For much of his two decades in wealth management and the RIA space, Cameron Sheehan has been deeply involved with ensuring firms run on the best technology platforms, and are able to conduct seamless migrations to maximize efficiency and minimize disruption. Here, as head of account management and business development at Addepar, Cameron shares his perspectives on how to best approach the challenge of moving to a new wealth-management platform to enable a modern client experience.
Changing platforms can be daunting. What do you recommend advisors do to overcome perceived barriers?
For most of my career, I’ve helped advisors implement new technology platforms—first at Moss Adams where I helped grow their RIA business in an operational role, and then at Envestnet, a wealth-management technology provider.
The first consideration for wealth-management firms is almost always lead time. Advisors need ample time for decision-making—enough to involve all relevant parties in their organization and identify the best technology partner. Before any conversion, they also need to fully understand the resources required for a successful migration, and to consider the practicalities of how to most efficiently onboard the new software to minimize business disruption.
Key questions to ask a prospective technology provider include:
· \tWhat’s your onboarding process?
· \tHow many direct contacts will I be working with?
· \tWhat data can I bring over?
· \tWhat kinds of enhancements are you going to build in the future?
The answers to these questions are crucial to understanding whether the new technology platform will truly provide services they need, and also what the transition will look like.
What would you say is Addepar’s biggest differentiator compared to other firms?
Addepar provides an unmatched level of sophistication and innovation. Architecturally, Addepar offers capabilities not found in other software. For example, Addepar users can “slice and dice” investment holdings data using multiple criteria, down to a deep level of granularity. There's a vast range of clients around the world who don't invest in a traditional way and need tools to help understand these more complex investments. Addepar is one of the few platforms that can deliver that capability.
Why is now the ideal time for firms to consider changing platforms?
Industrywide, wealth-management firms are consolidating, with advisors sharing centralized resources. ManyRIAs now have 30 to 40 offices across the country, and are continuing to grow. As these practices expand, it’s important that advisors don’t encounter a great client opportunity they can’t take on because they’re stuck with a legacy technology platform that can’t deliver what that client actually needs. For example, if a client commits to investing incrementally in private equity investment over five years or has a substantial real estate portfolio, that's a good chunk of their investments that can't necessarily be represented by legacy technology. Technology limitations that stand in the way of meeting new client needs put advisors at an extreme disadvantage. Those who want to be poised for future growth need to be preparing today by adopting a platform that can facilitate expansion.
Why is the successful migration of historical client data such a “hot-button” issue in tech decisions?
Historical data is an extremely important resource for advisors, and it’s not something they can afford to lose when migrating to a new data platform. A lot of what advisors do today is not only evaluate investments in their clients’ portfolios to help make the right decisions, but also frame those decisions in the context of past decision-making to show why these moves make sense for the future. As RIAs build the data set for clients over time, you get a longer view of changes in net worth, allocation shifts and a critical historical view of client relationships. The more data advisors have to support decisions they’ve made over time, the greater value they can provide to clients. Addepar enables advisors to make these informed decisions by providing seamless access to that historical data.
How does Addepar’s approach to historical client data compare to the industry at large?
Across the industry, there’s no standard for data formats, and many platforms don’t even offer a central data repository. Addepar translates data as it’s migrated into the platform and consolidates it so that it’s stored all in one place. Think of it as building blocks being assembled for an advisor to work with. Addepar provides simple, efficient, access to all the data and information needed to construct client portfolios. The platform also enables much more robust historical data analysis and reporting than other platforms.
Today’s clients expect more from their advisors, requiring them to operate more efficiently to meet increasing demands. How can technology enable advisors to deliver better outcomes in less time? Advisors face not only increasing client expectations, but also fee compression. It’s a very demanding environment that’s forcing advisors to look for new technology solutions that can help them improve operational efficiency. They need to set up automation and streamline processes in order to build a more profitable practice. But, importantly, they also must do this without compromising their ability to deliver high-quality advice and service to clients. One of the attributes that sets Addepar apart is a strong partnership network with custodians, to allow aggregation of custodial and held-away data. The platform also integrates with a range of other platforms to facilitate migration from legacy technology and enable links with platforms that offer complementary services. As a result, advisors spend less time navigating disparate solutions and conducting manual data entry. It’s a huge time saver, which means more time available to spend on high-value client interactions.
What do you anticipate to be the biggest shift in the industry over the next 3 to 5 years?
We see a few clear trends. One is globalization. Investors who have historically held primarily U.S.-based portfolios are increasingly interested in having investments in other markets around the globe. Advisors need technology solutions that will accommodate this global diversification of assets across the UHNW. Additionally, we see a shift to more alternative investments and democratization of alts beyond the UHNW. Similar to global investments, as more investors look to include alts in their portfolios, advisors will need a platform that can track these assets to keep pace with where and how clients want to invest.
For more information on historical data conversion, you can download the eBook, A Technology Tipping Point in Wealth Management.