FinTech continues to be a hot topic in independent financial advisory circles. Advances in consumer technology have raised clients’ expectations about the user experience in financial services. Digital platform providers from outside traditional financial services circles have served as both disruptors and agents of change within our industry. Technologies such as artificial intelligence, big data and virtual reality are poised to further change the traditional business model in 2016 and beyond.
One often overlooked player in advisor technology is the RIA custodian. Over the last decade, custodians have evolved from firms that strictly supply back office support into firms supplying much more in the way of technology and technological support to advisors. For example, almost all custodians provide at least some application programming interfaces (APIs) that allow third-party software providers and in some cases advisory firms to integrate their software directly with the custodians’ systems. Almost all offer some front office software (e.g., rebalancing software) that they have developed, or that has been developed for them by a third party and white-labeled for them. Almost all offer a host of other technologies that are capable of enhancing an advisor’s productivity, and almost all have technology consultants on staff who can provide guidance on technology selection and implementation.
While there are commonalities among the custodians with regard to technology, there are differences as well. Each one takes a somewhat different approach that differentiates it from peers. In this, the first of a series, we explore some of the latest technology developments at a number of RIA custodians.
Fidelity
According to Ed O’Brien, the senior vice president of technology product management at Fidelity Investments, Fidelity will continue to invest heavily in technology to support its advisor clients in 2016 and beyond. O’Brien highlighted a few initiatives that Fidelity is currently working on.
The first is a significant investment to bring all of the capabilities of Streetscape and WealthCentral together in a single platform. This is important to independent broker-dealers and other enterprise clients because it will allow advisors to have access to any capability offered by the combined platforms through a single interface. The new platform will be device-agnostic. HTML5, responsive design technology will ensure that the platform is smart enough to know what device is accessing it, so it can provide the proper screen layout, as well as touch capabilities if the device supports it.
Fidelity is also focused on creating a much deeper integration between its custodial platform and eMoney. “If an advisor is in the planning mode with a client and working in eMoney, they should be able to go from planning to action,” said O’Brien. He added that Fidelity will deeply integrate many of eMoney’s technologies, ultimately providing an enhanced investor/advisor experience to those advisors or firms who custody or clear with Fidelity and utilize eMoney.
He also said that his firm wants to make it easy for both advisors and their clients to engage with Fidelity and eMoney through technology.
Fidelity currently offers digital on-boarding, but the scope will be expanded. Though advisors can right now open only a single account at a time, in 2016 Fidelity will introduce the ability to bulk-process digital account opening requests. The company will also expand the account types eligible for digital account opening.
Data analytics is another area that Fidelity is investing in. By the time you read this, Fidelity will be offering “regulatory early warnings.” It will bring together data across all of an advisor’s holdings and send out alerts about corporate actions, updates on securities and other information that may be of interest to COOs. This is just the first of what Fidelity says will be many data analytics enhancements it intends to provide to help advisors make better business and investment decisions. The plan is to present much of this data in a very visual way so that advisors can digest it at a glance.
Fidelity is also developing its own digital advice platform for advisors, one that is separate and distinct from the Fidelity Go offering targeting retail investors. Although there are few details now public, O’Brien said the platform was being designed so that advisors could use it as an extension of their existing business. We take that to mean that it will allow the advisor to drive product selection, asset allocation, models and the like, as do some other advisor-focused digital platforms. We also take it to mean that the solution will be compatible with third-party software that advisors currently use in conjunction with the Fidelity platform.
O’Brien made it clear that Fidelity has much more in store for 2016 but that the discussion of other developments will have to wait for another month or so. We expect further disclosures of the 2016 technology road map by the end of the first quarter of 2016.