How do independent advisors navigate today’s vast landscape of wealth technology software? How do firms choose the right combination of solutions to support the business they want to build?
Michael Kitces, has pondered these questions at length, from perspectives gained as a financial planner, RIA, software vendor, consultant, and sought-after speaker at industry conferences. After all, Michael famously mapped out and categorized more than 300 individual applications in the wealth tech universe. So, as you might expect, he has some thoughts on the subject.
Michael sat down and shared those thoughts with SS&C Advent’s Michelle Odom and Trent Berry for the latest “Tech It Up” podcast #8, The Expanding Wealth Tech Universe: No longer a tiny sliver in the technology universe. In a wide-ranging discussion, Michael traces the explosive growth of the independent advisory business and the proliferation of advisory software over the past two decades. Before the internet, he notes, only the big wirehouses had the financial resources to invest in technology. However, as advisors began breaking away and going independent, they could not find technology solutions suited to their specific problems so they built their own software, then started selling it to their friends. This “wave of homegrown solutions” was the origin of many of the leading brand names on the market today.
The internet and the availability of specialized software enabled more advisors to enter the business, which in turn drove demand for additional software. This cycle led to the abundance of choices advisors now face. Along the way, the industry passed the “early adopter” phase with pioneering advisors who enjoyed experimenting with new software. Today, says Michael, mainstream advisors don’t want to cobble together their tech stacks. “People now are saying, ‘I would just like to have something that’s bringing it all together.’”
The conversation then turned to the concept of a “universal wealth platform” and the optimal platform for advisors. The reason the concept is elusive, says Michael, is because there are so many different types of advisors and approaches to building an advisory business. Nonetheless, some core common needs such as portfolio management and trading, accounting and reporting, and client communication and tracking. Beyond that, advisors’ software choices are driven by the shape of their business and what integrates well with their core platforms. Recognizing that technology vendors “can’t realistically integrate everything with everything,” Michael sees universal wealth platforms coalescing around “clusters” of products that work well together and are deeply integrated.
So how can an advisor simplify the process of due diligence on all the software out there – understanding that doing demos on 300 applications is not feasible? Michael’s advice on this is obvious: don’t start with the software. First, gain clarity on your vision for the type of business you want to build. Knowing what you want to accomplish will make it easier to focus on solutions that will help you do it.
Michael Kitces is engaging, funny, and provocative, and his insights are eye-opening and entertaining. Take a half hour and enjoy the full podcast.
Regardless of your size or structure, the Black Diamond® Wealth Platform has the flexibility, infrastructure, and power to support your unique wealth management business. Learn more by requesting your personal demo, call 1-800-727-0605, or email info@advent.com.
