Over the last several years, custodians have been investing in advisor-facing technology like never before. Before Fidelity launched WealthCentral roughly half a decade ago, the custodians competed primarily on the basis of their advisor-facing back office, the technology that allowed advisors to access client information, download forms, place trades and the like.

Today, the battleground is much broader. Custodians now play a pivotal role in many third-party integrations (something they shied away from previously), mobile solutions, technology advice, and, in some cases, collaborating with their advisors to provide rankings of third-party technology providers. In addition, almost every custodian uses the combined purchasing power of their firm and the purchasing power of their advisors to offer discounts on technology from a wide range of vendors.

While the custodial offering may appear similar at a macro level, there are differences in their approach to advisor technology. I recently talked with the senior technology executives of the four major custodians to discuss their current technology initiatives, as well as some of their plans for 2014.

The operational word at Fidelity is convergence. This past July, the platform technology groups of Fidelity Institutional Wealth Services, Fidelity Family Office Services and National Financial were combined into one team under the leadership of Edward O’Brien. This new structure is beginning to pay dividends. “We are getting more and more out of every dollar we invest in technology because we can now leverage it across multiple channels,” said O’Brien.

Recently, Cassie Warrington, vice president of platform consulting, demonstrated some of the new platform features. Most of these features have already been released on the NFS Streetscape platform and the IWS WealthCentral platform, but the timing and the features vary slightly. One thing that was clear at the outset was that Fidelity devoted significant thought to the user experience. Navigation is better, and access to key data has been simplified. In addition, the enhancements address specific business problems that advisors face.

Client onboarding is one good example. While the process continues to improve throughout the industry, it is not seamless at most firms. The new version of Streetscape allows advisors to populate forms using the unified account opening tool. CRM (if used) can feed the account opening tool, which then populates the forms. Advisors can then present electronic forms that clients can sign using DocuSign. With WealthCentral (IWS), the offering is slightly different, but there is a forms prefill offering that gets data from either the advisor’s CRM or from Fidelity’s brokerage system.

Currently, advisors can choose to allow one of two types of electronic signature. In one scenario, clients can be authenticated by answering a number of questions. As an alternative, the advisor can provide the client with an access code for validation. The system is smart enough to recognize the type of device a client is using, so the screen will draw appropriately for a PC or a mobile device. Account opening with digital signatures is currently in pilot for independent RIAs, and it should be rolling out soon. O’Brien added that some advisors would like to be able to offer a “self-service” account opening process to their clients, and that IWS was exploring the possibility of doing so through existing technology at Fidelity.com.

According to Tom McCarthy, senior vice president of product management, this is only the first phase of improving the account opening process. McCarthy says what advisors want is a way to send an electronic package of all necessary documents to a client and allow the client to provide a single signature across the whole package. Fidelity is working on this. They also demonstrated a prototype of a mobile process that included account opening, ACAT transfers, the opening of the account by Fidelity with the account number supplied to the client and advisor, and the ability to remotely deposit a check and have it credited immediately, all from a mobile device.

The mobile app for advisors has been enhanced. The home page contains news and mini-windows that contain key information such as your top five clients, money movements, alerts and a list of accounts you’ve accessed during the current session. Unfortunately, these windows are fixed in the current version. You can’t modify them or replace them with alternative widgets.

Trading capabilities are better. They closely mirror those of the Fidelity retail site. If you are working on a trading ticket for an account, you can click at the bottom of the screen to reveal the positions in that account. If you need to know account balances (cash, buying power, etc.) you can click in the top of the screen to reveal that information.

Another feature advisors asked for is the ability to view client documents, such as statements and trade tickets from within the mobile app. This capability was not present when I viewed the system, but I’m told it will be added before year’s end. Overall, the adoption of mobile apps from both IWS and NFS advisors has been excellent. There have been more than 22,000 downloads of Fidelity Institutional’s mobile apps, representing 42% of users on Fidelity’s clearing and custody platforms.

Streetscape has always offered the ability to generate a wide range of reports, but much of the data was only available on an ad hoc basis. There was no way to save a report or schedule one to run in the future. Streetscape now makes virtually every data point in the system available to authorized users.
Users can save report templates and they can schedule reports to run at set intervals. They can also link alerts to reports. So, for example, if you want to know what bonds in your portfolios are maturing soon, instead of running a report every 30 days, only to find there is no activity to report, you can instead create an alert that runs a report whenever a bond is maturing within the next 30 days. Data reporting is currently available to NFS clients, and it will roll out to IWS clients in 2014.

Dan Brownell, the president and CEO of XTRAC Solutions, a Fidelity Investments company, brought me up to date on his firm. XTRAC is not widely known in the advisory space, but it should be. The firm provides enterprise class workflows, document management and business process management (BPM) technologies. Originally conceived about 20 years ago to provide for Fidelity’s own internal needs, XTRAC now supports over 30,000 users and more than 39,000 work items annually. Of those users, approximately 2,000 are external.

A number of B-Ds doing business with NFS, as well as some large RIAs that custody with IWS, have seen significant productivity gains through the use of XTRAC systems. Brownell referenced one RIA firm that doubled its business in a relatively short period of time without adding a single employee after implementing XTRAC. Fidelity offers the system through a SaaS model on a private cloud for approximately $100 per month per user. Brownell emphasizes that the system is most to beneficial large or geographically distributed financial firms that can leverage XTRAC’s ability to automate processes. “A four-person single location RIA shop looking primarily for document management is not a perfect fit for XTRAC,” says Brownell, although he did not rule out the release of an XTRAC “lite” tailored to smaller advisory firms.

Since XTRAC is already the BPM engine for all of Fidelity’s internal documents and workflows, it is easy to envision how advisors using XTRAC could achieve a level of automation and straight-through processing with Fidelity that would be unmatched in the industry. It will be interesting to see if Fidelity and its advisors capitalize on this opportunity.

According to Ramaswamy (Ram) Nagappan, chief information officer at Pershing LLC, Pershing continues to execute on the strategies that they highlighted during their INSITE Conference last June. According to Nagappan, his firm’s strategy is solutions-based; it is all about helping the advisor interact more seamlessly with technology to solve real business problems. Two pillars of this strategy are mobile access and simplicity.

The whole NetX360 platform is getting a makeover. Some improvements are already under way; others will take longer. With regard to simplicity, Pershing will be taking the analytics portion of the platform, which too few advisors are currently using, and making it more accessible through a preconfigured graph and template dashboard that can be accessed with a mouse click. Bank and brokerage integration will come later in 2014 so the client can access things through a single portal.

On the mobile front, Pershing is beta testing the next generation of NetX360 mobile at the end of 2013 (the full rollout is scheduled for the first quarter of 2014). The initial release will support both Apple iOS and Microsoft Surface Pro, with an Android version following shortly thereafter. These new mobile apps will be hybrid apps (a combination of HTML 5 and native features) so they will look and feel the same across devices. For example, tiles displayed in both apps will be live.

Where possible, Pershing will leverage the native capabilities of devices and their operating systems. For example, Pershing plans to use the iOS notification system for alerts. In the case of Surface Pro, Pershing will leverage the device’s multitasking features to allow for tabbed viewing between multiple screens. The NetX360 app will leverage built-in location services (iOS only, initially) to help with appointment scheduling. If you plan to visit one client, you will be able to generate a list of other clients within a defined radius, so you can schedule other meetings in the area.

Pershing also plans to use FaceTime, a native Apple iOS application, to initiate video conferences from mobile devices, but this will come later, as it requires additional testing and compliance oversight. Assuming that project is successful, can similar capabilities through Skype (a Microsoft product) be far behind?
Pershing also plans to introduce a “client mode” view through NetX360. The idea here is to be able to pull up all of a single client’s (or household’s) information in a format that hides everything to the viewer except that client’s information. The advisor can then go into an Apple TV-equipped conference room, for example, and project the client’s data in NetX360 directly onto a screen for discussion with the client.

Pershing is currently beta testing some new digital signature capabilities. In the near future, this should enable true straight-through processing of applications and other forms.

The old NetXClient, Pershing’s end-client portal, is being totally rewritten and rebranded as NetXInvestor. The new version will reside on a Pershing private cloud. Beta testing is in progress now, with a full rollout scheduled over the next several months.

One unique feature of the new NetXInvestor is the flexibility advisors will have in configuring it for their clients. Nagappan says the platform is “multigenerational.” By that, he means you can have a different look and feel for different members of the same household. For example, the younger generation might want a tiled view with more information and self-service options, while older clients might prefer a more traditional, scaled-back view. Advisors will be able to provide clients with a portal that suits their unique needs and comfort level.

As is the case with all of the custodians we talked to, Schwab agrees that the big technology trends in the advisor technology space are the cloud, integration, mobile and big data. According to Neesha Hathi, senior vice president, advisor technology solutions/advisor services, at Charles Schwab, her firm approaches these trends with a specific focus on two areas: improving the client experience and improving the advisor’s business. One example of a new offering that incorporates both of these areas is the new paperless account-opening process, currently in pilot.

Soon, advisors will be able to log on to Schwab Advisor Center, prepare the necessary paperwork digitally using Schwab online forms, send the documents digitally to a client electronically in a digital envelope and have the client sign the forms electronically using DocuSign. The forms will then be routed digitally back to Schwab, with an alert to the advisor that the forms were received by Schwab. In phase two of this project, advisors will be able to accomplish the same efficiencies using a combination of Laser App software and their CRM or the Schwab forms wizard.

Schwab is also piloting other types of electronic authorizations. One obvious application of this technology is wire transfers. If a client requests a wire transfer, Schwab advisors will be able to send the client an e-mail or a mobile alert, notifying the client that electronic authorization is required to complete the wire transfer. The client would then log on to DocuSign to authenticate and authorize the wire digitally. According to Hathi, Schwab will not require advisors and their clients to use electronic authorization initially, but they will encourage it. She added that electronic authorization is efficient and secure, so at some point in the future it may become the service standard.

Schwab is launching a service that, for a fee, will create an advisor-branded mobile app for Schwab clients. This initiative, dubbed Schwab OpenView Mobile, will be available through Schwab Performance Technologies (SPT). Through this service, Schwab will create a mobile app for a firm that the firm can make available to their clients. The app will have the advisory firms’ branding, contain real-time client data from Schwab, as well as the advisor’s contact information. In addition, the app will offer advisors the ability to post some of their own content, such as newsletters and market updates. In addition, the app will have a link to the Schwab Investor app. That’s because some activities, such as electronic signatures on applications and electronic authorizations of wire transfers, are deemed broker/dealer activities, so they must take place on a Schwab property, not an advisor one.

Advisors are sure to ask if this mobile app will be multi-custodial. The answer is that it will—in the second phase of the rollout—with one caveat. Since the multi-custodial data will be fed to the application by PortfolioCenter Hosted, which is multi-custodial, advisors who want a multi-custodial app through SPT would need to use PortfolioCenter Hosted through SPT as their portfolio management solution.

One of the biggest challenges facing advisors is technology training, particularly when it comes to clients. When you roll out mobile apps for clients, electronic authorizations for clients and the like, how do you get adoption? How do you educate clients about these new technologies and help them understand the various workflow processes? Schwab’s answer is the Client Learning Center. This is a resource that advisors can direct their clients to which will educate them about various processes, like electronic authorizations. Hathi says that advisors who have previewed the Client Learning Center are very excited about it.

Looking a little further out, Schwab Performance Technologies plans to pilot what Hathi calls “a new generation of portfolio management” before the end of 2014. This product had yet to be named as we went to press, but it represents the next generation of PortfolioCenter. According to Hathi, it will represent a very different experience. Let’s face it, if Schwab were to begin building PortfolioCenter today, it would look much different than it does today.

Currently, every day, many Schwab-affiliated advisors download data from Schwab into another product called PortfolioCenter. They then must reconcile that data, which can be time consuming and inefficient. If they use a hosted solution, they are paying Schwab or a third party to download and reconcile the data. The plan is for the new product to do away with these steps, replacing them with what Hathi calls “a custodial direct” model. Under this model, the portfolio management software will sit atop the existing Schwab data. Advisors would access the data through a cloud portal so all custodial data that Schwab has will be immediately available to the advisor. “The time it takes advisors to reconcile varies considerably,” says Hathi, “but even if it is an hour a day, the efficiency gains will be substantial.”

In addition, the immediacy of the data will provide a better client experience. Hathi says this new portal will provide dynamic reporting and the one-stop publishing of reports. This means advisors will be able to manipulate reports on the Web on the fly and then publish the reports as PDF files. The platform will also deliver dynamic HTML reports that will be available to clients online and accessible on mobile devices as well as PCs. In addition, Schwab plans to make all relevant data on the platform accessible to advisors in an easily digestible format so that advisors can better analyze their businesses and better meet client expectations.

Since we have yet to see a prototype of this new product, it is too early to draw any conclusions; however, it is apparent to us that many current PortfolioCenter clients are less than satisfied with the application’s reporting capabilities, so dynamic reporting will be a welcome addition. Hathi did emphasize that Schwab is well aware of the diversity of its client base of 3,700 PortfolioCenter users and that Schwab is focused on delivering the features its advisors want. Hathi also emphasized that there were no immediate plans to retire the existing version of PortfolioCenter anytime soon, so advisors who are happy with PortfolioCenter can continue to use it.

TD Ameritrade
“We’re excited about where we are today, technologically speaking,” says Jon Patullo, managing director, technology product management, at TD Ameritrade, “and we continue to execute on our strategy.” His firm has seen significant growth in the adoption of VEO Open Access, their advisor portal; ThinkPipes, an advanced, customizable trading platform; eSignature; and TDA’s custom version of Salesforce over the last 12 months.

“We’re not just building out VEO Open Access,” says Patullo. “There’s much more to come.” Patullo was hesitant to give me the full scoop on all of his plans, since he’d like to save a few surprises for TD Ameritrade’s national conference next month, but he did highlight a few major initiatives that are in the works.
The Web experience for clients of advisors will soon receive a major upgrade. The retail side of the business is launching a totally new Web experience for their clients, and TD Ameritrade Institutional is going to leverage that platform, with some modifications, for the clients of advisors in 2014. I previewed the retail site, and it improves substantially over what was already a solid offering.

The new site is clearly focused on ease of use. It features a new menu, which allows users to travel virtually anywhere on the site with a single click. A new “My Accounts” overview shows balances and positions for all the user’s accounts in one place, plus other information such as news and videos. Perhaps the most innovative feature is the new “dock.” This highly configurable dashboard resides on the right of the screen. You can pin modules (widgets) right onto the dock. Initial modules cover account-related information, notes, shortcuts, a watch list, streaming news and more. I’m sure others will follow. The dashboard remains displayed no matter where you are in the site if you want it there. If not, you can toggle it so it is hidden, but you can make it reappear with the click of a mouse. The dock is a very slick feature.

The SnapTicket feature at the bottom of the page has been enhanced. Users can create trades, monitor order status, receive streaming quotes, access messages and more from this area.

Behind the scenes, TD Ameritrade is working on enhancing their application programming interface (API) to better facilitate updates to all VEO Open Access partners. As part of this project, TD Ameritrade is working on an “event bus.” Without getting into technical details, the idea is to notify applications when the data of concern to them changes; that way, the vendor will only need to request the data that has changed when it has changed. Sounds easy, but the technological know-how to pull it off is complicated. TD Ameritrade is also hard at work with partners to solve the household issue so information at the household level can be shared among applications seamlessly, or at least more seamlessly than is the case today.

A new iPad app for advisors is in the works. It will add cash management features and design improvements. A mobile app for advisors is forthcoming, too. In addition, TD Ameritrade is working on mobile apps for the clients of advisors.

The cloud version of iRebal is coming soon. Patullo says an advisor panel has previewed it, and the feedback was great. Beta testing will begin next month, with a full rollout later in the year.

TD Ameritrade is the first custodian to roll out the new Laser App Anywhere, the new cloud-based version of Laser App’s industry standard form-filling software. Already, more than 750 TD advisors have used the software, with thousands of applications processed. According to Patullo, Laser App Anywhere is helping create greater efficiencies for both his firm and the advisors who are using it.

In Conclusion
As we stated at the outset, all of the major custodians are making significant technological strides, and there are many similarities in their approaches. All are focusing on usability as well as improving the mobile experience for advisors and end users. A number of firms are leveraging technologies on the retail side of the business to get more bang for their technology buck. All are working on improved integration, digital authorizations and providing advisors with better data analytics. At the same time, there are differences. For example, Fidelity’s data alert feature, Pershing’s support of Windows 8, Schwab’s plans for a next-generation portfolio management system and TD Ameritrade’s iRebal cloud are all differentiators.

The good news for advisors is that they will have better custodial technology than ever to choose from. If there is any problem at all, it is that performing the due diligence required to arrive at the best technology fit may require some time. I suspect that’s a problem that advisors will be happy to deal with, given the gains to be had.