May 31, 2023

February 28, 2023 9:33 PM "This represents $1.2 trillion to $1.3 trillion in assets under management up for grabs, a substantial market opportunity for vendors," the study said. An April analysis by the company identified the major trends driving the vendor market for portfolio management and reporting systems aimed at the U.S. wealth management industry with a particular focus on the RA segment. In mid-May, the organization published a formal evaluation of seven select vendors to determine their competitive position in the space. It focused on factors including vendor stability, client strength, product features and client services. The seven participating vendors were Addepar, Broadridge, Envestnet, InvestCloud, Morningstar, Orion, and SS&C. Pershing opted out of the research effort due to "extraordinary commitments to the launch of Pershing X," a technology platform for wealth managers, according to the report. Holistic planning, holistic technology Okby said a number of trends are shaping the present and future of the portfolio management and reporting platform market. Chief among them is the fact that RIAs are increasingly managing holistic practices, and the channels that financial advisors affiliate with have a significant influence on the types of products and services they provide. "Wirehouses unsurprisingly have the most comprehensive set of services on offer. However, today independent RIAs and insurance broker-dealers fall a bit short, and we found gaps in trust and fiduciary services; credit and debt products; and non-traditional support services like elder care, career counseling and personal development," Okby said during last week's webinar. But independent broker-dealers, RIAs and insurance broker-dealers have meaningful opportunities to catch up via investment options focused on environmental, social and governance issues, considered "one of the most polarizing yet potentially lucrative and personal ways for wealth practices to deepen private client engagement." "I's really going to become more feasible and necessary for RIAs and insurance broker-dealers to integrate additional elements of holistic wealth, including insurance, ESG impact, legacy planning and other products and services into existing or more advanced reporting modules," Okby said. Data functions lag Other trends include the evolution of wirehouse broker workstations; the accelerating wealth transfer; regulatory and compliance integration; and the concept of value for enhanced services. "The last major trend is data aggregation, financial reporting and analytics hurdles," Okby said. "RIAs in our ecosystem often point to a common pain point, which is getting alternatives data that's accurate and correctly deployed through their tech stacks. In other cases, vendors over promise and under deliver on their deployment … advisors are increasingly frustrated when data held on the broker-dealer platform isn't accurately integrated with platform applications in a bi-directional manner. "The significant pain point for advisors is manual intervention to correct these data issues, which places a major drag on their efficiency." Different client, different tech Okby added that in today's environment, client reporting approaches differ between firms and advisors. He said wealth managers — especially in the independent space — tell him that advisors often choose their own reporting solutions, which can lead to different clients at the same firm having different experiences. As a result, firms have to go through a multi-step process to ensure that the data provided to all clients is accurate and useful. Improvements Several changes that are accelerating the workflow, including improvements in data aggregation from various sources; data reconciliation and normalization into a common format; and improvements to report design, report generation and report distribution. Okby said his team set out to determine where each of the seven vendors who participated in their analysis sit within the marketplace by leveraging a proprietary Aite-Novarica Group vendor assessment framework. Vendors were placed in one of three groupings defined as follows by Aite-Novarica: Best in class: Vendors in this grouping represent the leaders in the particular vendor market, with strong financials, diverse client bases and robust product offerings with industry-leading functionality and reliable client service. Contenders: Vendors in this grouping have created stable businesses, client bases and competitive product offerings. However, they sometimes struggle to identify the next big market trend or product features, or lack consistent R&D or IT investment, leading to a failure to update overall performance and infrastructure. Incumbent or emerging: This last grouping represents vendors with a large potential for future growth, or established vendors with stagnating offerings. This group may represent startups or vendors with limited resources. They may exhibit unstable business models, low client count and limited client service capabilities. The best Addepar, InvestCloud, and SS&C Black Diamond were recognized as best-in-class vendors in the Aite-Novarica analysis. The study says it was a "photo finish" between InvestCloud and SS&C, closely followed by Addepar. InvestCloud took the top spot in Aite-Novarica Group's product performance category and tied with Addepar in the vendor strength category. SS&C, meanwhile, was king of the in vendor strength category, and tied with Addepar in the product strength category. Trailing just behind the leaders as top contenders were Envestnet and Orion. According to the study, Envestnet ranks best-in-class in most categories of the Aite Matrix, but its overall rank was pulled down slightly by client feedback about its user interface, perceived ease of upgrades, and responsiveness to suggested product changes. For Orion, which lands just behind Envestnet in the rankings, the study recognized the firm as a dominant RIA technology platform with a strong brand, reputation and client base. Broadridge and Morningstar round out the rankings, representing the incumbent or emerging category. But the study points out that all seven organizations have plenty to offer. "Competition is strong among the portfolio management and reporting vendors catering to the wealth management market, and all these vendors have strong propositions and robust functionalities that are robust," the study said. "They have customizable, reliable offerings that are rated well in the market. With tight competition among these vendors, the customer experience bar is getting raised by the firms mentioned, as well as Broadridge and Morningstar." Beyond the seven vendors thrown into the matrix, the study included a list of vendors to watch. That list includes Advisor360°, BridgeFT, First Rate, Masttro, MyVest and Private Wealth Systems.