Scope Creep or Strategic Growth? Wealthtech Expansion Drives Need for Better Integration

“It’s not about faith in technology. It’s about faith in people.”

— Steve Jobs, co-founder and former CEO of Apple

The wealth management landscape is in a state of flux. With rising client expectations and a relentless drive for efficiency, Registered Investment Advisors (RIAs) are increasingly turning to wealthtech solutions to streamline operations, automate tasks, and ultimately, deliver a superior client experience.

However, navigating the vast ocean of wealthtech vendors can be overwhelming. Integration, the seamless connection between various tools, emerges as a critical factor in selecting the right fit for your RIA.

Technology as the Bedrock of Wealth Management: A Deep Dive into Integration and Strategy

In the realm of wealth management, the only constant is change, particularly in the technological tools that underpin our industry. The sentiment made by Steve Jobs was echoed in a recent Webinar hosted by Tolerisk where CEO Mark Friedenthal spoke with Ezra Group CEO Craig Iskowitz who unpacked the intricacies of choosing the right tech in a field where client relationships are paramount.

Beyond Efficiency: The Compelling Benefits of Integration

Integration delivers a multitude of benefits for RIAs, Iskowitz explained, extending far beyond mere efficiency gains to include a number of advantages:

  • Enhanced Efficiency: Automating repetitive tasks like data entry and portfolio reporting frees up valuable time for RIAs to focus on high-value activities like client service and strategic planning. Integration streamlines workflows, allowing advisors to spend less time wrestling with technology and more time building strong client relationships.
  • Improved Data Accuracy: Siloed data across disparate systems is a recipe for errors. Integration ensures consistent and accurate data transmission across all platforms, minimizing the risk of human error and leading to more informed decision-making.
  • Elevated Client Experience: By providing a holistic view of a client’s financial picture, integration empowers RIAs to deliver personalized and comprehensive advice. With a centralized repository of data, advisors can readily identify investment opportunities, address client concerns, and tailor strategies to individual needs.

The Evolving Custodian Landscape: Embracing Open APIs

The landscape of custodian services is also undergoing significant transformation.

While 56% of RIAs are multi-custodial, according to a 2022 Cerulli report, it is still difficult to convert accounts and every advisor dreads the thought of repapering.  There are a number of reasons for a wealth management firm to work with more than one custodian. Sometimes it is a conscious decision based on a desire for competitive pricing, a broader investment spectrum, and better technology integration.

But just as often, it is due to mergers and acquisitions, as the acquiring RIA does not want to rock the boat with new clients and takes on the burden of an additional custodian instead.

The RIAs that work with a single custodian tend to be smaller. Fifty-five percent of single-custodian RIAs have less than $250 million in assets under management, while 65% of dual-custodian RIAs have $250 million in AUM or more.

An article by Axos Advisor Services lists several signs that might indicate the need to bring on an additional custodian, including:

  • Catalyst: Your custodian was purchased by a new firm, and you are unsure whether the new custodian’s strategic direction aligns with your business needs.
  • Service deterioration: When you call your custodian for assistance, there are long wait times, inaccurate information or untenured associates.
  • Limited flexibility: Your custodian offers rigid solutions and refers to policy often. They make it more difficult to find mutually beneficial solutions for your business and your clients when they are needed most.
  • Competition: You are frustrated as your custodian’s internal wealth division/advisors and their promotional efforts/advertising seem to compete against you. You feel as if you are not aligned on the same side.

The comments on competition point directly at Charles Schwab which still has the largest market share of 38% according to the 2024 T3/Inside Information Software Survey.  But there may be a chink in Schwab’s armor as users of Advisor Center reported having the highest interest in changing custodians. Nearly 20% of Schwab-affiliated advisors said they plan to change or add custodians in the next year.

Among those advisors who indicated an interest in custodian change, the most popular alternative was RIA custodian Altruist, which was founded in 2018 by serial entrepreneur Jason Wenk.

Almost 12% of advisors who currently custody with Schwab said they are considering adding or switching to Altruist, according to the T3 survey. Despite having less than 3% market share, Altruist received one of the highest average user satisfaction ratings of any custodian – 8.5 out of 10.

Managing multiple custodians can present additional integration challenges for RIAs. However, a growing number of custodians are embracing open Application Programming Interfaces (APIs). Open APIs unlock seamless integration with wealthtech apps, empowering RIAs to leverage best-of-breed solutions regardless of their custodian. This fosters a more flexible and adaptable environment.

Best Practices for Selecting the Right WealthTech Partners

With a plethora of wealthtech vendors vying for your attention, a well-defined selection process is paramount. Iskowitz presented some key best practices to consider:

  • Needs Assessment: A thorough needs assessment forms the bedrock of your selection process. Identify the specific tasks you aim to automate and the data you require for seamless integration. A clear understanding of your needs will direct you towards vendors offering solutions aligned with your unique goals.
  • Integration Capabilities: As highlighted earlier, integration should be a top priority. Seek vendors boasting a broad range of deep and user-friendly integrations. Don’t shy away from inquiring about future integration plans; ensuring alignment with your evolving technological needs is crucial.
  • Robust Security: Data security is an unwavering concern for RIAs. Prioritize vendors with a proven track record of robust security practices. Investigate their data encryption processes and disaster recovery procedures to ensure client information remains safeguarded.
  • Cost Considerations: The cost of wealthtech solutions can vary significantly. Obtain quotes from several vendors before committing. Beyond the initial licensing fees, consider the total cost of ownership, which encompasses implementation, training, and ongoing support.
  • Vendor Reputation: Selecting a vendor with a solid reputation is essential. Seek references from other RIAs and actively research industry reviews. Leveraging the experiences of your peers can provide invaluable insights into the vendor’s service quality and overall reliability.

The Power of the Ezra Group WealthTech Integration Score

The Ezra Group WealthTech Integration Score (WTIS) offers a valuable starting point for RIAs seeking well-integrated wealthtech solutions. This proprietary score evaluates vendors based on the number and depth of integrations they offer, alongside ease of use. As Iskowitz suggested, RIAs should prioritize vendors with a score of eight or above, signifying “superior” integration capabilities. These vendors boast a comprehensive suite of robust and user-friendly integrations, ensuring seamless data flow and streamlining workflows.

Conclusion: Building a Tech-Enabled Future for Your RIA

The wealthtech landscape is a dynamic environment. To stay ahead of the curve, RIAs must adopt a strategic approach to selecting and integrating wealthtech solutions. By prioritizing the factors outlined above, RIAs can empower themselves to select the best-fit tools and unlock the transformative power of technology. Ultimately, this leads to enhanced efficiency, improved accuracy, and a truly exceptional client experience, propelling your RIA towards long-term success.

Contact Ezra Group if you would like a free consultation on your firm’s challenges with integration or support for multiple custodians.



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