Written by: Steven Draper | Family Office Exchange
A best of breed system approach in technology is often defined as the use of the best software application in its category. Although it may perform specialized functions better than an integrated application system, its very specialty often limits it. To fulfill varying requirements, wealth managers in the past often implemented best of breed systems from separate vendors to gain competitive advantage by supporting a niche product or asset type. However, we all know maintaining multiple systems provides little cross connectivity, and that in turn creates maintenance and integration challenges.
In the last few years the new developments in technology, and the many new vendors entering the wealth management space, I think calls for a change in how a best of breed approach should be viewed and implemented by wealth managers. The move should be away from application functionality and towards interoperability and a view that recognizes that the value of the wealth management industry is built on client assets and advice. The technology should absolutely be built around client needs and how those needs are met.
The client wants relevant data and knowledge about their assets, backed-up by timely advice and all delivered in a secure way that is easy to access. A new “Best of Breed” approach would form an interlocking wealth management ecosystem.
The Best - Secure technology infrastructure
Where security, resilience and vigilance was the starting point in the design and where business continuity and disaster recovery is integral
The Best – Data
Clean, consistent data, covering all types of transactions and asset types, gathered automatically and delivered electronically
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The Best - Integrated application platform
Integration of application components, with single data entry, a single database that combines data, business rules, business process, workflow, audit trail, to deliver real risk management and operating efficiencies
The Best - Client experience
Understanding which parts of the wealth management journey matter most to an individual client and then reimagine the whole service model needed to deliver it in each unique way
It’s when you focus in this way that decisions around a technology approach becomes clear. The ecosystem concept makes one think about the interdependence of the many technology elements and drives the choices being made. In the real world the wealth manager has to fulfill the client expectations in an efficient and cost effective way and the ecosystem view also supports this.
I have been talking about this for a while in the UHNW Wealth Management/Family Office space and how it can be achieved.