Ep. 179: Making Conscious Technology Decisions with Doug Besso, HighTower

Come on in and sit back relax, you’re listening to Episode 179 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.

Today we have an interview with Doug Besso, CTO of HighTower. Doug has over 30 years of industry experience and I like him because he’s a computer science major. We’ve got to stick together us computer science guys. Before his 11 years at HighTower he was Head of IT at Calamos Investments, and spent 10 years at Wachovia Securities, to name a few. 

This was a terrific interview, we discussed build vs buy and got into the core aspects of the HighTower tech platform. I’m always interested in how firms are building out their own custom advisor platforms using a combination of off the shelf tools and internally built technology. 

Before we get into the interview, 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. Now, let’s kick this thing off.

Topics Mentioned

  • Why Salesforce?
  • Building Unique Experiences
  • Build Versus Buy
  • Making Conscious Decisions
  • Three Tips for Building Your Tech Stack

Episode Transcript

Craig: Good morning. I’m pleased to introduce our next guest on the program. It is Doug Besso, CTO of HighTower Advisors. Doug, welcome.

Doug: Thanks for having me on.

Craig: I’m so glad that we could coordinate this and get you on the program that look trying to get you over here for quite some time. Where are you calling in from today?

Doug: Well, I am taking advantage of at HighTower, we have a high flex model so I am on the road. Enjoying a month away from Chicago the cold winters in Chicago and I’m currently in Siesta Key, Florida.

Craig: That is awesome. I’m a little jealous. I am also traveling. I’m in London and the weather is not as nice here as it is down there for you.

Doug: No doubt.

Craig: So you get to enjoy that. But let’s jump right in. Can you please give us a quick 30-second elevator pitch for HighTower Advisors for anyone living under a rock who doesn’t know who you guys are?

Doug: We are a 15 year old firm are made up of about 130 practices operating under a single ADB and from a technology standpoint we provide the platform that our advisors use for their clients and for the advisors to operate their business.

Craig: Terrific. So for the purpose of this interview we’re talking about, obviously from the technology point of view, as the CTO of one of the fastest growing firms in the country in our space. If we were in a roundtable discussion with other CTOs, what are some of the things you would share about how you built your technology stack? There’s a lot going on there. One of the first things you said was to start with is “what’s your core?” Can you explain what that means, “what’s your core?” What are some of the things you would think about when you’re building, if you’re building from scratch, what would you do?

Doug: We did build from scratch. It’s a question about our history, it really started with the client, knowing who your client is. For us, the client is called the advisor since we are made up of a collection of independent practices that we operate together, and then it’s the end client, right? So the advisor is servicing their end client and centering everything you do about the experience that the client has, and the advisor has has allowed us to integrate a platform where we can have a common center, which is always the client and focus and it enables you to do navigation, to share data, to make sure you’re always looking at the same thing but not have to build everything yourself. Have vendors in different parts of your ecosystem talk to each other from that client-centric standpoint. So that was the first bet we made was centering everything around the client and then making sure you gather as much data as possible about both the advisors and the clients so that you could enhance the experience.

Why Salesforce?

Craig: One of the first bets you made was on a CRM and you guys chose Salesforce. Can you talk a little bit about why you chose that and how you’ve you’ve used it and leveraged it in your in your tech stack.financial advisor software tools

Doug: Right, right. I think making a bet on something is really important. In the timeframe that we we partnered with Salesforce, it was about the ecosystem, not just the CRM, we never looked at it as a CRM, the ecosystem, having a platform that you can build and build applications and build integrations was really important to us. Because you don’t want to be passing data between all your platforms. You want to be integrating data between the platforms. And the house system that was already established, and we’re going to be survival that was really important to us. And we went out in the marketplace, just about every vendor we worked with, or wanted to work with, had an integration to Salesforce was going to have an integration to Salesforce on the roadmap and recognize that partnership to them was going to be very important ability to to operate within the ecosystem. Wealth Management. So I think that was critical to us, because we really wanted to make sure that everything we built in areas we worked with, while they may come and go, that we’d have that common center that we’d be able to navigate through and Salesforce has worked very well for that.

Craig: You’ve taken Salesforce to the next level. It’s not just your CRM, but you’ve also built a lot of applications inside Salesforce.

Doug: Correct. We’ve built over a dozen actions, from client agreements, the whole revenue and how we manage revenue for all those independent firms because they’re all collecting revenue and in different ways and beyond through those calculations. We wanted to be able to have that center run through Salesforce. We’ve created a workflow within the Salesforce ecosystem and being able to visualize a workflow tool that allows our practices to are common things but also unify them and unify the processes together. So that’s been something we did probably in the last four or five years, it’s been one of the biggest hits and that’s all done within the Salesforce. Clear what the system uses called clear that we’ve built but we’ve done that all with the net clear ecosystem.

Craig: And the advantage there is you get a seamless navigation and it seems as though is one system to advisors.

Doug: Correct. I think it’s really important when you’re especially when you’re taking a bunch of in the RIA space right? Everybody wants to have some identity and in a variable a build or run a practice with some independence, but it should always have a common look and feel to it. The navigation should be seamless. It should be more than just single sign on. It’s a matter of keeping data in context. And when you have a client up and one system you want to go into another that client information should be not have to be re typed that should come up. And the advisor can between those two, those two experiences, but it should look and feel the same data should be the same if you can get the context of how the client is going to appear. You want it to be universal. And that that even extends out to the client experience, right? So we’ve done things at the client level you want the what the client sees to be going between different platforms that should look and feel the same and really, that center has allowed us to do that.

Craig: And that was a great choice and also something we recommend as well. All else being equal, it’s always better to have one platform for everything. Even though you could have built these different applications in different technologies or other different systems, building them all in Salesforce, there were some limitations but you have one database for everything.

Doug: Correct. There’s nothing worse than data being out of sync and two pieces of information that are different because of timing or anything else. If it’s coming from the same place there’s there’s really not not the risk of the data not being universal.

Building Unique Experiences

Craig: Exactly. All else being equal, keep one platform. Let’s talk a bit about filling in the pieces of IP. So you mentioned building unique experiences. And so you built a lot inside Salesforce. How did you make those experiences unique? How did you bring in your own IP to build this experience that was different from other firms?financial advisor software tools

Doug: I think the first thing is being realistic about the marketplace. Rather than trying just to find ways to be unique you know, we looked at where the market was very well served. And you can call those commodities. I don’t want to insult the vendor by saying what they have as a commodity but it’s a commodity to buy it. It’s a very well done. There’s no purpose in us trying to recreate that and and incrementally improve it would be very risky. So you want to consume those things and take advantage and if anything, have you had those vendors compete for your business so that you get enemies of scale and pricing them to create the features that you want you would have created anyway. What that leaves you with is you can call it the 80/20 rule, the 90/10 rules, you know, this is what that that bit that’s in between there that you think is really unique to the way you run your business.

Doug: There’s certainly things in our business that are that are unique in the way we’ve set up and run into offices. That are running under a single ADB. There’s a lot of things we want to do centralized to bring down cost and efficiency, but also offer a lot of enhanced features and flexibility. So how we did that was to find the applications and the things that we needed to build and then the create unique experiences. I already kind of alluded to the one on workflow was where we just we had some really good ideas about how we wanted to do things and the core of the CRM just didn’t allow you to do that. So we created a visual workflow system that allows you to drag and drop things and move things around and see what people are working on. And create those common tasks and do it in a way that just it just makes it so much easier than trying to go in and manage tasks at the CRM level. And it worked really well for us and we can share those around the entire firm. So it really gives you the ability to do that. I think other areas of collaboration is you know, there’s nothing better than sharing and seeing what people are doing. And Salesforce was great at that right because they’ve already got chatter built within the Salesforce system. So by chatter and making it a centerpiece of our core platform, where people can talk to each other and ask questions and share ideas. That’s been a huge part of our culture. Because we really do want to collaborate and sometimes that’s advisors talking to advisors and not having someone in corporate try to interpret that or pitch that we’re all working together all the time and chatter really brings that ability out and we use that across the firm.

Craig: What you mentioned was avoiding incremental improvements, and that’s such an important point. We see a lot of firms spending big dollars, not on innovative features, but on incremental improvements. How did you come up with that and avoid that trap?

Doug: I think it’s experience. So having come from the wirehouse world many years ago where we had to build a lot of things ourselves because of the scale. You start to realize that at the end of the day, the system that you have wasn’t the best in the market. And you spend a lot of time and the dollar is just trying to keep pace with that innovation that others are already doing. So I think once you get your focus narrowed into the things you really want to do, it allows you to be creative and create that and be agile. And then I think the other thing is listening, we listen to our advisors, and they know the business way better than I’m ever good at. I’ve been doing this my whole career. I can take great ideas from advisors and put them together and take our technology team which is also a fantastically talented and our marketing people and people across the firm and we can create really good ideas because we can collaborate like that. So I think listening and the ability to respond rapidly or Agile has really helped us create things, collectively that we never would have done as individuals really, really powerful. I think we all know that the power of many who is always going to be strong and recover one.

Craig: Absolutely. It’s so important to be able to be able to visualize where you want to bring innovation and where you want to avoid that and use what the vendors have. And something you mentioned earlier you were apologizing for calling these some of these platforms, commodities. No, they understand their commodities. I wrote an article five four years ago now, 50 portfolio management platforms can’t all survive. We have so many of everything that some things have become a commodity and it’s up but it’s at least said let the vendors compete for your business. It’s up to them to come up with ways to differentiate that you can then leverage.

Build Versus Buy

Craig: Let’s move on to another topic, which I think is on a lot of CTOs’ minds which is buy versus build. So how do you make that decision obviously with Salesforce you bought and built but how do you other how you decide otherwise we might just build from scratch versus buying, what’s some of your key areas of deciding that making the question answered?

Doug: No, it’s the hardest one. But I think it starts with we build a three year roadmap. So I think the first thing is having a vision a B, and by going out three years, I wish I could go out five, but five gets really tough and when you’re basing it on technology. So I think a solid three year vision of where we think we want to be in three years, something we update every year. It takes into factors things that are going on in the in the outside world, as I like to say not just the wealth management space, but just technology that’s out there that we maybe want to bring into our firm because we think that could be a competitive advantage, or just something our clients and our advisors would want to want to have. And then others are things that are happening within within the business, could be planning, we want to do something on the planning side. It could be like I said, there’s performance reporting and some innovations on platforms. I want to make sure we could enter alternative investments right now an alternative marketplaces are huge in our business. So how we’re going to integrate and talk to those platforms is something that we want to make sure we’re laying out in our roadmap.

Doug: Once we have the roadmap, then it’s a matter of trying to find out those things that are available in the marketplace. Versus the things that are just not we try to make conscious decisions on that and and always evaluating vendors. And then we talked about the efficiencies or the IP that you can create. It’s the last piece is where do we really think we have a different view? And it’s something we don’t want to have someone build for us that we really think we can build it better. We can create it the way we want to to run our business and it’s going to have a return for our advisors and our clients. Because if it doesn’t have that return, then we shouldn’t be doing. So it’s a it’s a multi step process. That takes a lot of a lot of thought and debate. And we love active debate. So I think as you work through the process, ensuring that people are communicating clearly your vision, you know how it fits into your roadmap, and then you wind down to to the things you’re actually going to focus on and execute on. Which becomes your your one year plan.

Craig: When you are looking at the ROI of technology, how what’s a rule of thumb you use for deciding whether or not the ROI will be enough for you to build something versus buy it?

Doug: That’s a great question. Sometimes it’s a you can do a quick financial model on ROI and say, Look, this is going to have a payback of, let’s just say it’s less than a year right? That’s fantastic. So those become no brainers I can do this. I can either save money, it’s really hard to say I’m going to jump revenue, because that’s you’re always taking a little bit of risk to revenue will will materialize. But I think if you can find things that mathematically work and we always have some of those on the table, then it’s great. There’s things that reduce risk, and we’re we are all on our risk management business. So in some cases, we look at the risk and say, Look, we need to do this. We think it’s a really, really thing to do. It’ll help reduce risk across our business and help us manage the business better. Those become no brainers as well. And then I think there’s this things we talked about that the ecosystem and the look and feel and there’s other things that you do just because you’re trying to create that experience, and you have to invest in it. So those are not so much natural models to say to get us a return of x on the investment, as much as it’s part of creating that ecosystem and we’re willing to invest in that because we think it’s really important to running our business. And to do that you obviously need a good executive team. A good board that is supportive of trying to grow your business for the law on call, so we’ve got that as well. And it’s not I would say it’s not hard if you have the right type of management within your firm, but it certainly takes some creativity to be able to see what the vision is you’re trying to create in that space. So from the ones that are really straightforward to the ones that are a little less straightforward is kind of that continuum that I just outlined.

Craig: It’s important that the different heads of the business all work together and communicate because technology affects all them even though they’re not directly building or supporting the technology.

Doug: 100% right. We’d love to focus on growth things all day right that’d be great. If everything we did was just wrong business. You’re running a complex ecosystem, from risk to the financial side of your business and the operation side of your business right at the end of the day. It’s all those things are very very important to piece together.

Making Conscious Decisions

Craig: Let me tease apart a couple of nuggets of wisdom you shared in this last couple minutes. You said make conscious decisions. And there’s so much in just that little phrase and I can’t tell you how many clients we work with, where they’re sort of making. They’re making their decisions are being made for them, or they’re not really thinking about it as a decision. It just sort of happens. So as you mentioned, bringing all the leaders of the organization together to really think about, hey, we’re putting a three year roadmap, what are we doing, and why are we going with this way over this way and having someone give you some criticism while you’re doing that and have to justify it. So each one of you decisions is consciously made rather than oh, someone said that when we remember who decided on that particular thing as opposed to we know why we did that.

Doug: That’s a great point. Just made me think of something while you said that because it’s like data like we asked for data, we make sure we have a contract with the vendor that we have access to data integration. Even if we don’t know what we want to do with it. We want to make sure we can have it and that they can support it. And it goes back to those partnerships to say we’re thinking down the road because down the road, you may want that they can accommodate that prevented from doing it, then that’s a negative and maybe that’s something we want to evaluate before we get into relationship. So it goes back to that conscious decision as we know where we’re gonna go. And we think that having integration and having data is always going to be important to us becomes a foundation of what we do. Even if we don’t think we’re I don’t know what we’re going to do that today. We want to make sure we have and that that’s a great example of a conscious decision we make when we enter into partnerships and relationships with third parties.

Craig: One thing we recommend to our clients is document your decisions, especially the big ones but even the little ones because management changes as turnover and things go about years ago Biden’s people don’t remember why they made a particular decision. So if you’ve written down easy Oh yeah, here’s at the time. We had this this and this going ons we chose this, that maybe that’s no longer the case. This way you have a record of how that decision was made and what the justification was. So if that underlying environment changes now we can change this particular system or this particular way of doing things.

Doug: I would agree 100%. With that, it’s kind of fun. We go back and look at our old, our old roadmaps. There’s things that we did in there that never materialized. That’s fine. That’s you got to be bold, and you got to be thinking out there. But there’s a lot in there that we did, and we can go back and look at those and say this was what we wanted to do. We built towards it and we actually achieved it and you should be able to see those things over time. Just like you said is you’ve documented it, you’ve kind of written it down. It’s what your goal was, and you had a plan to get there. And then you got there over time.

Craig: We’re very much into integrations at my company. We do a lot of research on integrations and a lot of work with clients integration. So always asking for that integration support from a vendor is key. We we wish more clients would do that. And thinking ahead because you even if don’t need it today. You might need it in the future. And but even knowing to ask that question a lot of firms don’t know because they don’t spend the time to talk to their vendors about these things, especially when it comes to switching vendors. We found some contracts are very anti client where the vendors have all the control. If you try to leave and you don’t even own your own data, you’ve got to pay them to get it so checking the contract for what your rights are when it comes to your own data is also important.

Doug: It’s funny that you say that. Because you have to pay for your data. It’s your data. And that’s the right answer. If you ask that question and you’re anything other than it’s your data, of course you can have it then that that tells you something because the good vendors and I’ll say the good ones, they understand that it’s your data, you should have access to it and it’s yours. While you’re right they they certainly want to make it harder to leave them they because they’re locking your data, right that’s that’s just the wrong reason.

Three Tips for Building Your Tech Stack

Craig: We’re almost out of time, I wanted to get a couple of some interesting things that you had said in our prep call. If there were three tips you could provide to see CTOs of other firms that maybe they’re they’re just starting out like you are there early in the early days of their firm. What would those three tips be? For building their tech stack and their ecosystem and their three year roadmap?

Doug: The first thing is you’re gonna have to make some bets. And I and I talked to those that are just starting out in space. I think that’s always the hardest one is, you don’t want to make a bet too early. You’re gonna have to make some bets, so look at where you want to build your core, and you’re going to have to partner or bet on what that strategy is and be willing to do that because it’s really hard if you’re not willing to commit. You’ve got to commit someplace.

Doug: And the second thing is that is that roadmap is take the time to know where you want to go. You really can’t get there and I always say you can use the house, do I have to build a foundation before but the first floor before I build the second floor, whatever analogy you want to use or visualization you want to use, but it applies. We’re building technology, not for the sake of technology. We’re building it to put it all together. We need to have the plan of how we want to be there.

Doug: I think the other piece is those vendor relationships it’s really important to have strong relationships and not be building everything yourself. So you’re gonna have to spend the time in the marketplace and evaluate who you want to be partnered with, how you want to manage that relationship and where you want to leverage them to your business. I think that’s really important.

Doug: The third thing is that we have a great advantage that we can listen to advisers in the space. The advisors know the business for a while. They don’t know technology typically so partnership there is what do you need to run your practice? What do you need to run this business better to serve your clients better, and put together that ecosystem that creates an enables that experience for them? And I think that listening part is always a really important part of that because we’re not building things just for the sake of building them to make the business better. And I think we’ve learned to be good listeners. And it’s really it can be fun when you see how you can put things together and create things that you never thought possible. It takes a little while to get there, that wasn’t the case in the early days. Because you weren’t blocking but as you start to get in leverage or your environment, you really can do some amazing things by listening.

Craig: Doug, you’ve really put on a masterclass here and it’s like an MBA class on how to be a CTO for a large wealth firm. But we’re out of time, I could have talked for about an hour on some of this stuff because this is really what where we live and breathe, but we’ve got to wrap. Can you please let people know where they can find out more information about HighTower Advisors?

Doug: Sure, HighTowerAdvisors.com is our website. And you can certainly find me on LinkedIn. And again, we really, really proud of what we’ve been able to accomplish and I appreciate the time today, Craig.

Craig: No, no the appreciation is all mine, I appreciate you coming here and sharing with us. It’s been super helpful. Thanks so much, Doug.

Doug: Thank you.



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