The recent partnership between Adhesion Technologies, a provider of financial-account consolidation, and netDecide, a purveyor of wealth-management tools, may be a harbinger of things to come, as the combination of both services could be the new Holy Grail for capturing assets.
Specifically, the deal calls for the integration of netDecide's investment-analytics and financial-planning tools with Adhesion's EA Financial Consolidation Platform. Adhesion will collect client data from over 1,800 financial institutions, normalize the information and then deliver it to the netDecide platform.
Recently, Harold Hughes, senior vice president, Legg Mason Private Client Group, described "the next killer app" as the combination of wealth management and data aggregation when he spoke at Wall Street & Technology's Wealth-Management-Technology Conference in September (www.wallstreetandtech.com/story/WST20020926S0009). "The key is not just getting the data but what you do with it once you have it," says Hughes.
That may be true but getting the data, and getting it right, is the first step in any such endeavor, says Pamela Brewster, an senior analyst with Celent Communications who has worked on a number of wealth-management-technology reports in the last six months. "Without good, clean data, you can't give good advice, no matter how effective your wealth-management platform is," says Brewster.
So, it seems clear that the key to financial advisers providing sophisticated wealth management to their clients is having a combination of the two technologies. Even the fact that the financial adviser, and not the end user, is doing the planning is a new trend. During the Internet boom, when almost no one could lose money in the stock market, investors wanted their own tools for orchestrating their financial well-being. Now, the ball is back in the advisers court and with it the need for financial-planning tools.
To find the right tools, Brewster recommends first defining exactly which customer segment a firm is going to target: general retail investors, mass affluent, high-net worth or ultra-high-net worth. Serving each segment, she says, requires specific tools, which become more sophisticated as one goes up the food chain. Then a firm should work hard to develop a comprehensive request-for-proposal to begin vetting the vendor community. Finally, says Brewster, a financial institution must have prospective vendors demo products and furnish reference lists before making any decision.
"Institutions should also get their advisers involved in the decision-making process," she says, "because if the adviser isn't going to use it, then it's useless."