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Where RIA technology stands heading into 2013 after 2012 lost some steam

Philip Palaveev, Mike Golaszewski, Spencer Segal and Joel Bruckenstein weigh in on whether the 'mega-solution' will gain traction vs. the mix and match option

Author Brooke Southall January 2, 2013 at 5:30 PM
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Mike Golaszewski: If your product has an advisor end-client-facing component and it's not mobile, you probably don't have a product in two years.


mike costellano

mike costellano

December 31, 2012 — 9:56 PM

I come from a heavy Salesforce.com shop (my former BD) and feel that many of my peers went that route because they were presented Salesforce first and in some cases solely because of the strength of their name (Salesforce). Many are spinnning their tires and have multi year contracts.

My primary custodian, TD Ameritrade supports the multivendor model with their “Open Access” architecture allowed me to keep tools I was already using (LaserApp and MoneyGuide Pro) and also hook up Redtail CRM so that I get TD account data fed in. Redtail in turn feeds MoneyGuide Pro and populates forms via LaserApp. All of my tools talk to each other with no heavy lifting on my end.

I’m sure other custodians have similar open access initiatives but what made me opt for Redtail is knowing that I own the data regardless of any affiliate pricing incentives.

The most important take away from the article is the mention of advisor ownership of data.

Stephen Winks

Stephen Winks

December 31, 2012 — 11:45 PM

The flow of data is extremely important and expert authenticated prudent process is required to simplify advisory services without denigration of expert standing. Neither lend themselves to an incremental solution as scale and the streamlining of cost are precluded. Scale, cost and expert standing direct us to a far more sophisticated and less expensive approach to portfolio construction, not possible in a packaged advice product limited by prospectus..

There are innovations under radar advanced by none of the vendors cited above which through conjoint reasoning will mathmatically weight more than 50 client considerations in order of importance which makes expert personalized advice (fiduciary counsel) possible for the advisor to manage an unlimited number of custom client portfolios. This renders packaged products obsolete in terms of cost, values expertly addressed and managed and technical competency engaged and executed.

Further advances in global strategic asset allocation utilized by soverign wealth funds which Markowitz cites and documents as the best methodology in the industry will finally be available to retail advisors as a service, as the mathmatics and global business accumen entailed are beyond the reach of the retail advisor at a reasonable cost. This resolves the limitations of retail optimizers with four patented, peer reviewed and proven enhancements to MPT, to include the better use of data.

Custodians, broker/dealers and roll-ups which simply extrapolate the brokerage approach to advice by treating advice as a product brokers sell rather than an expert prudent process advisors manage, will not be the venue from which advisory services innovation is advanced, as each is structurally crippled by their inability to manage the necessary fiduciary responsibility/duties on behalf of their brokers to literally act in the consumers best interest. This is acknowledged by the industry in its position that the DOL’s fiduciary standing requirement will preclude brokers from handling retirement assets.

Given the advances underway in technology, portfolio construction and expert authenticate prudent investment process, the industry will be reordered areound fiduciary duty in the best interest of the investing public which will render conventional brokerage obsolete as a high cost low margin, low value added alternative.

The advisor and the consumer understand these redefining market forces at work, if the industry remains insular to the public trust and the best interest f the investing public 2013 could be the year that our largest institutions become irrelevent and lose share to those that professionally manage expert fiduciary standing in ways not presently possible in a brokerage format.

Harvard’s Clayton Christensen observes, “the biggest mistake made by established industry’s make when faced with industry redefining innovation, is to look at innovation in the context of its existing business model when a new business mode is in order.” As Edwards Deming observed, “if you can’t define what you are doing in terms of process, thenn you don’t know what you aare doing.” Both observations are presient.


Franklin Tsung

Franklin Tsung

January 2, 2013 — 5:03 AM


Have you also read crossing the chasm? That is also another good book around disruption. Salesforce’s model is liken to that of peoplesoft. It built a great niche around sales team and an engine for professionals of any business size to scale their sales force. From there, it realized to be a general platform, it developed “Force.com”.

Force.com being the underlying engine that powers Salesforce’s core product line – their sales and marketing platform. They call their core platform Sales Cloud.

Within the niche, Salesforce defers to “know it all” consultants, and there is never a limit to the number of consultants that permeates any industry, whether broker dealers, RIA to manufacturing etc.

What we started at AppCrown was a way to bring institutional integration and advisor logic into the retail space. Our premise was to package all the integrations to major custodians (i.e. TD Ameritrade), and 3rd party software into a whole product. The platform AppCrown would distribute this on is Force.com (Salesforce’s engine). We did not want to replicate another CRM, and become a RedTail or Junxure. (As a business, you could never sell to enough advisors and at the same time reinvest retained earnings into R&D expenditures to make EBITDA).

Essentially, what this comes down to – is our mindset is to give advisors a complete picture, leveraging the latest CRM. For example, a financelogix or moneyguide pro integration for us takes 5 minutes to setup as it is prebuilt on our business platform. The end product for the advisor is a CRM system that integrates all back office and software so the system becomes proactive- and that the business CRM truly alerts the financial advisor to key follow ups and analytics about their clients. This allows the practice to scale.

The technology must appeal to the hurdles of any independent RIA firm. If you think about financial advisors – the independent movement, many fall into the small business trap; whereby the scale ends at about 100 household or $100MM in AUM. There is some wall the advisor hits, and the focus immediately turns to “let’s hire to scale”. This trap saps away enterprise value. To any acquisition firm, they look at your firm as an annuity if your practice stagnates and just entertains consistent income (In effect the advisors multiples decays over time). The technology needs to address real needs.

Now, we don’t speak for all of Salesforce implementations, only to a certain small percentage of them, but the perspective to take is that unless anything is taken into the right context and the right understanding of how technology applies to a niche – well, then you fall into what Hayden had mentioned and you’re wholeheartedly correct – the biggest mistake made by established industry’s make when faced with industry redefining innovation, is to look at innovation in the context of its existing business model when a new business mode is in order.”


Stephen Winks

Stephen Winks

January 2, 2013 — 1:17 PM


I appreciate your ernestness.

But CRM has no more bearing on advisory services than it does on a surgical practice, Though thoughtful how does a telephone book impact anything. There are technical considerations that establish the parameters of every profession and define professional standing.

A telephone book is helpful; but hardly affects advisory services and certainly has not statutory imperative. CRM is very helpful in sales applications where there is no accountability or responsibility for recommendations. Yet when the advisor is accountable and responsible, the technical disciplines of (a) an authenticated prudent investment process which make advice safe to render and acknowledge, (b) advanced technology which supports transparency, continuous comprehensive counsel and modern low cost approaches to portfolio construction which are required for fiduciary standing,(c) work flow management which make advice scalable, easy to executer and manage and (d) conflict management which makes it possible to act in the best interest of the investing public —all are outside the core services you cite—hardly a complete picture. Would not want to misrepresent AppCrown as a “know it all” consultant, would you not agree?

You have a very narrow sales niche which treats advice as a product the broker sells rather than an expert authenticated prudent process advisors manage. Please do not try to establish equivalency, it is an afront to statutory requirements for fiduciary standing, counter to the best interest of the investing public and offensive to advisors who address and manage investment and administrative values on behalf of the consumer in the consumer’s best interest (as opposed to selling investment products as a series of disjoined unrelated transaction where it is literally not possible to add value). Your services are focused on sales people without professional standing in advisory services, not avisors.


Franklin Tsung

Franklin Tsung

January 2, 2013 — 6:02 PM


I wholeheartedly agree with you, and the premise of contact management being contact management.

The comment about Force.com and Salesforce evolving from the sales teams into a broader platform is to give some background to the CRM’s story.

They started first with Merrill Lynch (the brokers broker), and then evolved the “Wealth Management” template from that. It doesn’t go beyond the template.

AppCrown, where my sole passion lays, is our approach – that advisors are household focused and people focused, not product related. To this extent, we took the approach to integrate 3rd party systems into business functions, and deliver that by using the contact system from Salesforce (which is scalable from an technology deployment perspective).

Coming from my background in operations research, any platform, IT or focus must address the business of the end user community. AppCrown’s not a consultant, so we largely integrate disparate systems that advisors acquire to support their HNW families (financial planning, portfolio accounting etc), into unique business applications – Whereby the CRM is transformed into an operating system, giving the advisor alerts to when an client account has deviated from the IPS (investment policy statement) or whether the household is at risk based on data compiled and merged between financial planning & portfolio accounting systems like BlackDiamond. We largely focus on predictive analytics and ways to extend the notion of contact management.

I was largely agreeing with you that Salesforce as a whole – being a generalized platform – misses the point of the niches’ and would fall flat – following the concerns you’ve echo’d from Clayton Christensen. To that extent, Salesforce relies on niches to fulfill business applications within that niche.

But I am very interested in your view point of mobility and 2nd generation wealth. Many of my clients grapple with transitioning to the next generation, and how to stay connected in an more transaction-minded generation. What are your thoughts??

Peter Giza

Peter Giza

January 2, 2013 — 11:54 PM

My two cents:

First I have to get this off my chest: CRM is just CRM. There I’ve said it. How CRM became the platform of choice for business process automation is beyond me. But here we are and Salesforce isn’t going to just disappear. Go to a Salesforce event and see the 100,000 cheering zealots. The cult of consulting reigns ever powerful.

Something Mike Golaszewski stated struck me: “Consumers have been spoiled by the mobile Internet.” and it isn’t just consumers, we all have been spoiled. It’s all about simple. That is one reason Apple is so wildly successful.

This key tenet all product czars must consider when considering a new product or repurposing an existing one. It doesn’t matter what it is, if you are not thinking mobile then you are missing the boat. I am not saying every app should go mobile. What I am saying is you must think mobile during the product definition and development phase.

I don’t agree that the desktop is dead, however it is in jeopardy if ISVs (Independent Software Vendor) don’t have a strong cloud analog they will be looking at a vastly diminished addressable market. Desktop apps will have their place due to complexity of the workflows and performance requirements. If this wasn’t the case the likes of Lenovo and Dell would not continue to invest in mobile workstations like the Lenovo W530 this was composed on.

I also do not agree that there is no place for the Addepars of the world. If they get it right they will compete against portfolio accounting and performance management products. And as has been echoed by advisors and is constantly stated by Advent / Black Diamond; why would you exit your PMS to go to a separate rebalancing platform or otherwise? Right now the answer is because no mega-solution has a good RIA rebalancing platform. However that will change in the not so distant future.

What I see for 2013 through 2015 is a continued move toward API access (like TD) of BD and Custodian and mega-solution platforms. They already have the APIs they just don’t advertise them but that is going to change over the next few years. Just how bad could it be for an advisor if they could leverage Addepar, Advent, Orion, Tamarac, Schwab and TD? Of course that is completely dependent on the level of cooperation between vendors, but it could easily be reality.

Several of my colleagues have balked at the idea of a common data exchange and rich integration. However it is happening under our noses. Maybe not in the way I have proposed, but it is still happening. And it is happening via a force far more influential than any RIA firm or custodian – the consumer. John Q. Public is pushing for more access, simplified views. easy yet secure access to data and they are pushing everyone and in every industry.

Gone are the days of data captivity practiced by so many vendors; everything is open. Pragmatically speaking we are still data captives, but that discussion is for another day.


Pete Giza | Spitbrook LLC

Stephen Winks

Stephen Winks

January 3, 2013 — 4:36 PM


We are at the tipping point, where cost functionality and scale will win the day. Process is the great simplifier of the complex advisory services considerations which must be managed.

With the interjection of a simplifying expert authenticated prudent investment process, Addepar and others have a major role to play simply by exercising intiative. Yet either independent software vendors must adapt to a simplifing process and merge to streamline cost or more comprehensive solutions built around process will be far less expensive and afford superior functionality.

The tension is on the expense and quaity of incremental functionality versus less expensive comprehensive functionality that affords expert fiduciary standing with an audit path and opinion letters to prove it.

Based on the comments here, the faster, better, cheaper complete though wins over any incremental consideration.

There are systems emerging here and in Singapore and Hong Kong that actually are supportive of a fiduciary standing. Our committment to non-fiduciary, expensive packaged products and our inability to support the free flow of data is crippling the ability of the US to compete world wide, where fiduciary standing is required and commission sales are prohibited in advisory relationships.


Mr. J. L. Livermore

Mr. J. L. Livermore

January 3, 2013 — 4:51 PM

Mr. Winks,

What? Could you repeat in the vernacular?




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