We exist in a fairly incubated environment in the world of Wealth Management. Meaning, what is a problem for one advisor is typically a problem for the advisor across the street. Similarly, what is a potential solution for the tech savvy advisor in Vancouver has equal utility for the technologically challenged advisor in Halifax. Presently, this contained world is defined by this singularly ubiquitous cry, “we’re planning to connect our tech stack through APIs integration”.

Sounds great right? Maybe not so fast!

In the Canadian landscape, widespread proliferation of APIs remains in its infancy. “Exists in imagination only”, might be closer to the truth. To promulgate the idea that the Canadian advisor has a seamless workflow - CRM connected to Portfolio Accounting, connected to Financial Planning Software, connected to Client Portal - is a pipe dream. But truthfully, when one thinks of the herculean effort involved in reaching this “utopian state of advisor bliss”, it may very well be a Quixotic quest.

As an analogy: The continent of Africa essentially missed the technology revolution of landline communications. Through a combination of, colonization self interests, scarcity of resources, and disparate languages, the most basic telephone services eluded the Sub-Saharan African mainstream until well into the 1990’s, at which point, a decision was needed. They had to chose between expanding coaxial cable throughout the continent or embrace the new cellular technology which would be easier to construct, provide greater flexibility, and position the continent for a potential emergence. The decision was easy. By the early 2000’s, African countries counted over 750 Million cellular users.

Similarly, the Canadian Wealth industry has been late to the API integration dance. As a former executive of one of the largest independent RIA firms in the US, I had a front row seat to the implementation of API calls and software integrations that our company began over a decade ago. We were one of the first firms to connect our CRM (Salesforce) to our Portfolio Accounting (Envestnet) and to a limited extent, to our Financial Planning software (Financeware and later Money Guide Pro). But what I experienced were three limitations, if not outright failures with this platform approach.

  1. Cost and Time to Market: Creating these connections takes a tremendous amount of manpower to 1) identify the fields, 2) map like titled field to like titled field and 3) strategize the movement of data.  All of which takes time, which costs money.  Lots of it! Fortunately for us, we were the first, so despite how long it took us, we were still first to market.  That novelty mulligan has been redeemed and the goodwill forgiveness that accompanied it has been similarly cannibalized.
  2. Desire/Ability to Connect: Just wanting to connect one technology to another is conditional on two elements, both of which are predicated on sizable variables, 1) both programs indeed have open API source code and 2) both companies want to connect to one another (never a given in our industry where overlap of business models are commonplace) and both companies are motivated to devote the time and resources to doing so.  What I found was one company (usually mine) desperately needed to connect to another technology to complete our integration, whereas the other company had a business model not at all dependent upon this integration, and was actually making themselves less profitable and potentially more vulnerable to reverse engineering.  Not difficult to figure out where the counter firm usually landed.  After literally 5 years of trying, we still never got to any real scope of API integration with one of our Financial Planning Software partners.  Ultimately the firm was acquired by one of the major Custodians, which told us everything we needed to know about their motivations or lack thereof.
  3. Underwhelming End Results: At the end of the day, the data points you end up pushing and pulling are pretty underwhelming. Yes, it avoids the dreaded allergic reaction of “recreating the same data in multiple places”, but straightforward API connections simply take a data point from one technology and recreates it in another.  To be sure, it recreates it over and over again, and updates that data point as it updates, but it doesn’t analyze that data, reinterpret that data or manipulate it.

None of which is to recommend giving up.  Quite the contrary.  Revisiting our African analogy, in the same way they leapfrogged traditional landline phone service for cellular, the Canadian landscape would do well to leapfrog traditional API integrations and leapfrog to the latest technology available today which is, working from a Data Lake/Data Warehouse structure.

Yes, this accepts that you are taking on a daunting project.  But so is connecting one technology package to another technology package and pushing and pulling selected data fields.  In this preferred structure you push as much data as you want into one centralized Data Lake, organize it as you wish in Data Warehouses and then, (admittedly this is beyond the scope of most firms) create a centralized “wrapper” that can extract those manipulated pieces of data as you wish.

Yes, this accepts that you are building your own solutions as opposed to leveraging prefabricated ones.  But the cost of developing the APIs is every bit as expensive as developing your own solution. The time to develop the APIs is every bit as long as it is to build your own solutions, sometimes more because so many elements of the timeline are beyond your control.  But at the end of it, you will have technology that is as you designed it.  Not a compromised hybrid, you have settled for because it was the only way to get the two technology components to connect to one another.

Yes, (and this is the big one) this accepts that you have the skill set and knowledge base to actually create your own solutions.  Don’t worry, I know a firm that has done it for you.

To find out how we have accomplished this and more at QWealth Partners, please reach out.  We would be delighted to show you, “The Future of Wealth Management”.

Clive Cholerton
Executive Partner
QWealth Partners