The sixth annual TD Ameritrade Institutional Technology Summit, which recently concluded in Frisco, Texas, demonstrated that the company is still the leader in providing technology choice among RIA custodians. With 105 current VEO integration partners, the company offers a breadth of integration partners that rivals can only aspire to. TD Ameritrade is not resting on its laurels, however. As we shall see, it continues to develop and innovate in conjunction with its partners. Before we get into the latest developments, however, a little background is in order.
Over the last six or seven years, all of the major custodians have become somewhat more open to integrations with their technology vendors than they were previously, but no RIA custodian has embraced the open platform concept with the gusto that TD Ameritrade has.
As recently as 2008, RIA custodians offered limited, if any, third-party technology vendor integration. They viewed integration as the responsibility of the advisor, even though the evidence was clear that few advisors had the know-how to evaluate and implement platform integrations on their own. In late 2008, Fidelity announced WealthCentral, an integrated advisor workstation. Initially, it included CRM, financial planning, portfolio management/accounting and rebalancing software from third-party vendors, but there was only one provider for each software category (Fidelity has since increased the number of vendors participating in the offering).
In mid-2010, TD Ameritrade caused a stir in the industry when it announced its open architecture concept. The idea was to create an open application programming interface (API) that would allow any technology vendor, assuming it passed a screening for due diligence, compliance and security, to interface directly with VEO, the TD Ameritrade interface that the firm makes available to its advisor clients. Most industry experts were initially skeptical of the VEO Open Access concept, but it has proved to be a real boon for the company, for participating vendors and for advisors. The nine original vendors in the program have swollen in number to 105, and the company welcomes new partners.
The company’s approach to technology centers on three major themes: choice, flexibility and efficiency. For choice, TD Ameritrade offers a wide variety of providers for advisors to choose from. While it is true that not every integration is of the same caliber, there are many of very high quality. For vendors, particularly newer ones, there is an opportunity to integrate with a major custodian well before others will consider such a move. For TD Ameritrade and its advisors, perhaps the greatest advantage of VEO Open Access is that it creates an environment of collaboration and innovation that is currently unique among the custodial platforms. The company’s platform benefits not only from the creativity of its own developers, but also from the ideas of over 100 other FinTech companies.
A good example of its flexibility is the options that TD Ameritrade affords advisors in digital account on-boarding. Advisors can choose to launch DocuSign from within VEO. Assuming the relevant information already resides within VEO, the system will populate the fields within the TD Ameritrade forms and DocuSign will electronically send the forms to the client for their e-signature. TD Ameritrade also allows advisors to launch DocuSign from within a VEO integrated CRM system. In this case, the CRM would populate the forms. Under this scenario, advisors can add their own form to the digital envelope. DocuSign then sends the envelope to the client. Yet another option: Advisors can choose to use Laser App Anywhere to populate form fields with data fed through the CRM. The advisor then launches DocuSign from within Laser App to complete the process.
TD Ameritrade makes both DocuSign and Laser App available to its advisors at no charge, as do many other custodians. Where TD Ameritrade differentiates is by allowing advisors to use their own version of DocuSign to interface with TD Ameritrade. While advisors must bear the cost of their own DocuSign licenses under this option, it has the advantage of allowing advisors much more flexibility in the scope of forms, the scope of work flows, etc. The ability to customize DocuSign is particularly appealing to larger firms, or those looking to maximize automation.
A couple of years ago, TD Ameritrade began handing out VEO Integrated Awards to recognize a select group of key vendors and incentivize others to excel. MoneyGuidePro won the award for advisor satisfaction, based on a survey of over 1,200 TD Ameritrade advisors. Junxure Cloud won the Innovation Award for its deep two-way work-flow integration with TD Ameritrade. Riskalyze won the Newcomer Award for Autopilot, an automated digital asset management platform for advisors.
The ability to automate processes such as account opening, the ability to encourage vendors to improve the advisor experience through the VEO Integrated Awards as well as the VEO One dashboard discussed below are examples of ways that TD Ameritrade promotes advisor efficiency.
Looking ahead, what is TD Ameritrade doing to maintain its open platform lead? The answer: plenty. In March 2016, the company rolled out Advanced Alerts (formerly known as the “Message Bus.”) Advanced Alerts represent a communications pipeline that all technology partners can monitor. Currently, TD Ameritrade pushes operational alerts to vendor/partners and allows vendors to access potentially missed messages through the API. When something relevant happens, it triggers an alert, that all firms monitoring the pipeline can “hear.”
These advanced alerts can then trigger an action or even a work flow. For example, if a CRM system such as Junxure Cloud sees that a client address has been changed within the TD Ameritrade platform, it can either automatically update the client record to the new address, or it can launch a work flow to initiate confirmation of the change. If a client deposits funds with TD Ameritrade, it can trigger a work flow to invest the money in alignment with the client’s investment policy statement. It is important to note that these advanced alerts are not just point to point. They can trigger work flows and share data across multiple applications. TD Ameritrade plans to expand the scope of Advanced Alerts in the coming months to include many aspects of cash management, trading and account management.
TD Ameritrade is continuing to build out VEO One, its next generation advisor workstation. The June 2016 release added trading, new navigation and an action menu. There are currently over a dozen vendors integrated with VEO One, and TD Ameritrade will slowly be adding other vendors to the platform in the coming months. One of the primary goals of VEO One is to provide advisors with even deeper integration through a single unified dashboard where they can conduct all of their business, should they wish to do so.
VEO One allows advisors to arrange widgets on the VEO One dashboard. These widgets can offer a view of a web page from within the TD Ameritrade ecosystem, as well as views from a CRM system, a portfolio management system, a financial planning application, etc. The system also has advanced search capabilities powered by the Google Search Appliance. So, for example, an advisor might search for a client or a household. The dashboard could then contain a list of outstanding tasks related to the client from the CRM, as well as a personal balance sheet from the financial planning software. The performance would be displayed from the portfolio management and reporting software.
Generally speaking, you can drill down for more information by clicking on an item. That will bring you, in context, to the applicable page within the proper software application. One important feature of VEO One is that a firm can establish dashboard templates according to function, so an advisor will have a view of information relevant to the advisor, while an operations person will see data relevant to his or her own tasks. Once individual users tweak the views to their liking, the software remembers views at the individual user level.
One current limitation to VEO One is that it only allows for a widget in one of two sizes. Some views are displayed in the smaller widget only, some in the larger, and some offer a choice of the two. Eventually, TD Ameritrade plans to offer developers flexibility to create widgets that can be resized.
Another limitation of VEO One is that it requires trial and error on the part of users to find the optimal layout of widgets on the dashboard to obtain maximum efficiency. TD Ameritrade has plans to address that issue as well. Through the use of big data, the company hopes to analyze the relative usage and efficiencies of all VEO One users. That will help it determine what layouts seem to work best for a use case. For example, if your firm’s operations staff trails the benchmark of other similar firms performing similar tasks, the software will be able to suggest more efficient layouts that can save time. With the recent purchase of FA Insight, TD Ameritrade now has access to a trove of additional data that it can leverage and deliver through VEO One to help its advisors improve their business performance.
TD Ameritrade recently launched an upgraded version of its Integration Analyzer software. This software helps advisors construct a software ecosystem that best suits the needs of their firms. Advisors can enter their current software applications and see, at a glance, if these integrate with TD Ameritrade or their other software products, and if so, how well. They can then propose adding or subtracting applications to see the impact changes will have on their overall ecosystem.
One final big idea that TD Ameritrade is very excited about is the concept of co-creation. To date, much of the building of the VEO infrastructure has been the primary responsibility of TD Ameritrade. For example, the company has designed the infrastructure of VEO and VEO One, published APIs, and allowed third-party developers to write to them. That’s not to say that VEO partners had little say. They did provide a tremendous amount of input. And it’s not to say that third-party developers did not make important contributions. They did. Co-creation, however, is designed to take this third-party input and development to a whole new level. It opens up an opportunity for TD Ameritrade to work together with its 100-plus vendor/partners to create new widgets and integration features for VEO One.
Although TD Ameritrade’s approach to technology remains very popular with advisors, it is not without its risks. At what point does adding vendors result in diminishing returns? Managing such a wide range of technology relationships requires a significant resource commitment. The challenge of maintaining security while managing so many external vendor relationships requires continued diligence. Furthermore, other custodians are taking a more open approach to technology as well, so TD Ameritrade no longer has a monopoly on open platforms. To cite just one example, Pershing recently announced a new open API store and other enhancements to foster integration and collaboration with third-party technology vendors.
For now, though, TD Ameritrade appears to be achieving its goals of choice, flexibility and efficiency. If VEO One is released on schedule, it should help maintain the company’s position in a very competitive RIA custodian marketplace.