Advisors risk falling behind — particularly with younger investors — if they fail to offer ways to engage with them directly online.
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Executives at the fintech giant FIS saw an opportunity to go beyond the accounting, portfolio management and other software they now provide to wealth managers and offer client-facing digital services. But rather than build something from scratch, FIS turned to InvestCloud, a wealthtech platform that provides cloud-based applications to financial advisors.
Sherry Baker, head of FIS’ wealth business, said she thinks the two firms together will be able to meet demand from not only independent advisors but also banks with internal wealth management units.
FIS
“As assets were really transitioning to the younger generation, they were looking for consumer-grade, mobile-first digital experiences, so clients could access their advisors when it made sense and have all of that information at their fingertips,” she said.
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What FIS and InvestCloud bring to the table
The partnership, which the two firms announced this week, aims to wed FIS’ expertise in back-end technological support with InvestCloud’s background in providing advisors with ways to engage clients digitally. InvestCloud, a California-based firm with private equity backing from Motive Partners and Clearlake Capital, offers mobile apps and other software to run investment management, financial planning and other functions on top of firms’ existing tech systems.
Baker said the product that FIS and InvestCloud are bringing to market isn’t something that FIS had time to build on its own.
“The partnership with InvestCloud really kind of gave us everything we were looking for, where we could provide the financial and operational backbone around our accounting platform and InvestCloud could bring its deep wealth-domain expertise with an in-market solution around advisor intuitive client experience,” she said.
Baker said services from the new partnership will be rolled out in July to six clients that FIS and InvestCloud now have in common, then eventually extended to other firms. She said FIS works with roughly 600 institutions through its wealth management division, many of them banks.
“Not all of those are running our recordkeeping platform,” Baker said. “About half of them are, and so those are the clients that we would go after.”
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Firms with bad technology risk losing advisors
Advisors’ desire for better technological support has been documented. In January, the research firm Cerulli Associates reported survey results suggesting that technology is a primary consideration for advisors at banks or trust companies who may be thinking of leaving for another institution.
Of the bank- and trust-based advisors Cerulli polled, just over half deemed technology “somewhat important” and nearly 30% deemed it very important when comparing their firm with others in the industry. Like many long-established industry players, banks regularly see advisors leave to start their own practices or join firms where they can enjoy greater autonomy operating as independent contractors.
“As banks cede market share amid accelerating advisor movement into independent channels, these firms are looking at differentiating through their technology stacks,” Matt Zampariolo, a research analyst at Cerulli, said in a statement.
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Dan Bjerke, the president of digital wealth at InvestCloud, said many banks are looking to wealth management to reduce their dependence on income from interest on loans. Client assets held in advisory accounts have come to be prized for their ability to produce steady revenue streams insulated from economic conditions.
Clients, for their part, don’t necessarily want to maintain relationships with more than one financial institution.
InvestCloud
“They want a unified household view,” Bjerke said. “They want advice that factors in retirement, career goals, family goals and all of those different elements. And the financial institutions that InvestCloud and FIS work with are very well-positioned to meet that need to provide that end-to-end advice.”
Artificial intelligence is also playing a part. InvestCloud has developed AI systems designed to monitor client accounts and economic indicators and alert advisors to events that may require a response.
Inside a bank, such a call-to-attention could be particularly useful in getting separate departments to work together and bring their expertise to bear to meet a client’s needs.
“How do we quickly get insights around a large cash deposit or paying off a loan, and then how do we transition that to our wealth group quickly?” Baker said. “It’s about being able to have that information from our banking platforms at our fingertips and then feed it into InvestCloud, and being able to say, OK, here’s three products that you could go talk to this client about tomorrow.”
A primary desire of banks and other large wealth managers these days is to ensure client assets remain “sticky” — or unlikely to be moved to another institution that can perhaps provide different services. Baker said technology is a primary means of achieving that goal.
“If something happens in the market with a particular stock, and if you can give that information to clients immediately, versus having to kind of wait till the next day … I think that that timeliness of information is going to be a key differentiator for us across our client base, whether it’s banks, law firms, RIAs or whoever we’re working with,” Baker said.
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Old technology a stumbling block in unifying banking, wealth services
Bjerke said older single-purpose technology not built with data-sharing in mind has hindered the convergence of banking and wealth management services.
“So you can have a banking relationship, a brokerage relationship, a wealth advisory relationship, etc.,” Bjerke said. “But there really hasn’t been technology that can be an engagement layer that would pull all of that together without replacing that very set of complex highly critical operational systems.”
InvestCloud, along with building mobile apps for independent advisors and providing software for portfolio management and financial planning, also designs infrastructure to make data transferable across technological systems. Baker said one impetus for FIS’ partnership with InvestCloud was that “we realized that advisors were drowning in a ton of information and fragmented processes, sometimes logging into three, four, even five different systems to prep for conversations.”
