RIA-facing financial technology is rapidly advancing, pushed by innovative start-ups and new evolutions in consumer technology.

What’s driving the change is that custodians sense the need to create more powerful platforms to serve a broadening RIA client base. Custodians are becoming technological curators for advisors, providing front-office tools for their clientele and offering integrations to help advisors work seamlessly across different tasks.

Each custodian takes a different approach toward technology, colored by the clientele they serve. For example, Pershing’s focus on enterprise firms serving high-net-worth clients has led it to different solutions than the ones offered by Folio, which has prided itself on being efficient and accessible for advisory firms of any size or maturity. Other firms boast a wide offering of application programming interfaces (APIs) that allow third-party software vendors and sophisticated advisors to tap directly into their systems.

The largest custodians are forced to create flexible solutions that can serve the multiple styles of advisors and businesses.

Charles Schwab

San Francisco-based Charles Schwab, for example, offers flexible technology and comprehensive resources for both small practices and megafirms. Schwab supports the larger firms using APIs and integration, says Lauren Wilkinson, vice president of advisor technology solutions, while smaller advisors tend to gravitate toward the Schwab Advisor Center, the firm’s proprietary web platform, though the platform is utilized by RIAs of all sizes.

Schwab’s trading tools enable complex transactions to be easily executed within a simple interface. Schwab’s PortfolioCenter offers management, analysis, accounting and reporting. The Portfolio Rebalancer gives advisors access to real-time batch and household rebalancing.

Schwab is meanwhile introducing StreetSmart Edge, a new trading and research platform that gives advisors the option to get free low-premium streaming quotes for the most commonly displayed market data at no cost to the advisors.

Schwab is also building out its e-authorization system, says Wilkinson, which will be enabled for account openings and coincide with Schwab’s expanded e-signature capabilities using DocuSign. Since introducing e-authentication for wire transfers a few years ago, advisors are now conducting 50% of their wires digitally, says Wilkinson. “We’re extending that to more money movement transactions, starting with checks.”

Schwab’s offerings are accompanied by a comprehensive suite of research tools that incorporate data from third-party providers such as Ned Davis Research and Morningstar. The company also offers a mobile app giving anytime access to advisors and a white-labeled client-facing version.

Though Schwab has traditionally fulfilled its role as a technology curator by pursuing a limited number of partnerships and integrations with third-party firms, Wilkinson says the company is actively pursuing additional integrations now and opening up its APIs to a larger set of third-party software providers.       

“We’ve gone the selective route in the past because we want to make sure we’re carefully vetting these providers,” says Wilkinson. “In areas where we’re pursuing deep integrations, we still want to make sure we’re carefully vetting.”

TD Ameritrade

Jersey City, N.J.-based TD Ameritrade, on the other hand, has built its open-architecture RIA platform on a foundation of collaboration and openness between itself, its affiliated advisors and third-party providers.

“This makes it easy for advisors to see information across multiple pieces of software so they can do their job as efficiently as possible,” says Jon Patullo, the company’s managing director for technology product development. “Advisors want to pick and choose the systems that best meet their needs. Open access has been a huge success for us.”

Originally, “Veo” was TD Ameritrade’s hub technology for independent advisors and the company’s core account management platform, but it’s been supplanted by Veo One, now TD’s primary advisor workstation. Veo One offers advisors the ability to launch applications from multiple software providers on one platform, with a single log-in and user experience.

“It’s really to help them more efficiently manage their clients,” says Patullo. “So they’re out there spending their time developing client relationships or gathering new client relationships. As advisors grow, we grow. It’s a success for both of us.”

Veo One’s ClientCenter, summary page and data views give advisors multiple ways to segment and analyze their books of business. The platform boasts dozens of integrations, including deep dives with Black Diamond, DocuSign, eMoney, Envestnet/Finance Logix, iRebal, Junxure, Laser App Anywhere, Laserfiche, MoneyGuidePro, Morningstar, Orion, Redtail and Salesforce. In addition, more than 100 integrations are available through Veo Open Access.

The iRebal rebalancing system offers automated rebalancing—including tax-loss harvesting—at no cost within TD Ameritrade accounts and on a fee-for-service basis within multi-custodian accounts. TD Ameritrade’s AdvisorClient.com portal allows advisors’ clients to view balances, positions and transactions on a secure, personalized website.

Moving forward, Patullo says the company will launch new advancements around data analytics and AI, leveraging its purchase of FA Insight to give advisors real-time business intelligence on the Veo One platform.

Fidelity

Boston-based Fidelity has also taken a comprehensive, multipronged approach to addressing RIAs’ technology demands. Fidelity’s Wealthscape platform includes account opening, trading solutions, reports, market data and research, modeling and rebalancing, risk management and compliance tools, as well as mobile capabilities.

Fidelity recently updated Wealthscape with advanced rebalancing enabling household, asset class and tax-optimized rebalancing.

In 2015, Fidelity bought financial planning software provider eMoney and immediately embarked on linking Wealthscape to it through a series of deep integrations, says Tom McCarthy, head of platform technology for Fidelity Institutional. “Today, with many of the planning tools out there, once you’ve exercised financial planning with a client you have to swivel over to a different platform to re-enter data, open accounts and fund them. We’ve hard-wired eMoney and Wealthscape together to allow advisors to seamlessly transition back and forth between planning and action.”

Information now moves seamlessly between Wealthscape’s client data repository into the eMoney planning functions, then back into Fidelity’s portfolio tools.

The company also recently added a regulatory “Early Warning System” that uses web-crawling capabilities to scan the websites of regulatory organizations for updates relevant to individual firms.

In 2018, Fidelity plans to add fee billing to Wealthscape to help advisors reduce time in invoicing. Also in the works is the Automated Managed Platform (AMP), a digital advice solution that allows advisors to scale down to serve low-net-worth and small account clients efficiently, and to offer digital-facing service to tech-savvy clients.

“We’ve seen a wide chasm of firms where basic services don’t meet their needs,” says McCarthy. “Optimal solutions often have a high price tag; we’re trying to find something in the middle to serve a broader swath of clients.”

Pershing

At Jersey City, N.J.’s Pershing Advisor Solutions, the custodian’s main focus is on enterprising advisory firms serving high-net-worth and ultra-high-net-worth clients; however, the company’s client base remains large and diverse enough to require a full suite of technological solutions for RIAs.

“You can’t have solutions just for high net worth; you need broad-based solutions,” says Evan LaHuta, Pershing’s head of client experience. “We have recently thought about how we serve different clients and how we’ve segmented them. It was once commonplace to segment based on size and complexity, or on whether we were serving an investment manager or a wealth manager, but as technology has taken an increased role in the relationship, we’ve started segmenting our clients based on how they consume our technology.”

While some RIAs look to Pershing to provide all of their technology solutions, others knit together a custom ecosystem using Pershing’s platform, third-party software and their own technology build-outs, relying on the custodian to help them craft the best solutions for their clients, says LaHuta.

In 2018, Pershing will launch NetX360-Wealth, the next generation of its RIA platform, which LaHuta says will allow advisors to optimize trading to create the most efficient solutions for their clients. Streamlined proxy voting capabilities are also going to be implemented across the NetX360 platform. The custodian is also planning to roll out a deep integration with Salesforce that will ease the on-boarding and account-opening process. Pershing will also introduce eight to 10 more APIs over the next year.

Pershing’s NetX360 wealth management portal creates a single point of access for advisors to manage their businesses, perform transactions and conduct research. Advisors’ NetX360 dashboard is a customizable home page allowing advisors to set up their own relevant displays of content. The platform also allows client on-boarding with straight-through processing, creating fewer hang-ups as clients are moved from data entry to affixing signatures and funding their accounts in a paperless procedure.

Thanks to Pershing’s relationship with BNY Mellon, advisors are able to handle bank- and brokerage-custodied assets on a single platform. Recent additions to NetX360 include updated planning applications, account aggregation and document sharing and e-signatures.

Folio

Unlike some of its larger peers, McLean, Va.-based Folio was built as a technology firm first and does not come from the traditional custody and clearing business. In some ways, that gives the firm an advantage, says Greg Vigrass, president of Folio Institutional.

“We’re seeing to our great joy that the market seems to be coming to where we are with the whole notion of digital engagement and how advisors serve and interact with their constituents,” says Vigrass.

Like Fidelity, Folio is moving ahead with a next-generation robo-advisor platform geared toward advisors who want to add one as a complement to their traditional practices.

Folio’s advisor dashboard is a highly customizable practice management command center, built from widgets that advisors can mix and match at will. On the trading side of things, Folio provides sophisticated tax management capabilities, including its Tax Football optimization tool. The trading platform also enables security, sector and industry exclusions to help filter certain investments from client accounts.

“The need for socially responsible and impact-oriented investment solutions is an area where we have a lot of strength,” says Vigrass. “Our platform lends itself naturally to it.”

Many of Folio’s trading processes are intended for automation, meaning that advisors don’t have to think about their clients’ preferences when they initiate trades across their book of business. Folio’s Advisor Connexion brings automated work flows across administrative areas of a planning practice. The firm’s platform also offers dynamic performance reporting and automated fee-based billing on its platform.

Vigrass said that future updates will include redesigns to the client interface, more flexibility and access to third-party tools, and data integration across client assets.

Looking further into the future, Folio will incorporate predictive analytics and machine learning into its platform.

Challenging The Establishment

Today, custodians aren’t just trying to build out RIA technology as a useful add-on for their clients; they’re actively competing for RIAs’ custody business with their technology platforms. Meanwhile, a crop of smaller, technology-oriented custodians are also challenging the established megafirms for advisors’ business.

Financial advisors have become the winners in this competition as the advancing technology creates more time- and cost-efficient firms across the industry.