Technology continues to be a pressing issue for advisors and the RIA custodians who serve them. Advisors face a host of challenges today. They face cybersecurity problems, complying with the DOL’s fiduciary rule and competition from robo-advisors. At the same time, they must improve their clients’ experience, improve their own efficiency, integrate technology into their business and scale for growth. Every single one of these issues is either directly or indirectly linked to technology.
But most firms, unfortunately, are not well equipped to deal with these issues. All but the largest firms lack in-house cybersecurity defense experts, yet regulators expect all firms to be prepared nonetheless. The DOL rule will require firms to make changes in policy and procedures, as well as update work-flow software. But not all firms have the expertise to evaluate what changes will be required of their staff or how to make the software changes.
Given those challenges, RIA firms are increasingly turning to their custodians for help. Here, we look at what a few of the major custodians are doing in technology to support their advisory clients.
TD Ameritrade
According to Jon Patullo, managing director of technology product management at TD Ameritrade, much of his firm’s focus in 2016 has been related to the client experience, and that will continue next year. Perhaps the firm’s biggest initiative is the rollout of its “VEO One” platform, the successor to its highly successful advisor VEO workstation. (That rollout should be under way by the time you read this.)
Patullo says the initial version of VEO One will include all the core functionality of its predecessor, if not all the ancillary functions. Those will appear later, as will a resource center, and the original VEO will still have all the old functions until the new version incorporates it all in 2017. The plan is to train advisors to use the new features and functionality as they come on board.
Data analytics is another area of focus for 2017 after TD Ameritrade’s purchase of FA Insight earlier this year. The deal will offer TD Ameritrade advisors the ability to benchmark their firms against their peers. “Advisors want to know how they stack up with other advisors,” says Patullo.
TD Ameritrade’s tools will also help advisors segment their business to boost growth and productivity. There are other enhancements on the way. For example, a new status tracker will allow advisors to monitor the status of new account openings, asset transfers and the like without having to call a service representative. Also on the way is an improved account wizard to capture and store all the information, whether it’s manually entered or obtained through third party applications. The wizard will also facilitate near real-time digital account openings.
TD Ameritrade is creating a native Salesforce app. The app is designed primarily for advisors who already have Salesforce installed when they come to TD Ameritrade, or for those TD advisors using their own version. The app will let them view VEO data, get TD Ameritrade alerts and take advantage of the new account opening process.
The company continues to bring advisors on to the free iRebal platform—more than 2,200 firms have been trained and put on the platform.
Finally, there is good news for the advisors on the Scottrade platform who transition to TD Ameritrade’s. It should be obvious that TD’s technology far exceeds Scottrade’s, so advisors making the transition are in for a far superior technology experience.
Schwab
There were no major blockbuster tech announcements at this year’s Schwab IMPACT Conference, which is often the venue for them, but there were interesting developments.
For instance, Schwab announced a number of enhancements to its Schwab Intelligent Institutional Portfolio offering, the automated investment platform designed for independent advisors who custody with the company. The initial upgrade to the platform allows more portfolio customization. Schwab now offers more than 950 ETFs on the platform, more than double the number available at its launch last year. By the time you read this, all advisors will be able to create up to 45 advisor-defined asset classes in each portfolio and offer multiple ETFs in each asset class.
There’s another welcome change: Previously, each firm could only have one firmwide Institutional Intelligent Portfolio program. Now, different offices of individual advisors within a firm can establish their own programs targeting a specific audience.
A new, streamlined account-opening process makes opening accounts easier, faster and more intuitive. Schwab has also expanded account funding options. Previously, only cash was accepted. Now, accounts can be opened with stocks, mutual funds and ETFs. Assets can be moved by transfers from other institutions or by journaling from an existing Schwab account. In many cases, the assets will be liquidated upon delivery to Schwab, but the sales will be done at no charge. If an ETF transferred in is appropriate for the new Institutional Intelligent Portfolio model, it will not be liquidated.