I have this compulsion to say exactly what I think. It's a congenital condition.

My mother was even worse than me. Having no ability to censor herself, she'd say exactly what she was thinking, even if it offended someone. If it were true, she'd say it.

While it may sound cute, it's a heavy burden, this personality trait. I share my mom's penchant to be trenchant, as my wife only an hour ago reminded me, and I am only slightly more diplomatic.

Lest I further digress, here are the major technology trends for 2011, which are likely to offend some but be welcomed by many.

Application programming interfaces (APIs) are revolutionizing advisor apps. This is the most important tech trend affecting advisory firm operations. An API enables client financial plans to be automatically updated with data from your portfolio management software. An API enables your phone system to send recordings of calls to your CRM and store them in client records. An API has turned TD Ameritrade Institutional's back-office clearing system into an app store, opening to technology vendors data on client holdings, cash management and alerts for RIAs.

An API makes data in one app usable in another. It makes it easier to integrate apps because their databases are clearly structured and rational. Generally, they use Web Services Description Language (WSDL), a standard for enabling apps to talk to each other over the Web. I wrote about APIs in April 2007, and they're not new.

What is new is that APIs are being more widely embraced. Web-based apps for portfolio reporting, account aggregation, document management, financial planning, task management, rebalancing and brokerage are opening their database schemas to other apps. Even companies that have some competing apps or a few overlapping features are embracing opening their data to be pushed or pulled into another app.

Creating an API isn't easy because an app must adopt uniform standards and write instructions supporting the API. But it's also not all that difficult. Software development has grown easier, at the same time that a wave of entrepreneurialism is sweeping across former "Third World" nations. Small companies worldwide are developing apps, giving advisors more choices, and monolithic technology providers are not as common.

Across all categories of apps-CRM, analytics, portfolio accounting, account aggregation, document management-there are more firms competing for advisor business. And these hungry new tech companies have everything to gain by opening their databases and writing APIs to enable integrations, dropping barriers to control your data that have existed for years. It is redefining the roles of custodians and broker-dealers, empowering advisors who choose their apps wisely. The effects will start to be seen in 2011 as more meaningful integrations are rolled out.

There will be more specialized apps that do only one thing. The adoption of APIs fosters integrations with specialized apps that do one thing great. Just as the Apple iPhone app store has 350,000 apps, look for tightly focused apps that are basically add-ons to core systems. Proposal generation, VOIP recording, economic forecasting, and other tools not widely used currently but valuable to advisors will flourish.
This is not good news for apps that do more than one thing. An all-in-one app that tries to build a silver bullet by providing CRM, financial planning and performance management will find it difficult to compete with an app that just builds a CRM system.

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