Wealth management firms have long recognized the need for comprehensive solutions that digitizes operations to increase efficiency, productivity and profitability. After investing countless resources over the years, these efforts have come with varying degrees of success.
Historically, the financial service industry was dominated by wirehouses, large independent broker-dealers and custodians, who each built their own legacy “all-in-one” platforms. For years, this one-size-fits-all approach worked well enough for their financial advisors and clients—but times changed.
As the industry evolved to include more independent players, localized dissatisfaction with various aspects of the pre-determined platforms grew. Additionally, the growing gaps in these offerings, identified through changing client and advisor demands, left “all-in-one” platforms seeming less than advertised.
In today’s crowded and rapidly changing marketplace, financial services institutions looking to achieve scalable back-office operations may want to look beyond the traditional choice of either an all-in-one technology solution or an array of individual plug-and-play products. A middle-ground approach that focuses on technology providers who deliver a “most-in-one” platform may be a better solution.
Push Back Against an “All-in-One” Approach
As wealth management moved to a more independent model, financial advisors pushed back harder on the traditional top-down approach and wanted the flexibility and autonomy to choose the best solutions for their businesses. The industry had to determine how best to tie these disparate tools together with their platforms, providing an opening for early fintech companies to create innovative individual solutions. This was especially true for tech-enabled client-facing and investment management activities, and to some extent for back-office operations.
The approach resulted in firms offering a patchwork of technologies with some degree of integration. Back-office operations were not immune to these changes, with lack of integration an ongoing issue. Put another way, the pendulum may have swung too far in the stand-alone technology direction and today’s wealth management firms may want to come back toward the middle—to what we call a “most-in-one” solution to yield better results.
While firms know their advisors have grown frustrated with the lack of deep integration of their preferred stand-alone tools, going back to a full “all-in-one” platform for back-office operations can be prohibitive. If a firm decides to buy a new “comprehensive” solution, the work is only starting, as the company needs to determine how to integrate multiple systems, including new account opening, workflow, CRM, custodian, compensation, supervision and surveillance.
This is where a “most-in-one” technology provider can be effective.
The Rise of the “Most-in-One” Alternative
Seasoned financial services technology providers have begun to stake out this middle ground. By focusing on what they do best, these providers have rounded out their offering by assembling a rational ecosystem of complementary tools around their core solution either by building them or making strategic acquisitions. Firms that need a faster, more secure back-office would be best served by this option.
Using an experienced provider who has the majority of what is needed to run an efficient back-office, and knows where to get the rest, can be a game-changer. Firms can rely on these providers to ensure the integration of tools and systems, bolting on additional solutions, as necessary. This takes a large burden off the shoulders of CTOs and COOs whose time is better spent running the business.
Using a “most-in-one” provider can also greatly reduce the number of relationships, service-level agreements and contracts a firm needs to maintain, as vendor consolidation continues to be a trend in the industry.
The emergence of the “most-in-one” player is part of the ongoing maturing of the wealth tech space. The goal is to simplify the process and drive back-office efficiencies. Seasoned players in this middle ground know what the independent landscape looks like today and understand where the industry is going, with needs for automation and AI-enabled solutions in a time of industry disruption and consolidation.
Truest of Cliches: Firms Need a Partner, Not a Vendor
Firms looking for a “most-in-one” solution need a provider who can be a partner, not just another vendor. A valued partner will have years of experience delivering core technologies and products that have evolved to address changing needs. A true partner understands that technology is not solely about bells and whistles, it’s also about providing solutions to make businesses more efficient and effective.
By collaborating with the right partner, a “most-in-one” approach to your back-office technology needs may be the most cost-effective, scalable and user-friendly way to solve your firm’s operational challenges.
David Knoch is the chief executive officer at Docupace
