Breaking down barriers to create a holistic view of clients’ data is a core challenge financial planning platforms were designed to solve. Now, RIAs and financial institutions with developer resources at hand can maximize the value of that solution without a major tech stack overhaul thanks to three little letters: API. With an application programming interface, companies can establish a link between two different types of software so they can “talk” to each other.

Firms now have the tools to build digital experiences with more control and flexibility. With application programming interfaces (APIs) and components, firms can incorporate the powerful data from planning software into their own solutions, including the following three use cases.

1. Client-facing Tools: Deliver Personalized Insights to Clients at Scale

Financial services firms are rolling up their sleeves to create client-facing mobile apps and client portals that provide customized, relevant insights to consumers in a central hub of information. When Intuit shut down Mint, one of the top budgeting apps for years with 3.6 million active users, it created a natural opening for firms in the financial planning space to fill the void.¹

APIs can speed up the time to market for these client-facing tools. They can enrich an app, for example, by feeding in data from a planning platform—such as a client’s net worth, asset allocation, portfolio performance, and probability of plan success. This type of client portal can enable the client to not only see what they owe and own, but also plan for the future and track their expenses.

Creating this compelling view of a household’s total assets and net worth can foster a sense of transparency and trust between clients and advisors.

2. Advisor-facing Tools: Build a Best-in-class Advisor Tech Stack via Custom Integration

Many wealth planning firms want to buy the best software in each major category, from CRM to portfolio management to financial planning. They know that if their tools aren’t up to par, their advisors may leave. For example, 92 percent of advisors said they would switch firms over bad technology in a recent survey.²

eMoney research shows that the dominant enterprise technology approach is to buy solutions from multiple vendors, rather than build the tech stack in house.³  The 2023 Kitces Report comes to a similar conclusion, showing nearly all advisors rely on third-party planning software, and for the minority who don’t, “51 percent still use another third-party application to supplement their own.”⁴

The problem with this comes when integration between these tools falls short, as it does for the 66 percent of firms who said integration was a moderate or major challenge for their tech stack.⁵

With APIs, you can create a bespoke connection that seamlessly integrates each part. The possibilities this unlocks are significant. You can eliminate the need to enter the same data into multiple systems, boosting advisor teams’ productivity. Increasing the accuracy of financial plans is also within reach, as well as surfacing more opportunities to better serve clients.

3. Data as a Strategic Asset: Create a Data Lake for AI-enabled Innovation

The rapid evolution of generative AI capabilities, including comprehensive data analysis, has put a spotlight on the value of data for businesses. However, fewer than 30 percent of financial services firms have a well-defined data strategy.⁶

Those with a strategy are likely to have considered a “data lake,” or centralized warehouse where financial firms can collect and secure the vast amounts of information that they are in many cases required to collect under FINRA’s Know Your Customer standards.

Having this centralized data lake can unlock possibilities for deeper insights into a client’s financial situation, with a holistic understanding of the data at hand. With a financial planning platform’s APIs connected to the data lake, your organization can get the full picture behind the scenes securely and reliably. Add in generative AI with natural language processing, and you can train the model to make API calls under certain conditions (such as “send an invite to the client portal two days after a new client record is created”). A custom-trained chatbot could also simplify the task of interacting with the data lake.

Empowered by APIs

APIs hold great potential for enterprises intent on making the most of their planning data. From insights that can help firms uncover new revenue streams or capture more market share, the possibilities are wide open.

By breaking down barriers between different software systems, APIs empower firms to enhance efficiency, improve data accuracy, and foster stronger client relationships. The strategic use of APIs will be crucial for businesses seeking to stay ahead of the curve and deliver exceptional financial planning experiences.

Planning Ahead

What’s the next big thing in financial planning? Experts are calling it the “beyond the plan” era. It’s all about using tech, understanding clients’ perspectives, and providing inherent value. Check out our eBook, Unlocking the Value of Financial Planning, for more insight.

 

Sources:

1. Bloomberg. “Intuit Is Closing Personal-Finance App Mint,” November 2023.

2. Advisor 360. “2024 Connected Wealth Report,” January 2024.

3. eMoney Product Roadmap Research, March 2024.

4. The Kitces Report. “How Financial Planners Actually Do Financial Planning,” January 2023.

5. Cerulli Associates. “State of U.S. Wealth Management Technology 2024,” April 2024.

6. Technology Tools for Today. “Data Lakes: Steering the New Wave in Wealth Management Technology,” January 2024.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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