T3 Day 1 – February 16, 2012

Sandwiched between dueling jewelry and cosmetic trade shows at the Dallas Hilton Anatole hotel, the 7th annual “Technology Tools for Today” or “T3” conference kicked off today, with over 500 advisors and software vendors gathered together to learn about the latest enhancements, trends and developments in the back office applications and systems independent advisors use on a daily basis to operate their firms.

As a consultant to the independent advisor industry, I work with many of the technology companies that support independent RIAs and will be blogging for Registered Rep. over the next several days about what’s hot in advisor tech, industry trends, what the influencers are saying, as well as the many goings on at the nightly parties hosted by the software firms and their executives.

The brainchild of industry technology gurus Joel Bruckenstein and David Drucker, T3 is the independent advisory industry’s largest technology conference. Top themes on display this year are mobile apps, cloud-based platforms, social media capture and of course the never ending quest to integrate systems to streamline processes and create scale for the independent industry to successfully compete with their much larger brokerage rivals.

Because independent advisors are running their own small businesses, they need to acquire a core set of software applications and in a sense become their own “CTO” (Chief Technology Officer). The good news here is that in lockstep with the tremendous growth of the independent (RIA) industry is a corresponding growth in the innovation of tools to support these fast growing firms. Evidence of that can be seen in the record number of attendees and vendors showing off their stuff at T3, including technology heavyweights Salesforce.com, Microsoft, and nearly 75 other, advisor focused, purpose built systems. Joining in on the party are also all of the major RIA custodians, such as Schwab, TD Ameritrade, Fidelity, Pershing, Trust Company of America, Shareholders Service Group and many others.

Highlighting this year’s agenda was a set of pre-conference, hands-on workshops that allow advisors to sample the latest in document management software, customer relationship management (CRM) systems, portfolio management and performance reporting platforms, as well as financial planning, asset allocation, portfolio rebalancing and other business process management systems. Basically, everything an independent advisor needs to run his or her back office in one place for three busy days.

Historically, advisor technology applications were separate systems, requiring multiple data entry points, slowing down an advisor’s day. To combat that problem, advisor focused technology firms have been slowly collaborating among themselves to create custom integrations to minimize the manual data entry typically required.

As the industry is racing to achieve operational efficiencies for advisors, RIA custodians are taking a larger and larger role in driving technology integrations as they see that the more efficient advisors are, the more assets they can gather. This self-fulfilling prophecy results in filling up the custodians coffers at a much faster pace and the reason for their bold investments in advisor technology.

Taking a page out of Apple’s playbook, TD Ameritrade is leading the way by opening up VEO, TD’s brokerage workstation’s “API” (application programming interface) and allowing third party technology firms to write custom data integrations direct to TD’s core brokerage systems. This strategic move by TD to open up their platform is paying off in speed to market while other custodians are actively bolting on select systems one at a time and are thus looking to catch up. As part of the VEO “Open Access” initiative, TD hosted an integration “Tech Summit” here at T3 that featured over 30 software companies looking to integrate their applications into TD’s brokerage workstation.

“We’ve invested millions of dollars into this initiative and will continue to invest millions more,” noted Zohar Swaine, Managing Director of Institutional Strategy and Product for TD Ameritrade.

The other big, blockbuster news coming out of T3 today was the acquisition of portfolio management, rebalancing and performance reporting system, Tamarac, by Envestnet for $54 million. Prior to the deal announcement, Tamarac and Envestnet executives were seen mingling at the bar last night in a very festive mood, but remained quiet about what was up. This morning all of the conference talk centered around the deal and it was now clear why there were all of the smiling faces.

The strategic acquisition of Tamarac will provide Envestnet with a solid bridge into the RIA space. It also comes on the heels of other major technology acquisitions over the past several months such as Advent’s $73 million purchase of Black Diamond Performance Reporting, and LPL’s grab of Fortigent. All three of these deals provide access to and a better foothold with RIAs, again reinforcing the importance for industry players of having a beachhead into the fast growing RIA market space, and that technology is becoming the strategic way to get in the front door.

The $54 million deal news was also buzzing loudly among the many software firms here, many of which are small and family owned companies, salivating that they may be next for a big time payday.
Rounding out Day 1 was the opening of the Exhibit Hall with a busy cocktail reception in a free wheeling atmosphere, interspersed with booths, demo stations, and bars as advisors tested out the latest cool apps.
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The hotel bar will be jam packed late tonight with vendors and advisors networking, making deals and deciding on the next software purchase. T3 is definitely not for the feint of heart and you are wise to bring your drinking shoes.

Day 2 tomorrow will feature dozens of keynotes, panels and technology demonstrations, which I’ll highlight the hottest apps, trends and goings on in my next post.

Timothy D. Welsh, CFP® is President and founder of Nexus Strategy, LLC, a leading consulting firm to the wealth management industry, and can be reached at tim@nexus-strategy.com or on Twitter @NexusStrategy.