 4%, Tamarac CRM 2.7%, Firm Proprietary 2.5%, Microsoft Dynamics 2.5% then it just falls off the map. So what does it mean for these companies? Oh, let me just switch over to a T3, which has way different numbers. They’ve got Redtail at 62%, almost 100% higher which could be because they get more broker dealer enterprise respondents to their survey. Envestnet’s number two at 16%, Wealthbox number three at 13%, Salesforce 11%, Junxure 4%, Advyzon 2%. So what do these numbers mean? Clearly Redtail’s the leader, Orion bought the leader in CRM, and it means a wealth as you said Wealthbox is the only major CRM available at that’s standalone.

Kristen: I want to be clear on that for a little bit. So number one if we’re listing adoption, and again, some of that survey, which we’ve reviewed and disclosed, I think does hit primarily that independent RIA market isn’t necessarily representing the IBD space in a large way. But that’s okay. We’ve gotten enough data and they’re doing a great job.

Kristen: Couple things to note though. Redtail was founded in 2003, which means they’re on year 19. Okay, and congratulations to Mr. Laughlin on that. So Wealthbox, if we were to look at the historical data from your from the T3 survey or others Wealthbox has made increasingly large jumps to get to that 23 in half the time. They’re eight years behind. Wealthbox was established by Starburst Labs in 2014. So sometimes when we look at data we also look at longevity and the same thing is happening with RightCapital. We’ve talked about that before where RightCapital is considered the newbie, but it’s the fastest growing adopted financial planning tool or market.

Kristen: So I think we need to give that a little bit of credit that Wealthbox, the climb is sometimes just as impactful as those final results. Now to Redtail’s credit, once you earn an A you’ve got to keep it, your numbers can always go down just as much as they can go up. So everybody in from Wealthbox and Redtail has been climbing predominantly. But I think those big step climbs from companies that are newer to the market is impactful and something to consider.

Kristen: There’s also been areas of the CRM market where certain companies are deciding to be or not be. I’ll give you an example, email. It’s a big one. Redtail currently has an outsourced solution for email hosting through a company named Zimbra, will that stay will that go with Orion? Remember, Redtail isn’t just a CRM. They are a document management system for storage. They also have their Speak component which is for texting and messaging and chatting. They have so many other components to the CRM that Orion has a lot to unravel as to how it all fits. And until I see otherwise, I’m guessing it’s all coming along for the ride. But how that all instrumentally fits into their platform will be interesting.

What Does This Mean for Competitors?

Kristen: If we were to look at other platforms out there, although it’s not apples to apples, nothing is let’s look at Tamarac and Envestnet, for example, the Tamarac platform for independent RIAs. They don’t have a risk tool. So they’re missing that but they have their own proprietary CRM built on the Microsoft Dynamics platform and have forever when Envestnet bought Tamarac years ago.

Kristen: So the Orion platform having CRM portfolio management, which includes reconciliation, performance, reporting and building, a trading and rebalancing tool, a client experience, financial planning, and not only risk assessment, but you’re right, prop gen, along with other pieces of Orion, because of those other acquisitions, like TAMP, it’s big. They’ve covered all of their bases with this acquisition. And I think we also need to talk a little bit about Redtail and a sense of, congratulations both to Eric Clarke and to Brian over at Redtail because they both built amazing companies that have a lot of the same synergies.

Kristen: One of the biggest integrations is Redtail and Orion from the beginning. And they’ve been doing it from the beginning. And in Brian’s, 19 year career of having rRedtail he’s built an entire industry level CRM. I think the numbers spoke for themselves, when we were looking at some recent surveys.

Craig: I think so.

Kristen: Redtail is very well highly adopted and we see that in the IBD space in the independent broker dealer space as well as in the RIA marketplace. And so, the idea that Redtail has a long longevity of clients success, user success and innovation. This is a great add for Orion. I’m happy for everybody.

Craig: It really puts Orion in play for a lot of clients that may not have had before. And also it kind of changes the marketplace. As you mentioned, Tamarac has had a CRM for many years, but it wasn’t highly adopted. Whereas this move might change the nature of how RIA platforms operate. If Orion can be successful, integrating Redtail to become Orion CRM if they rebrand it as Orion CRM, which makes sense, and the integration is really tight and seamless and feels good to advisors, and the adoption rate keeps increasing rather than decreasing, it could change how their competitors look at them and say, Well, hey, they’re doing this, we need to do the same.

Kristen: I agree but I also think that if I were an advisor today who has heavily adopted Redtail but uses Black Diamond, or uses some other portfolio management tool, I would wonder where this leaves me. I also think that Wealthbox is in a very strong position, although this is an acquisition and it’s very positive, happy for everybody, my agnostic sense comes out. But Wealthbox in my opinion is literally the only CRM out there that is independently owned, operated with the intention of being a CRM only. And there can be an opinion here and I’ll hear it from all my clients, which is well Redtail, now you’re not a CRM. Now you’re part of a bigger platform. So what about us? What about those CRM initiatives?

Kristen: I think I could speak on both sides of that coin, one being Redtail has such a large company and people and support behind it and all of that is coming with the company. So I think that that’s good for Orion where it can still stand alone, although it’s under the umbrella. But to that point, it does take away advisor choice at some level, you and I keep talking about how advisors want choice. And now you can make that choice at least we’re not sure actually if you’re going to be able to buy Redtail after close. Second quarter. We’re not sure if you’ll be able to read by Redtail independently that hasn’t been released yet. We’re an hour into the release, but it hasn’t been said yet.

Ep. 141: The Anatomy of 401(k) Trading with Dave Goldman, Pontera

Next up is a clip from Ep. 141: The Anatomy of 401(k) Trading with Dave Goldman, Chief Business Officer at Pontera that was published in May.

Craig: So I realize why this is important, but for people listening who maybe don’t understand, can you explain why being able to trade held away assets is so important to advisors?financial advisor technology trends

Dave: It’s important to advisors because it’s important to their clients. And if you really think about what happens, most of the country today is no longer dependent on defined benefit plans or pensions those have gone away. So the primary means of retirement savings are in clients’ 401k’s and 403b’s and defined contribution plans. Now, because these are held off platform for most advisors, it means that they’re really not a part of the advisors purview in helping their clients. There’s a lot of studies, there’s some that talk specifically about management of 401k’s, there’s a lot to talk about the value of an advisor. They both peg it to about 3% per year net of fees as the benefit that the advisor can provide to a client. When you look at that compounded over 20 years, this can be an additional 75% growth for a client up until retirement.

Dave: What happens unfortunately, is that because advisors oftentimes cannot manage these as part of an overall portfolio, these get defaulted. These accounts get defaulted into a fund or a number of funds when the client signs up for their 401k and doesn’t get regularly reviewed and doesn’t get looked at and doesn’t get managed and doesn’t change with the clients lifestyle and risk tolerance and existing financial situation. So they underperform the market over time. And really what’s important for the advisor and for the client is to make this part of the overall strategy so they can create that benefit for their client and so their client doesn’t have to worry about, am I going to be okay in retirement, knowing that their trusted financial professional has been shepherding this account for them during their regular engagement. So really important for the end client to see the benefit of management of these accounts as part of a strategy. And of course for advisors that are focused on serving their clients that are fiduciary and that are always looking to do the right thing. That’s why it’s so important for them as well.

Craig: Yeah, it is amazing how long we’ve gone. This is not a new number of these 401k’s we have it being the primary means of retirement savings with a large chunk of investors savings stored away in these plans and we really had no way to interact with them except manually where the advisor looks at and goes okay, well I don’t like this holding change that he’s got to trust the client to go login find the way to do that and do the rebalancing themselves.

Dave: Yeah, we actually see advisors taking two approaches on these accounts. So that’s quite a common approach, which is, if you bring me your statement, when it’s convenient, at the end of the year or when we get together next, I can take a look at it and I can give you some recommendations and then my hope is that you’re doing something about it. That’s a very reactive approach from the advisor standpoint. They’re trying to help which is nice, and we can talk about some of the compliance implications on doing that as well. But it’s not a full service solution, it’s a reactive approach.

Dave: There are other advisors and we see this quite a bit, that actually one at a time will take them if they’re taking all of the right steps. If they’re claiming custody and they’re going through surprise custody audits, and they’re securing client credentials. This is a process that we’re seeing very commonly in the industry. The client wants help with the account. They’re they’re basically permissioning their advisor to do this. It becomes a very cumbersome manual process for the advisor. It brings a lot of risk to the advisor from a cybersecurity element because advisors are typically not SOC-2 certified, they typically don’t have chief information security officers to kind of monitor how this works. And they’re not built for this. So although it’s great that they’re doing this to help their clients it creates a lot of direct liability for them. And what we’re finding is that outsourcing the ability to conduct the entire security audits and InfoSec process and secure trading is something that they’d prefer to offload to us versus figuring out and trying to do themselves. But there’s policies, the SEC has policies and procedures in place on if you are going to take credentials and if you are going to trade these accounts. This is what you need to do and here’s how you need to subject yourself to surprise audits and what that looks like as well. So it’s happening today in quite a significant scale.

Ep. 127: $1 Million Worth of Advice from Kevin Adams, Edward Jones

The next most downloaded episode was Ep. 127: $1 Million Worth of Platform Consolidation Advice from Kevin P. Adams, General Partner, Head of Business Solutions Development for Edward Jones, which went live in January.  Here’s a bit of social media trivia: Kevin and I have 630 mutual connections on LinkedIn.  That’s a lot of overlap!  In this clip, Kevin is sharing tips for evaluating enterprise software vendors.financial advisor technology trends

Craig: Now, one thing I know you’re good at, and I’ve seen you do this, when you when you’re judging at conferences, judging demos, you’re very good at seeing behind the curtain or at least kind of peeking behind the curtain if you can, because the demos always look good, right? They’re only showing the best of the best and the only shown the stuff that works. So what advice can you give to other firms that are getting demos, how can they kind of peel the onion a bit and see is it really working the way they’re telling me it’s working or is there something behind the scenes that’s, that’s not working right?

Kevin: Once you get past the demos, you have to go through, take some real use cases, take some test data, take some dummy data from your firm, and you actually have to run it through their system and run it through the process. It may not be the identical real world use case that you’d have your advisors using, but it needs to be close to it. So that’s one, actually testing the system out.

Kevin: Two, talk to other clients have have a deep discussion with clients that have been on the system, been using it for a while listen to you know the successes, listen to the opportunities, listen to the the challenges they’ve dealt with in the platform. I think those two I’ve seen skipped by firms time and time again, but they just pay off in in the longer term before decision of purchasing something without really trying to put it through some semblance of paces or learning around how it’s performed or how it’s worked with a competitor.

Craig: So true. We often refer to that as user acceptance testing, that you need to build out that test plan. And even when the vendor tells you it’s going to work, you can’t trust them because this is your business and you need to, as you said, run the data through even it’s just a sample to make sure that it works the way they say and also define what it means to accept that. What’s your exit criteria? It’s got to do this, this and this, and here are the things we expect. Have you seen any issues around that where you’re doing your UAT and it’s not working well and how do you work with the vendor to get that resolved?

Kevin: Of course, I’ve seen that.

Craig: I know you’ve seen it!

Kevin: I think I’m going to go away from the functional side for a minute, and an area that a lot of people don’t always talk about or maybe think about in advance coming too close into UAT is really the non functional side, performance calculations, performance of the system, time responsiveness. So when going through that final stage you talk about of UAT that’s really around the functionality of the system, but the non functional side is often either forgotten or not paid as much attention to and in this day and age when you need quadruple nine uptime for these systems because, you know, millions, billions of dollars are flowing through them, that scalability, reliability, robustness of these vendor commercial most of the time, SaaS, cloud based hosted solutions really needs to be tested thoroughly.

Craig: Yes, the non functional requirements are often overlooked to the expense of the functional requirements because the functionals are in front of your face. It’s easier to see those than the non functional. When we’re talking about interoperability, back to integration, when you’re doing platform consolidation, you often have a choice. Sometimes it is a choice of a vendor, which one you’re picking, sometimes it isn’t if you’re acquiring another firm, oftentimes the acquired firm’s software gets nixed. But if you have a choice and you’re picking and choosing, how do you define which applications get integrated, which applications get replaced?

Kevin: That varies so much depending on the business itself. I think and I’ll take the last piece which applications get replaced, some of that starts with the overall architecture of the application. Is it legacy, does it run on a modern stack? Is it something that maybe not as cloud based today? Is it going to be easy to move it into the cloud? Is it secure? Is it performant? Those will help you make that decision. If you’re talking about you know, acquiring another firm where you’re inheriting a technology stack you could spend a lot of time trying to modernize a platform, and you have to balance that versus saying, we’re going to replicate this functionality into something new. That something new could be an internal custom build. That’s something new could be another vendor solution. So I think that’s a really important piece of it, and I wouldn’t call that functional or non functional, but really just the underlying architecture stack, how modern is the platform itself from a technology perspective?

Craig: So when we’re talking about the platform consolidation projects, and how to support them, and give yourself a higher probability of success, one thing you mentioned is the data data models and the data architecture. So can you go a little bit more detail? On how a well designed data architecture supports platform consolidation projects?

Kevin: I believe it starts with understanding and I touched on this earlier, what is the data? Where did it come from? How is it being used? The authoritative source of it, making sure that it’s curated well, it’s managed well, you’re not making multiple copies of it. Other systems are now using it right into it, we’re not really sure where the authoritative source came from, was it derived data? So hence, understanding the depth of the calculation and why that calculation was used and the output. It’s not just about the data in the systems or how they’re being used, but the audit mechanism of understanding if something went wrong, or there was a question about a calculation or trade within the system, being able to understand that whole lineage of the data to be able to recreate that scenario to either validate what happened was actually right, or try to understand what went wrong.

Craig: It goes back to your earlier comment about a common vocabulary which is also I think, can be described as a data dictionary, and be able to build that data dictionary so you know which which data is coming from the source, which data is derived, which data is calculated. And that changes over time you have these slowly changing dimensions over years or more, where the data slowly morphs, nothing big, nothing major, where it’s enough to to get people concerned, but slowly morphing over time. And you wind up with a completely different data set than you had when you started out 7-10 years ago. The common vocabulary also helps with data cleanliness, can you talk a little about specifically when you’re when you’re consolidating multiple platforms, that why is data cleanliness important?

Kevin: I think I touched on it in the last answer, but that cleanliness is important. You’re managing money, you’re rebalancing a portfolio, you’re placing a trade, you’re understanding performance of an account or a portfolio or specific security, that data is everything that’s going to define why you’re doing something or how you’re doing something and making sure you’re doing it right. So hence why all large enterprises in the last 5-10 years have taken data so seriously with data strategies, data architects beefing up their data engineering, data stewards. It’s become such an important factor in financial services and albeit investment banking, capital markets, the sell side, buy side, asset management, wealth management. Data and understanding the cleanliness is one of the most important things that we have to focus on as a firm or in my role as a technologist.

Craig: So we’re running out of time. I want to squeeze in one more question. When you’re consolidating platforms, and we mentioned earlier about replacing platforms or integrating platforms and sometimes you don’t have a choice and sometimes you do, if you’re integrating multiple vendors, what’s some advice you can give firms about that process and how to make it a smooth offering so that in the end you’re getting a best of breed, but you’re not suffering from the the consequences of having different vendors all fighting to get things done?

Kevin: I’ll start with the large commercial managed account or advisory vendors, they need to partner with other firms that may be competitors, so some coopetition to provide a more robust offering end to end for wealth managers, and we talked about this via those well defined interfaces for best of breed components. And the example I would use is you can have Vendor ABC, which may have a robust tax optimization and their engine, Vendor EFG might be best in class from portfolio construction capabilities. They need to work together on their API’s, on the data integration of the product.

Kevin: So think about wealth managers could go out there and pick and choose from the imaginary managed account App Store, so to speak, to implement the best platform that meets their advisors and clients needs. And that’s really talking about that hybrid based solution where it might not be build it all yourself. It might not be just buy one solution and try to force it into your needs, doing a lot of customization. It’s really picking and choosing the best solution and being able to work together. And then from an experience perspective, not just the systems communicating or the underlying data, but that the experience is fairly cohesive for the advisor that’s using a system.

Ep. 134: Healthy Data Infrastructure with Don McHenry, ByAllAccounts

Our next clip is from Ep. 134: Healthy Client Data Infrastructure with Don McHenry, Senior Product Manager at Morningstar | ByAllAccounts which went live in March. I ask Don about comparing data aggregation vendors.

Craig: One thing that I found is difficult when it comes to data aggregation vendors is comparing them. It’s very difficult to look at the output because it’s not like this report. I can just run to show me which one’s better. It’s mostly run over time, looking at hundreds or more of different data sources under different conditions, different times of the year, times of the month. So what have you found when you’re comparing yourself to other vendors? What were your strengths or weaknesses?

Don: Sure, like I was mentioning before, you know, in general, when selecting a vendor, you want to understand what market is that aggregator committed to? What use cases are they enriching the data for, is it for payments? Is it for credit decisioning is it for investment purposes as a foreigner spending? Did they cover the right sources for you? So those are all really important questions to ask when, when selecting a vendor, one of the other things that really helps that’s set ByAllAccounts apart, of course, is the fact that we are a Morningstar product. So really, the aggregation and engagement solutions that we can deliver with use of the Morningstar ecosystem is really greater than a sum of its parts.

Don: We have the ability to collaborate across teams within Morningstar that serve a whole cross section of the financial services industry. So the products that serve the investor products that serve the enterprise products that serve the advisor, and we have a lot of great internal partners that use our aggregation service in these products. So we can actually see how our data is being used, what works, what doesn’t work, where do we need to invest to make enhancements?

Don: So again, from our perspective, we’re really committed to the investor, the advisor and the platforms that support them. We certainly have have great external partners as well where we can get this feedback but it’s a big benefit to have this in house. And also, as part of the morning story ecosystem, there’s all sorts of great tools and data available to help us really create a flywheel effect with our products. Certainly we have customers that use our aggregation and their Morningstar services and kind of integrate those together themselves. And one of the things that that we’re investing in now and in the near future is kind of delivering even more turnkey aggregation solutions that involve other Morningstar data and other Morningstar analysis capabilities. To provide really a level of depth that differentiates us amongst other aggregators.

Craig: And back to differentiation that’s what it’s about. Let’s talk about something fun. So let’s talk about the buzz we’re hearing what is going on, there’s so much talk about acquisitions and more mergers, and we of course, we had the Plaid attempted acquisition. What are you hearing around the buzz in the industry?

Don: There’s quite a lot of buzz I think you mentioned the Plaid attempted acquisition, I think at the time the valuation was was $5 billion, which was quite a surprise for many and I think their valuation has even increased many fold since then. So really a of this buzz is attributed of two main areas, so competitive pressures and advancements in technology.

Don: So, from the competitive perspective, fintechs are really accelerating digital transformation for older wealth management enterprises. What I mean by that is that, you know, customers can really use free services to see a 360 degree view of their financial lives. They expect this now with their advisor, their money manager to have the same capabilities, because if they don’t, someone else will. So when an advisor uses aggregation to gain access to all of their customers data that really makes a highly compelling and customized and personalized experience so they can deliver. And then on the advancements in technology side, aggregation is no longer really just about an overview of accounts, right. It’s how is that data being enriched and how is it made actionable for use within the enterprise. Everything from simple network delivery to end users to suitability, business intelligence, customer engagement and marketing. And now with with open banking, customers, our consumers data is portable, right? So belongs to them, that they can share this between apps and as an aggregator now we are at the intersection of all this. We’re the intermediaries that bring all this data together between stakeholders and we grow with the ecosystem.

Craig: There were reports a while back, banks shutting off access to third party data aggregators because they were screen scraping the websites, and they didn’t like that. Is that still happening and if so, how are you dealing with it? I imagine the open banking API’s link into that somehow.

Don: Certainly. We’ve engaged like I said, we’re live now with open banking API’s with with a number of institutions and we’re engaged in building connections with others. Part of the the deal here is that we’re getting off the website. We’re not agreeing for the website any longer with banking API’s are available. So there’s certainly quite a bit of operational internal migrations that need to happen and collaboration with our customers to make that work. But typically, institutions are giving us a deadline, right? Okay. Here’s access to our making API’s. Great. We have a direct relationship with you and now it’s time to move to that channel. And we will essentially block the website connection at this date. We’re definitely seeing that and we’re working together with the financial institutions and abiding by their needs for that.

Don: And then there’s also kind of the more rogue situations that you’ll see where they’ll implement certain technologies that just simply block aggregation all together and make it very difficult to aggregate accounts and erode the user experience. In those cases there’s two things we can do. One is we attempt to make our technology as adaptable as possible and have the best messaging to our user about connecting accounts and setting up accounts. And then the other option of course, which is always what we attempt to do is connect with the institution, establish a relationship with them, and discover alternative means for collecting data.

Craig: Cool, very cool. So one other thing that we are seeing on our end, is the concept of aggregator of aggregators, and it seems like it’s gaining momentum at some firms, especially larger firms, larger broker dealers that can afford to build out their own technology, or other vendors that are building tools to connect to multiple API’s or multiple aggregators. Are you seeing that as well and how do you see that changing the way aggregation is used?

Don: I think the biggest thing to keep in mind for that is that it’s really important for the aggregator to own the whole aggregation experience. Ultimately, it’s about delivering a compelling user experience, keeping the client engaged, and by owning the whole, from the connection, to the enrichment, to the delivery of the data. You’re providing more value than someone that doesn’t provide that service. Can you know there there are certainly some advantages of aggregator aggregators in terms of being able to point shoot at different institutions, but at the end of the day, it’s not them that has control over the technology, the connections and being owning that yourself is a major benefit.

Craig: Can you share some of your product roadmap what’s coming down the pike for ByAllAccounts users to look forward to?

Don: Sure, we’re really focused on on three areas. Those three areas are investor engagement, advisor ROI and workflow automation. So from an investor engagement perspective, I mentioned this ecosystem, Morningstar capabilities, we have an our data is really plug and play into this ecosystem. One of the things I failed to mention earlier when I was talking about our enrichment is not only will we map, all positions that we aggregate to their accurate ticker, CUSIP, we actually also map them to the internal Morningstar ID. And that really unlocks a lot for our customers. We have many customers that are also Morningstar data customers, and they can really easily correlate the aggregated data with the Morningstar data.

Don: So we’re now taking the initiative to make some of these services a little more turnkey for our customers. Adding things like if you think about a customer aggregating their portfolio through our services, hey, we can add the portfolio risk, or we can add the CIS, excuse me, sustainability rating. This is great because investment behavior really has changed for younger investors. So if you’re trying to go more downstream with your users or reach a larger audience, they’re looking for more editorial content there. They want to make sure that their portfolio aligns with their risk and their values, understanding the holding and sector kind of exposure that their portfolio has. And these are all things we can really deliver off the shelf with all these great Morningstar capabilities we have so certainly investing more than that in the realm of investor engagement.

Don: Also in that realm, financial wellness tools. High level kind of view of financial health married with guidance. We have a great team here of behavioral scientists that are really helping us innovate and drive and these tools and bring them to market so they’re less focused on being in the budgeting weeds, and take more of a holistic approach and financial wellness.

Don: What I mean by that is how much income are you allocating towards debt for day to day consumption verse the future and is that balanced according to your goals and maybe our recommendations, how is your savings from a short term and long term solvency perspective. Are you prepared for an emergency event, losing your job, how close are you to financial freedom if you’re an older individual closer to retirement. So those are really exciting, financial wellness tools. And then also in the investor engagement side, we’re committed to delivering, the broadest set of data connections for investors and advisors. So, that means connecting to new asset classes, right. So cryptocurrency is something that is in high demand, we have customers that that need access to these sources because their clients have this data, or in some cases, there’s turnkey asset management platforms that advisors are beginning to use. So we’ve engaged in relationships with them to deliver direct feeds to provide that data downstream to platforms.

Don: On the advisor ROI side, really trying to highlight the interoperability of our data. Not only can we serve the portfolio accounting use cases, but we can also really deliver advisor and investor alerts and insights from our data. Some examples might be, hey, there’s idle cash in this investors portfolio let’s let’s open an account. I can engage with that investor and open an account. Their risk exceeds the risk profile. That’s a discussion for diversification. They’ve changed their job or their income has changed. Hey, let’s update your savings and contributions. These types of insights and alerts can really help give the advisor more time to offer their client trusted, personalized advice in a way that a robo is unable to do so. The third was the workflow automation and onboarding. So investing in some tools, the capabilities there to help enterprises facilitate asset transfers and onboard clients quicker and excited about that as well.

Ep. 154: Embracing TAMP Trends with Daniel Needham, Morningstar

Our next clip comes from Ep. 154: Embracing External Trends Trends in the TAMP Space with Daniel Needham, Global Chief Investment Officer at Morningstar that was published in August.  I ask Daniel for the background behind their decision to switch out the underlying technology running their TAMP.

New TAMP Technology

Craig: Recently, you announced switching your back end technology to a new provider. Can you talk about that and what was the primary factors in that decision?

Daniel: Yes, I mentioned, we’ve had a platform for quite some time. And we’ve seen the the needs of advisors evolve, and the ability to deliver flexibility and choice we think is more important than ever, and we’ve had great partnerships supporting the TAMP and, but but we felt from a technology perspective, we needed to enhance the underlying platform, especially from a UMA perspective, we have multi strategy accounts, UMAs now, but but we really felt like we needed to partner with an API first provider, and we have Morningstar Office, which has its own portfolio accounting engine. So we’ve got some back end capabilities that we were really leveraging a third party for, so we’ve made the decision to overhaul the the middle and back office of the TAMP. And so we’re using Office as our sole portfolio accounting and performance calculation engine. And we’re working with SMArtX to be our UMA and middle office provider. So working with them, API based connections. There’ll be pairing out how you ma Model Manager, or rebalance. And so really excited, Evan Rapoport, and John Pincus, just great partners. I think they’re they’re really focused on innovating, leading with technology, disrupting maybe the market a little and with Aaron and Alex as well, their head of tech and head of product, they’re just a great team to work with so like minded organizations, and we just couldn’t be happier with the partnership.

Craig: Yes, we’ve been talking about SMArtX for a while long before they kind of popped up on the radar with everyone else, and 2020 or 2021 when they started grabbing a lot of assets, but for years no one was really talking about them but I’d seen what they were doing. I like their technology and we’re experts in new UMA and managed accounts so when I see a vendor with a new take on new UMA and sort of, as you said technology first provider. I want to talk about it, so we’ve been talking about SMArtX, so we’re really happy you guys are working with them. We don’t have any relationship with SMArtX and in terms of monetary relationship, but we’re just happy to see vendors that we like, work together and doing cool stuff.

Daniel: We’re excited about it. And we think the collective strengths of the organization so we really come together. That’s the great approach with their API. First approach is that you can really build something that’s right for your workflow. And we’re going to be bringing some some really cool features and functionality out and I think the SMArtX guys are a 10 year overnight success. They’ve been building that tech for for some time, and it’s super exciting.

Craig: Yeah, they came from other tech, they started out in the hedge fund world, which is a very, it’s very, it’s a lot more pressure right here. When you’re in the hedge fund, things are changing. Of course, Wealth Management, is pressure as well. You gotta be right and correct. You can’t be bad data or inaccurate but hedge fund is at a different level so I think coming from that tech background, that client segment gave them a good base for moving into wealth management.

Daniel: Yeah, couldn’t agree more. And we see that in their ability to calculate performance real time and it’s precision that you need, I think, and that’s the way that the industry is going and I think they’re leading it.

Why Did Morningstar Switch TAMP Technology Providers?

Craig: Indeed. I’d like to kind of dig a little bit more into how you make this decision because we work with a lot of firms like Morningstar. On the tech side, we work with a lot of your clients, broker dealers, enterprise RIAs, and it’s often an issue for for for CXOs, presidents of companies like yourself, when do you switch? How do you know that it’s time to switch? So you mentioned UMA need, you mentioned API’s, but how did you know that? Hey, now’s the time. We have to switch, what was your decision point?

Daniel: I don’t know that there’s an easy answer to that question. I think strategically, we could just see the way the industry was going, and we could see that with advisors, expectations aren’t declining, I would say so, advisors, they’re humans. They spend a lot of time in modern apps and and using different sort of digital applications. And I think when they move into the sort of the finance, tech space, they don’t change their expectations, they just get disappointed.

Daniel: And we could see that and, and, and so for us, we really felt like we needed to improve the digital experience for advisors. And that was the key. Jeff Bezos talks about embracing external trends and that generally if it’s a strong external trend, and you don’t embrace it, you’re probably going to be left behind. For us, we could see that and and so that was really the catalyst we needed to improve the experience the workflows on our platform. We looked at all of the major providers, we went through a comprehensive due diligence and evaluation process, and we signed confidentiality agreements with all the vendors and they were great and we were very this was a bonafide a search, we wanted to look for the best partner. And there’s a lot of great providers out there, I’d say so it was not an easy decision, but but we felt on balance. SMArtX were good because we liked where they were in their, in their business lifecycle, they’re still in that sort of innovator sort of pilot stage and, and that’s great, because we want to build something that’s really well suited to our advisors, and our clients. We want to innovate together.

Daniel: I think when firms get really large they turn into large professional services firms that have cookie cutter playbooks. And so and we felt like, SMArtX wasn’t that and so it was it was a comprehensive process. It’s it’s a risky, moving back end and middle office. It’s risky. It’s a lot of work, but we’ve got a great team and we’ve got some experience doing some pretty complex projects of this kind of nature and so I feel really confident we’re really on track things going well, and our goal is just make sure there’s no disruption for our for our advisors and their clients and we feel good about that.

Craig: We’ve seen that as well working with a lot of different vendors from large to small that success breeds lack of innovation. You tend to innovate less as you get larger. And once you be in order to get that level of success. You have to become a legacy provider. It takes it takes a number of years to do that. And now your technology becomes old, your you become beholden to your biggest clients legacy clients, and they start to drive your roadmap rather than innovative ideas driving your roadmap.

Daniel: Yeah, that’s right. The engineers that are closest to the the pain point or the problem that’s where the innovation comes from solving real problems, but once they get to a certain scale the engineers move out and the MBAs move in and then it’s about scaling and turning into a software product.



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