Client Portal: Build or Buy?

March 12, 2020, by Matt Sonnen
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RIA publications and the conference circuit are filled with articles and breakout sessions titled, “The Digitization of Advice” or “The Amazon and Netflix Effect on Our Industry” – all discussing the on-demand culture we find ourselves now living in.  As we have written about previously in this publication, “In our on-demand driven era, clients are really asking for increased access to their advisors—hoping to review their accounts and their financial health on their own timeline, whether that is 3 p.m. when they find a short break in their schedule, or 2 a.m. when they are unable to sleep.”  And from the advisor’s perspective, they are always looking for a way to get in front of their clients more regularly than the typical in-person quarterly meeting schedule, hoping to remind clients of the great work they are doing for them and their families all year long.

The answer to this client demand and advisor wish is, of course, the client portal.  In addition to the ability to post static performance reports or deliver a document vault to clients, the advisor can also offer a dynamic picture of the client’s portfolio that updates every single day.  This data is available to the client at all hours of the day or night, so the client can choose when and how often they interact with their advisor.  It is a very valuable tool for RIAs, and one we believe has become simply “table stakes” for financial services firms at this point.  There is no doubt that if you aren’t offering a client portal to clients today, you are being left behind.

That being said, we do not believe advisors need to build this technology themselves.  We see many RIAs getting caught up in the importance of this portal technology and concluding, “We must own the client experience,” and they erroneously assume that the portal makes up the entire service being delivered to clients.  We believe that the portal is a key component of the client experience, but not the sole factor in delivering financial wellness and advice to clients.  The major reporting providers offer highly customizable portals as part of their technology suite that RIAs are already purchasing – there is no reason for an RIA to spend six figures (and more) building a portal that simply replicates the technology being provided for free through software they are already paying for.

In speaking with Andina Anderson of Envestnet Tamarac, she confirmed our belief that, “In today’s interconnected world, investors of all ages have come to expect seamless digital access to their advisor.  Our client portal helps advisors meet those expectations with an intuitive interface that makes communications between the client and their advisor more personal and positions the advisor to operate at an elevated level of service.”

With the coronavirus gripping headlines across the nation, much is being said about the need for RIAs to offer video conferencing solutions to clients in lieu of in-person meetings.  While we all agree on that fact, I don’t see RIAs developing their own software that can facilitate these virtual meetings.  But when it comes to the client portal, for some reason many RIAs feel they must play software developer and attempt to build it themselves.  One RIA COO interviewed for this article concluded, “We don’t want to spend our time developing the portal.  We know we can’t compete with the fintech providers on how to make that experience better.  If an RIA did have that kind of money, and they choose to spend it on the client portal, they are spending their resources on the wrong things.”

Don Nilsson, Chief Product Officer at Addepar put it this way, “Distilling complexity is hard and creating a best in class solution is harder still; we’ve made the upfront technology investment so our clients don’t have to.  We are continuing to invest heavily in new functionality and the user experience of our portal so that advisors don’t need to build it themselves and can focus on what they do best.”  Bjorn Widerstedt is Vice President, Product Management for SS&C’s Black Diamond Wealth Platform – he added, “An advisory firm trying to build its own portal will run into significant infrastructure costs and security issues, plus the time and labor for ongoing support, maintenance and upgrades.  For a fraction of the cost, you can have a proven solution from a provider who will also support it and keep it up to date.”

RIAs that choose to spend the money themselves do so out of fear that, “If we use someone else’s portal, we’ll look like everyone else – we need to stand out in the marketplace.”  While the need for differentiation is as key today as it has ever been, your client-facing website, your logo, the experience level and communication style of your staff, the investments and financial plans you deliver, your ability to be there for your clients whenever they need and for whatever they need, all make up your value proposition— the client portal is only one small component of the service being delivered.

We believe that RIAs choosing to develop a portal themselves have not researched the customization available with these reporting provider-offered solutions.  Not only can the color scheme and layout be customized however the RIA chooses, but their own logo will be prominently displayed in both the desktop version and mobile-friendly version of these portals.  The RIA can choose different client segments across their client base to see different data, and the end clients can even customize the portal experience to however they choose to view it.  Clients will be driven to the RIA’s website, and from there, they can click, “Client Access” or “Client Portal” to view their financials.  The end client won’t even realize they are viewing data from within the reporting providers’ database.  In the client’s mind, it is the RIA providing this access to their financial picture.

With market volatility likely to continue throughout this election year, profitability should be top of mind for all RIAs.  We implore RIA owners to consider very seriously where they are spending their money and deploying resources.   That money and time should be reserved for areas that generate revenue for the firm and where you can truly stand out.  2020 is not the year to attempt to turn your RIA into a fintech company.

This article originally appeared on WealthManagement.com.

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