Yuryi Ferber, founder, chairman & CEO at BRITech, explains in this exclusive interview the many dangers inherent in having a multiplicity of systems, and why wealth managers should have efficient workflows and data management right at the top of their priorities, rather than proliferating systems.

Established wealth managers are known for often operating with a labyrinthine web of systems. It is true that some of this is attributable to the frenetic pace of M&A in the industry, but as Yuryi Ferber points out it is more because of the sheer range of requirements technology must satisfy.  

As he observes: “Wealth managers are constantly facing the challenge to handle various regulatory requirements, often from different regulators, to address specific client requests, to make a multitude of investment decisions and to manage all this in a rapidly changing market.”

The explosion in “wealthtech” also means that fi have been spoiled for choice in their ability to bolt on “best-of-breed” solutions in areas like client relationship management, portfolio management, suitability profiling and more.

But while a panoply of systems may be common, Ferber believes it is time for firms to start seriously considering the full costs. 

“Combining and integrating these systems has created huge challenges, resulting in limited straight-through processing and missed or erroneous data requiring manual intervention,” he asserts. “Although it is understandable that firms try to manage complexity via multiple systems, they need to understand that all of this will inflate the cost of ownership far beyond the upfront investment.”

WealthBriefing research has found improving data management is a priority for 71 per cent of firms  as they start to appreciate both the benefits and risks that come from being able to process more and more information about clients. Yet Ferber sees patchwork quilt architectures often resulting in data management being in a parlous state: “Many wealth managers have looked to go global and multi-regional in search of growth. As a result, they have acquired a variety of different systems, sometimes spread across several countries, which creates fragmented, inconsistent and often siloed data.”

The “double-edged sword” of client data
The need for remedial action is now acute, particularly as regards client data, not least because privacy regimes continue to tighten globally to follow the “gold standard” of the EU’s General Data Protection Regulation (most notably in several US states). But perhaps just as important is the imperative to coordinate all the information about clients’ preferences and habits that the sector’s rapid digitisation is making available. That is, after all, the expectation.

That data is very much “a double-edged sword” is well accepted across the industry by now, according to Ferber, but he sees fi diverging according to size as to how they maximise the rewards while minimising the risks it represents. “Solutions usually involve incorporating yet another layer of technology to manage the data issue, resulting in increased complexity and costs that only the biggest institutions can generally afford due to their capacity and economies of scale,” he says. “Smaller to medium-sized firms are typically looking for an alternative.”

All too often, small to mid-sized wealth managers resign themselves to manual workarounds and “living with legacy”. But as Ferber explains, copious manual work, erroneous or inaccessible data and operational complexity bite far harder for smaller-scale firms and it was for this segment that BRITech was originally founded. And, he explains, the company’s core mission has been to truly innovate and solve all the issues created by having a multiplicity of systems at the root.
 
Thus, BRITech’s solution is intended to be the opposite of a patchwork of systems that might not “talk to” each other that well, and is rather a modular system encompassing the entire client lifecycle from onboarding through to portfolio management, billing and fees, and reporting.

“Our system effectively acts as an orchestration layer for different sources of data: broker, custodian, market data, third-party systems and data generated by internal systems and users,” Ferber explains. “This results in higher consistency, better data processing and lower costs than any other option available as there is a backbone layer where all data will be normalised and can be easily audited and reported.”

While institutions can adopt individual modules and integrate those of third parties as they choose, the more these come from the same “family” the more the benefits compound, he continues.

An API shopping list
Given that firms may be using six or more systems to manage, monitor and report on portfolios, the “orchestration layer” concept has readily understood appeal. Yet for all focus on phrases like “interoperability” in fintech marketing literature, Ferber advises wealth managers to carry out careful due diligence here:

“First, on your shopping list should be securing the integrity of your information. APIs [Application Programming Interfaces] have to be able to get data in and out of systems in various formats and methods, but the highest security standards must also apply.

 “Then, ensure that the API concept is native to the solution – rather than requiring more work - and that those APIs are fit for purpose.

“Part of this is balancing flexibility and scalability. Having very well documented and standardised APIs is how we are able to integrate new systems in a matter of days, but you also need the freedom to configure your own workflows. Our clients have been able to adapt our APIs according to their business rules to really enhance the client experience.”

It is also abundantly clear that the advisor experience is no less important. WealthBriefing research suggests that more than three-quarters of advisors would move/ not join an fi due to poor technology provision. The industry-wide drive towards greater advisor productivity naturally has as much to do with individual relationship managers’ own bottom lines as it has those of their employers.
 
Cutting through complexity
Given wealth managers’ ambitions for both efficiency gains and improving the client and advisor experience, Ferber believes the importance of mobile access should also be born into solutions.

He argues: “Our technology improves advisors’ productivity and enables them to better engage with clients as well. Being able to onboard clients on a mobile device, and to do things like showing them visually how investments compare and the effects of rebalancing and dividend reinvestment generates huge business gains.

“Advisors must be able to access the application anywhere, anytime through smartphones, tablets and PCs to maximise STP and deliver the slick experience today’s clients expect.

“But it is vital that mobile - or indeed any other feature - is inherent to the solution, rather than the functionality you need calling for yet more products to integrate or another layer being added to the architecture.”

Otherwise, firms risk falling into the manual workaround trap once again - something small to mid-sized wealth managers in particular can ill afford.

As Ferber concludes: “The wealth management sector’s rapid digitisation over the past few years really has been something to behold, but it’s meant many firms getting tied up in knots and dedicating levels of resources to their technology set-up that are just not sustainable.

“Think about workflows and dataflows first and always aim to be cutting through complexity when it comes to your architecture – not creating more.”

This forms part of this publication’s latest research report, Technology Traps Wealth Managers Must Avoid. Download your free copy by completing the form below.

Reference:

i,  “Technology and Operations Trends in the Wealth Management Industry”, WealthBriefing 2018
ii, Ibid.
iii, “Help or Hindrance? The Link Between Technology Provision and Advisor Productivity”, WealthBriefing, 2014