Custodian hopes to open the platform to all vendors that pass a security check

July 30, 2010 — 6:30 AM UTC by Nevin Freeman

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Elizabeth’s note: In this story, webmaster Nevin Freeman breaks news about TD Ameritrade’s latest technology push, and offers his expertise to help advisors understand why the push to integrate outside vendors’ software — a goal several of the major custodians are reaching toward — could make advisors’ lives easier.

TD Ameritrade Institutional said yesterday that it is working on a system that will allow outside vendors to integrate their software with its technology platform.

“We’ve been working on this for some time, for probably the last nine to ten months” said Jon Patullo, director of technology platform management for TD Ameritrade.

TD Ameritrade said it relied on studies produced by ActiFi, a consulting firm that the company holds in high regard in the realm of CRM, financial planning and portfolio management solutions.

The Omaha, Neb.-based custodian also held a technology summit in May to discuss integration nuts and bolts with nine vendors it considers most prominent.

“No other custodian actually engaged [these vendors] in this fashion and set up a summit, so they’re very excited about it,” said Patullo.

Patullo declined to comment on which vendors were represented, and said that they are currently going through a security screening with TD Ameritrade, which takes a few weeks. Although only nine vendors were at the summit in Dallas, the platform will be equally accessible to any vendor that goes through this screening.

Behind the scenes

The goal of integrating typical advisor software applications like CRM, portfolio management, and trading/rebalancing is to avoid the need to enter the same data into two applications twice, switch back-and-forth between applications too often, and export data from one system only to import it into another. But to describe how this integration can happen, we need to go behind the scenes.

A key term in this space is “API,” which stands for Application Programming Interface. An API is a special language and infrastructure that two applications can use to pass data back and forth in a secure and structured manner. It needs to be decided in advance, so that each application can be built to share data in the right way.

TD Ameritrade is creating an API for Veo, its custodial platform [See: TD Ameritrade’s technology, Veo, wins high praise from advisors so RIABiz took a look], that will be available to any technology vendor that meets the company’s security standard. This way, if enough vendors get on board, advisors using Veo will be able to choose from a wide variety of applications for things like CRM and financial planning.

Integration is not new

Patullo stressed that the custodian has supported some types of integration between applications before, and that this effort is simply the next logical step. But other custodians have come to similar conclusions, and TD Ameritrade is not alone in the race to integrate the applications its client RIAs use as seamlessly as possible.

“They’re following our lead,” said Ed O’Brien, senior vice president of technology for Fidelity Institutional Wealth Services. Fidelity released its WealthCentral platform for advisors that allows a single sign-on to all of the typical applications in October of 2009, and as of March of this year all incoming RIAs are brought on to the platform. 500+ firms are now on the platform, though about 200 still access its predecessor, according to O’Brien.

“There are no industry standards” for integrating these kinds of applications, said O’Brien. As a result, each custodian has a lot of work to do at the beginning of this kind of endeavor. The company worked on WealthCentral for 18 months before releasing it to advisors.

Patullo added that the proliferation of web-based applications makes this new type of integration simpler, since all of the data can be shared over the internet.

A different angle

But TD Ameritrade’s open API (there is not yet a name for the project) sounds like it will differ from the approaches of other custodians.

Schwab Advisor Services announced a similar project in May originally dubbed 'Project C.’ The project is now called 'Schwab Intelligent Integration’, and is set to begin it’s multi-year rollout at Schwab’s IMPACT conference in late October.

Schwab Intelligent Integration is slated to have two tiers. Schwab OneView Office will be a turnkey package that does everything, but limits choice of 3rd party applications to a select list. Schwab OpenView Gateway will allow leading tech vendors who don’t make the list for the top tier to integrate with Schwab technology.

TD Ameritrade’s approach does away with tiers and select lists, welcoming any 3rd party vendor that is able to meet its security specification. “Our API will be open as long as security requirements are met by the vendor,” said Patullo. “This will allow us to have more vendors and more importantly give advisors the flexibility to choose the vendor they prefer.”

More similar than different

Since “integration” is used to describe many different things, it’s difficult to parse out exactly how these different platforms stack up, but the three custodians’ approaches appear to be more similar than different. [Pershing did not respond to inquiries by the time of this writing.]

All three are very big undertakings to increase advisors’ efficiency, with the goal of winning over breakaways and new RIAs with the best tech. WealthCentral has a jump since it is already out there, and everyone involved in these projects acknowledges that they don’t happen overnight.

“With the approach we took, and how long we’ve been working on this, and our ability to execute, I think we’ll have something out there prior to Schwab,” said Patullo. But since both upcoming platforms are still in development, everyone who commented for this article was very hesitant to speculate about comparing them.

“We are building something significant that will pave the way for how advisors interact with their platform and their custodian going forward. As such, we are being extremely thoughtful about how advisors will work in the future. The development of this long-term philosophy, and the selection of technology partners who adhere to the highest standards, is ongoing, but we are on schedule for IMPACT [in October] where advisors will have their first taste of how our platform will be built to support them well in the future,” said Neesha Hathi, vice president of technology solutions and head of Schwab Intelligent Integration.

Mobile app opportunities

Patullo added that the new API will allow for the development of mobile applications that can pull and push data to and from TD Ameritrade. The company is currently developing a native iPad version of Veo that will eventually have all of the same functionality as the web application, helping tech-savvy advisors bring their system into the field.

“We had an advisor panel meeting a few weeks back and half the room had iPads, so … we thought it would be advantageous to move forward and get an iPad app out for advisors,” Patullo said.


Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally



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