03.12.21 | Brad Kellogg, COO Flyer
Financial advisors and WealthTech firms can both benefit from a deeper understanding of how APIs improve the ability to meet the technology daily needs of advisors.
But there’s no WealthTech 101 course for financial advisors to take—even if they do heavily rely on their technology every single day to carry out their fiduciary duties.
Whether you’re an advisor who’s using a best-of-breed technology stack, or you prefer a single unified wealth management platform, understanding APIs can help you understand the benefits of integrations.
And if you’re a technology company, using an API for integrations can upgrade advisors who engage with their WealthTech systems for everything from internal operations to managing client relationships.
Over the rest of this article, we’ll go deeper into exactly what an API is, and how they’re shaping the future of WealthTech for financial advisors and their technology partners.
What is an API?
API stands for application programming interface. Software talks to other software using an API, a set of rules that allows software to talk to each other by sending a request and receiving the corresponding response.
This is important because businesses become more encoded in software requiring software to work directly with other software.
Here’s a simple way that APIs power interactions between financial institutions and the apps you know and use every day.
The VISA network connects storefronts and apps with banking institutions through its API to process payments and record transactions.
If you load your VISA credit card into the Venmo app, the person you sent money to doesn’t have a direct relationship with banks. They need an intermediary to deliver information about how much money you’re exchanging, and check to be sure that the funds are available.
In this case, the intermediary is VISA’s API, which uses the internet to connect your app with your bank.
The API’s job is to deliver instructions and connect two systems that wouldn’t otherwise talk directly with each other. It stands between the app and the banks to route information to the right places and make an interaction like transferring money from one person to another seem as simple as tapping a button.
These are the main terms to know for understanding APIs:
- Front end: The front end is what you the user interacts with the software to make requests and view the responses and results. For example: You are searching for a flight using a travel website like Expedia or Orbitz. The front end is the search box you use to type in your dates and cities and also the search results page.
- Back end: The back end is where the requested information is processed. Using the example above, when you hit “search” on the travel website, the back end kicks into gear to look at the information held by all the different airlines by using the airline ticketing systems’ APIs and then sends it to the front end, which interprets that information into something you can read on the results page.
- API: A REST API is an API built by web developers using an agreed-upon set of standards that allows for easier “talking” and compatibility between two systems. This is like an agreed-upon style, such as writing dates in M/D/Y format instead of D/M/Y or using a 12-hour clock instead of a 24-hour clock for telling time.
From booking travel to using Venmo to pay back a friend, there are endless everyday use cases for APIs.
4 Ways Advisors and Technology Firms Benefit from APIs
There are also endless everyday uses for APIs for financial advisors and wealth management firms. Here are four main benefits of APIs:
1. More Efficiencies
You have a lot on your plate already. Any time and energy you would normally put into having to use separate software or siloed systems could be saved and put toward building your client relationships.
For example, when your trading system uses API, it can deliver your trade orders directly to your custodian. Without a connected API, you’re left downloading trades into a spreadsheet and then manually uploading that trade file to your custodian’s website.
It’s not efficient and it leaves room for errors. An API eliminates those manual tasks and connects your trading to your custodian to transmit your orders seamlessly.
That process then gives you more time to spend in a one-on-one meeting with the client to discuss their goals and progress.
2. Real-Time Automation
In addition to cutting down on duplicated data entry, APIs open up the possibility of creating automated processes for tasks you do on a regular basis. The automation, with help from APIs, provides data and information that you need in real time to make the best decisions for your clients.
Without APIs, your reaction time to market changes is significantly reduced.
3. WealthTech Features
APIs also beef up your wealth stack, whether you are using different pieces of softwares, an all-in-one solution, or a proprietary system. As noted above, APIs can extend an all-in-one solution or tie different systems together.
With APIs, tech companies can build products or features that you are requesting because they may have access to information and features outside of the current provider or organization.
The end result is that advisor technology systems can directly encode efficient user workflows into their systems, which creates a better user experience for the advisors who use those solutions.
4. Client Access
Even your clients can benefit from APIs. With all systems connected, they can access a comprehensive financial snapshot or plan that pulls in all of their bank, insurance, and investment information in one place.
You could also use such systems to send out important notifications when changes are made to their account or friendly reminders about portfolio drift or tax season tips.
In this way, APIs create a broader ecosystem of software by integrating them into a single contact point for a user. The APIs talk to other software to exchange data, but the user only has to use a single system to access that data which is stored in multiple systems.
APIs and Flyer
Flyer has developed strategic partnerships with all major custodians and the most popular WealthTech companies to help financial advisors get access to our leading portfolio trading tools and APIs.
The WealthTech partners who build their portfolio trade order management workflows on Flyer’s API and network are able to give advisors like yourself a more intuitive and faster way to rebalance and trade while eliminating manual tasks like uploading and downloading files between different systems.
Portfolios can be automatically rebalanced and orders automatically staged for approval or sent to a custodian, giving advisors time back in their day and ensuring investors get a premium investment experience from their wealth manager.
Learn more about our wealth management products or schedule a call to talk to us about improving your tech stack with Flyer’s API.
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