How Broker-Dealers Can Love Their Tech Stack, Not Just Tolerate It

How Broker-Dealers Can Love Their Tech Stack, Not Just Tolerate It

By Brian Bleasdell, Chief Product Officer

Broker-dealer technology stacks don’t have the best reputation.

They’re notoriously behind the times and hard to integrate with other financial institutions. They’re even cited as one of the main reasons advisors decide to break away and start their own independent businesses.

But you have the power to change that.

With application programming interfaces, or APIs, you can solve the main issues with your technology stack and enhance it to the point of making it a reason clients and advisors turn to your firm and stay there.

Understanding the Challenge

COOs and CTOs at broker-dealers have two main objectives:

  1. Ensure your team has the tools they need to do their job efficiently and successfully.
  2. Attract new advisors and retain existing advisors.

Each objective comes with its own set of challenges.

The Right Tools

When it comes to your operations, the right tools used to include everything from computer hardware and software to office supplies and coffee pots. But the industry has  changed and become much more digital.  The pandemic has pushed us even further that direction.

Providing the right tools for your operations should be almost entirely focused on keeping your tech stack updated.

Updating or even changing technology isn’t easy at a B-D. There are a lot of people to train or even convince to get on board with a new system. Cost may or may not be a factor, but ROI most certainly is.

Why spend money on something your team isn’t using to its fullest or that isn’t doing what your team needs it to do? Research from Cerulli Associates shows that 40% of advisor-managed assets are managed by “medium” technology users, meaning that they don’t use technology extensively.

Addressing that hurdle can be a big part of achieving your second objective.

Attract and Retain Advisors

Advisors are switching firms and breaking away at increasingly higher rates in recent years, as evidenced by headlines and research across the industry. How can B-Ds combat that trend? Standing out is key.

According to Charles Schwab’s Independent Advisor Sophomore Study in 2018, 74% of advisors said that the ability to provide a broader set of products, technology and services was either very important (46%) or somewhat important (28%) in their decision to break away. That’s actually a higher percentage than advisors wanting the opportunity to increase their income.

By offering advisors the technology they crave plus the training and back-office support they can’t get by either joining an RIA firm or going completely independent, you can stand hand and shoulders above other B-Ds and become a more attractive—and less scary—option for advisors looking to break away.

In addition to retaining your advisors, you can also retain more investors and keep their assets on your platform. The same Schwab study shows that advisors are able to retain 87% of their clients on average when they transition to independence.

Why APIs are the Solution

In TD Ameritrade’s Break Away To Independence Spring 2020 Survey, 72% of RIAs said that technology was better once they went independent.

Understanding that sentiment begins with acknowledging that RIAs have more independence when choosing technology solutions. They aren’t bound to in-house solutions like many B-Ds, so they have their choice of third-party companies, which often means they can get the best solution in any category.

Thanks in large part to the interconnectivity APIs provide, their solutions can still provide efficiency in addition to top-of-the-line features and functionality. As a result, RIAs can build an integrated tech stack with all of the best tools instead of relying on an all-in-one solution that may not deliver in all areas.

But an integrated tech stack isn’t exclusive to RIAs. Broker-dealers can create the same—if not a better—experience for their advisors by leveraging APIs to eliminate time-consuming manual entry and enhance “The Last Mile” of the investment process.

Eliminate Manual Entry

In today’s investment world, manual entry is a non-starter.

Using APIs to connect to custodians, CRMs, or risk analysis and financial planning tools, you make your advisor more efficient and effective by automating everyday or tedious processes.

Instead of spending their time copy/pasting from an Excel document or from software to software, you allow your advisors to concentrate on using their expertise instead of their technology navigation skills.

This also increases the accuracy of your advisors’ work and can contribute to the overall advisor experience at your broker dealer, and your advisors’ overall happiness in their jobs.

Enhance The Last Mile

Speed, accuracy, and overall efficiency are key when navigating the Last Mile of the investment process: portfolio modeling, rebalancing and order management. Your advisors need to be able to react to volatile markets in real time.

By using APIs to connect your B-D tech stack to all of the leading custodians and trading tools, you can provide a game-changing experience for your advisors. That kind of integrated tech stack would allow for automated alerts and even trigger immediate transfers based on set up preferences.

Giving your advisors an edge over their peers is the kind of differentiating factor that will stick in their minds, the minds of clients, and the minds of prospective advisors and investors.

Flyer Integrating Tech Stacks

Flyer’s Co-Pilot, a comprehensive investment platform, centralizes portfolio and order management in a single multi-asset application.

The Co-Pilot API allows for robust and secure integrations to other systems in order to enhance your entire advisor experience.

Contact us to learn more.