Just a couple of years ago, the effort to develop a new advisor desktop was centered on CRM systems. Schwab Advisor Services, for instance, the predominant custodian to RIAs, started a new business unit in September 2011 that would create a "CRM-centric approach designed around the way you serve clients." However, in a testament to the accelerating speed of change in advisor technology, the CRM-centric advisor desktop has already become outmoded. So many new, innovative apps are appearing that CRMs can't provide all their functionality. And the way software is used in the advisory business makes it impractical for a CRM to be "the" application in an advisor workstation.
What's going on? For one thing, software development is much easier than it was just a few years ago, and it's less costly, since it has been off-shored to India, China and Eastern Europe. Thus, a new generation of apps are revolutionizing advisor technology and reinventing the advisor desktop. Unlike the old, familiar applications on this desktop-those for client relationship management, portfolio accounting and financial planning-the new apps don't fit easily into strict categories. Instead, they perform specific functions and fill in the cracks, extending the old applications with valuable new features.
Take inStream Solutions: A collection of calculators, it helps advisors solve specific financial problems for clients. Moreover, it connects advisors with a marketplace of products that address a client's problems directly. While inStream calls itself financial planning software, it is nothing like traditional applications in that category. After all, what financial planning app is integrated with a financial supermarket?
Schwab invented the mutual fund marketplace in the late 1980s and its early leadership in that realm powered its enduring dominance in the RIA custody business. But Schwab and other custodians have not offered RIAs a supermarket that sells a vast array of insurance, annuity and mortgage products at wholesale prices.
The onslaught of new apps comes at a poignant moment for financial advisors-when their business model may be in deeper trouble than they realize. Planners are facing fee compression. Automated financial advice is now being offered by all of the major discount brokers (and RIA custodians). And then there are consumer financial apps like Mint, Wealthfront and LearnVest that have dramatically escalated the competition. Professional apps like inStream, and others sure to follow, could help advisors fight back.
Clients often don't feel as if they're getting any immediate benefit from the kind of traditional strategic financial plan offered by advisors. The plan usually gets placed on a shelf to be revisited every year. InStream attempts to make advice proactive by telling an advisor to contact his clients when they have a financial problem rather than waiting for an annual update.
The application focuses on the details of a client's life, the practical day-to-day problems people face as well as longer-term strategic goal planning. For example, inStream will let you input details about your client's mortgage-the rate, the loan amount, term, etc. When mortgage rates drop to where your client should be thinking of refinancing, inStream will alert you automatically. Not only will it tell you that the client should be thinking about refinancing, it mentions specific mortgage products to consider.
Oh, and one more thing: InStream is free. That's right, free. Why? The company makes money by charging product manufacturers for shelf space and introducing their products to advisors. Mortgage bankers must pay to be on the platform, for example.
InStream is the brainchild of Alex Murguia, the CEO of McLean Asset Management of McLean, Va. (He's also got a Ph.D. in psychology.) In 2001, he joined his father-in-law's RIA and has since propelled it from $25 million in assets under management to $500 million. He has spent the last few months raising money to aggressively develop inStream, and his management team includes Bob French, who left Dimensional Fund Advisors (where his father, Ken French, heads up investment policy). While inStream is still a year or more away from offering a wide array of financial products, its plan is clear, and it already has about 1,000 advisory firms signed up to use its nascent system.
Another app reinventing advisor desktops is RightBridge from CapitalRock. RightBridge does not offer any financial planning advice. It simply analyzes a client's financial products and suggests holes that might be filled. In mid-September, the company announced a deal with Edward Jones to launch a version of its annuity tool. The tool makes it easier for Edward Jones's financial advisors to match annuity products to specific client needs.
"We were looking for a tool which would help our financial advisors narrow the list of available contracts to those that best align with a client's specific needs," says Tim Burke, principal of annuity marketing at Edward Jones. "The RightBridge Annuity Wizard gave us the framework to automate the process we train our advisors to use."
The contractual differences between the various companies' annuities make it complicated to select one. Advisors must weigh the various features and benefits of multiple products against the client's needs. RightBridge matches an annuity's features, options, costs and benefits by analyzing client data on a brokerage system and asking a client for additional data if necessary.
The analytics engine then filters this data through a broker-dealer's list of approved annuities. It presents only those annuities that meet a client's objectives and needs. RightBridge also supplies the advisor with "reason text" that can be used in an e-mail or conversation to explain to the client why a particular annuity is recommended or why one might be appropriate. The Edward Jones deal came one month after RightBridge's annuity wizard was purchased by Raymond James.
CapitalRock was founded by John Hyde, a leader of the team behind the development of an integrated financial planning, trading, analytics and investment management platform offered by SunGard Financial Systems, the world's largest technology services firm specializing in financial services.
Before he was at SunGard, Hyde ran a financial planning software development team at Sterling Wentworth, a software company SunGard acquired in the 1990s. After the purchase, Hyde was tapped to run the development of SunGard's advisor desktop and oversaw the acquisition and integration of Frontier Analytics, an asset allocation application integrated into SunGard WealthStation. He also oversaw other software companies bundled into WealthStation and sold by SunGard to the enterprise market-large institutions that buy software, customize it to their product marketplace and deploy it on thousands of advisor workstations. WealthStation, or parts of it, is used on tens of thousands of advisor desktops at major wirehouses, insurers, regional brokerages and other large financial services companies.
Large software companies like SunGard might have been the best place for a creative technologist like Hyde a decade ago, but talent like his no longer needs such backing. Software development is easier and less expensive, and apps are laser-focused on particular functions. That makes it easier for developers to start their own companies, and it's fostering innovation.
Apps that make product suggestions to clients could turn out to be very disruptive in the RIA business, and spawn rivals to custodians. It's unlikely that B-Ds will face competition, since they exert control over what registered reps are permitted to sell. But RIAs are free to advise clients on whatever products they wish, including those from independent financial supermarkets using these "suggestion engines."
An independent entrepreneur like Murguia becomes more of a threat if his online calculators can alert a fiduciary before a client's auto lease is about to run out. Or let them know that an umbrella insurance policy needs to be upgraded. Or remind a client to consider a 1035 real estate exchange. Or if, in all these cases, he can suggest replacement products. That makes a solution like inStream more valuable to an RIA than a custodian supporting asset management, a business that's become increasingly commoditized.
Such apps connected with financial supermarkets could be real lifesavers to financial planners. Advisors are supposed to help consumers with a broad range of areas, but most of them earn their fees for managing investments. Most respondents to an Advisors4Advisors survey agreed, "Financial planning represents a small part of my business income, and I earn my living almost entirely from managing assets." Of 118 financial advisors polled, 78% said they need help figuring out how to make money on writing financial plans.
The CFP Board is in the midst of a four-year, $40 million mass media blitz extolling the value of a CFP professional, but financial planners do not have the systems and technology to make money creating comprehensive financial planning for the masses, even with well-designed professional apps like MoneyGuidePro and NaviPlan.
Planners can instead make money by ensuring clients have the right business liability coverage, advising them on loan consolidation and making sure they buy the right type of life insurance, paying as little as possible. To the extent online suggestion engines and integrated financial supermarkets can streamline the ongoing monitoring and advice process, they could provide a way for financial planners to justify what they charge, and sidestep the fee compression afflicting many investment managers.
Keep in mind, the suggestion engine is just one of many new apps being introduced for use on advisor desktops. Client portals, tax management programs, social content applications, mind mapping apps, Crummey trust managers, bond traders, technical analysis apps, content generators and many more apps are being built or offered now and can be integrated into advisor desktops.
The apps in the cloud are transforming the advisor desktop. The notion that you and your staff would be in your CRM all day is passé. It's been replaced. Just as you use multiple apps every day on your phone and tablet-to make calls, send text messages, check the weather, find maps, tweet, check account values or read the latest news-you must be able to run trades, see which of your clients are checking their statements and change their tolerance for share price declines. You must be able to move quickly from one app to another, whether you're using a laptop, tablet or smart phone. Meanwhile, your employees will also need different applications. One assistant will need access to social media tools, while another needs portfolio analytics, and partners will need yet another interface or dashboard to run their end of the business.
Expecting all of this functionality to be managed in a CRM system no longer makes sense. With the pace of innovation accelerating, it's unrealistic for you to expect any one app to be "the" interface.
What advisors need is an app store for their products, a place where they can see how different pieces plug and play to create an advisor desktop. These apps are already available on the Web, but they're not aggregated in any single place. My guess is that someone will come up with an app for that.

Andrew Gluck, a veteran financial writer, owns Advisor Products Inc., a marketing technology company serving 1,800 advisory firms.