Robinhood Acquires TradePMR To Refer Next-Gen HNW Clients To On-Platform RIAs (And More Of The Latest In Financial #AdvisorTech – December 2024)

Robinhood Acquires TradePMR To Retain Its Next-Gen Wealthy Clients By Referring Them To "On-Platform" RIAs

There are a lot of reasons why it can make sense for a retail brokerage platform to have an accompanying custodial business for financial advisors. At a base level, it's expensive to build out a custodial platform, but the core requirements of RIA custody – having adequate capital, accounting and recordkeeping, trading technology, tax reporting, etc. – are similar enough to those of a retail brokerage that once the retail side of the business has been built, there's already much of the infrastructure needed to support the custodial side as well. And once that custodial platform is in place, the combined firm benefits: It gets the additional volume of assets on its platform from which it can earn revenue via net interest on cash sweeps, securities lending, or payment for order flow, while sizing up to gain further economies of scale on its operating costs. Additionally, the platform becomes better able to retain retail clients who decide to hire an advisor (who can easily stay "on-platform" if the advisor they hire happens to use that particular custodial platform already), and it can implement lucrative advisor referral programs that send clients to in-network (i.e., on-platform) advisors in exchange for what is often a lifetime percentage of the advisory fees paid by those clients. In other words, a combined retail brokerage and RIA custodian gets to participate in both the underlying economics of providing custody services to its clients and the advisory fees of its advisors.

And so time and again over the last 30-plus years there have been instances of retail brokerage firms branching into RIA custody; either by building it out themselves (such as with Fidelity's custodial arm, Schwab Advisor Services, and TDAmeritrade prior to its acquisition by Schwab) or by buying an already-existing custodian to bolt onto the retail platform (such as when E*Trade bought Trust Company of America in 2018… which was then spun off again in 2021 to Axos Financial after E*Trade's acquisition by Morgan Stanley).

But upon each instance of a retail brokerage firm building or buying an RIA custodial platform, there are often reports of trepidation among advisors and industry commentators around the perceived conflicts of interest between retail platforms and their affiliated RIA custodial` platforms. The main concern is usually that the large retail presence of firms like Schwab or Fidelity results in advisors on those platforms effectively competing with their custodians for their own clients. And yet the reality is that on the whole, advisors see very little siphoning of their clients from their custodial platforms' retail arms. In fact, there are often significant benefits to having a custodian with high brand recognition among the public, which gives clients some reassurance that their savings are being held at a large institution where they'll be kept safe, and that if they're ever unhappy with their advisor they can simply de-link from the advisor and remain with the retail platform without needing to move their own accounts.

Nevertheless, all these concerns and more are being raised again in the wake of this month's announcement that the retail brokerage platform Robinhood is acquiring the independent RIA custodian TradePMR in a $300 million deal.

A number of advisors have voiced their skepticism over aligning with a platform in Robinhood that gained its initial fame amid the meme-stock bubble of the early 2020s and was later accused of (and paid millions in fines for) various unsavory business practices including misleading customers about its revenue sources (for which it paid $65 million to the SEC in 2020) and allowing customers to place option and margin trades without approval and failing to keep its platform's technology running smoothly during a spike in trading (for which it paid $70 million to FINRA in 2021).

At the same time, however, since its early casino-like days Robinhood has seemingly become more established as a brokerage platform for "everyday" investors, similar to platforms like E*Trade and Ameritrade that grew out of the speculative frenzy of the 1990s dotcom bubble into more mature institutions. And just as those platforms eventually grew to a size and scale where adding RIA custody was the next logical step to continue serving their customers as they grew their wealth, so it also appears that Robinhood has grown to the point where it makes sense to extend its existing infrastructure into servicing advisors and their clients. So despite the anxiety that some advisors might feel about aligning with a platform that their clients might associate more with YOLO-ing Gamestop options than with long-term diversified investing, there's a long history of similar transactions that shows that the strategy of adding RIA custody to an established retail brokerage has largely been a successful one.

In fact, it could be argued that, with a reported 25.1 million retail brokerage accounts – which is not that far behind Charles Schwab's 36.0 million and Fidelity's 38.7 million retail accounts – Robinhood was actually overdue for adding advisor custody. Because even though the 'average' Robinhood account isn't large (which at $152.2 billion of assets under custody as of Q3 2024 works out to around $6,000 per account), by sheer probability there must be a fair number of users who have accumulated significant wealth. And there's a much better chance for Robinhood to retain those users (and their assets) if there are advisors to whom Robinhood can refer its wealthier customers who will keep their assets on the platform.

Meanwhile, advisors, who have already flooded other custodial referral programs like Schwab's with so much demand that the platforms are considering raising their already-substantial revenue sharing percentage, will likely line up at the chance to get client referrals from a platform whose customers skew younger than other brokerage platforms' (as Robinhood reports that 75%+ of its clientele are Millennials and Gen Z, a full two generations younger than the typical RIA's baby boomer clientele), and can be considered prime targets for a very long-term (and still contributing instead of withdrawing) advisory relationship. In fact, expect to see the largest mega-RIAs, that have increasingly looked to RIA custodial referrals as a scalable lead generation channel, to clamor for the opportunity to be the first into the Robinhood referral system and get first-pickings of the initial flow of referrals when the program is rolled out to Robinhood's 24 million customers. After all, why pursue the next-generation heirs of your existing clients with the looming "Generational Transfer of Wealth", when you can simply get those inheritors referred to you as soon as their inheritance hits their Robinhood account?

That said, there are still many questions to be answered in the months and years ahead that will have a large impact on how this deal works out for Robinhood and TradePMR. How long will it take for Robinhood to learn the back- and middle-end of RIA custody, and to scale up the high-touch customer service that TradePMR has become known for (and the level of service that RIAs expect to do business with the platform at all)? At what point (and it's definitely a "when", not an "if") will Robinhood move TradePMR away from Wells Fargo as its clearing broker and onto Robinhood's own custodial chassis (to fully capture the available revenue for providing clearing services, that Robinhood will want to provide and get paid for itself), and what hiccups could that entail? And how many Robinhood clients will really decide to sign up with an advisor if Robinhood offers them one?

In the end, while this deal isn't industry-shaking in its size – as Robinhood and TradePMR's combined $200 billion in on-platform assets are dwarfed by the likes of Schwab ($9.9 trillion) and Fidelity ($15 trillion) – it does have the potential to raise both Robinhood's and TradePMR's standing in the brokerage and custody business. For Robinhood, it has the potential to keep its customers from bolting once they accumulate enough wealth to want to hire an advisor (and/or increase its wallet share among already-wealthy customers who only keep their "fun money" at Robinhood). For TradePMR and its advisors, it creates a new sales funnel with the potential to deliver next-generation clients from among Robinhood's younger user base to an RIA community hungry for new channels of organic growth. And so the question going forward isn't so much whether advisory clients will be turned off at the idea of having Robinhood as a custodian – since ideally, many of those clients will have already been Robinhood users to begin with – but instead how well Robinhood and TradePMR can align their platforms, technology, and customers to create a seamless transition for retail customers to become paying clients of advisors?

Advyzon Launches A Family Office Platform To Move "Upstream" To UHNW Clients

At a very high level, the technology needs for advisors are fairly similar no matter where their clients lie on the wealth spectrum. Typically, there needs to be a CRM to store client information and notes, a platform for managing investments and reporting on performance, a way to store and manage client documents, and some kind of portal where the client can log in and view their accounts in one place.

However, there's historically been a bifurcation between software solutions meant for advisors of mass affluent or even some high-net-worth clients, and those made specifically for advisors of ultra-high-net-worth clients. In the former case, there's software like Orion, AdvisorEngine, and Advyzon, which can support a relatively limited range of account vehicles and ownership structures – e.g., individually or jointly-owned taxable accounts, a handful of standard retirement account types, and revocable trusts – and typically only tracks and reports on publicly-traded securities. Which makes them good enough for the large number of clients whose financial situations fall mostly within those account and investment types, but also means they can fall short for clients whose ownership and investment structures get more complicated.

And so another tier of software has arisen, including tools like Addepar and Black Diamond, that's specifically geared towards advisors of UHNW clients, whose situations involve, for example, illiquid and nonpublicly traded alternative investments, business and real estate interests, and mazes of layered trust or LLC structures. Which eliminated what was often a great deal of manual effort that UHNW advisors at RIAs, private banks, and family offices needed to put into calculating performance, tracking capital calls, managing liquidity, updating balance sheets, and many of the other functions that often aren't supported by software made for advisors of "merely" affluent or HNW clients.

And this month, there's news of another entrant into the "UHNW Platform" category, as Advyzon has announced it will be launching a new platform (dubbed "Auria") to provide portfolio management, performance reporting, and CRM capabilities specifically for advisors of UHNW clients.

At its core, Auria, like the other UHNW platforms, aims to pull together the many disparate, difficult-to-track data points that compose UHNW's financial lives into a single interface, tracking traditional investments alongside alternatives like private equity and real estate and visualizing what are often complex ownership structures divided among multiple family members. Which makes it likely closest to Addepar among existing options, albeit with an additional layer of CRM and asset visualization. Somewhat ironically, the functions that Auria is advertised to perform are not all that different from what Advyzon's core product does – which again goes to show how what really separates technology for UHNW clients is not so much what the technology does but rather what kinds of assets and ownership structures it's designed to handle.

All of which has interesting implications in an environment where we're hearing a lot about the "democratization" of asset types like hedge fund, private equity, and private debt, which platforms like CAIS and iCapital have increasingly allowed for advisors to distribute among even their non-UHNW clients. Because if alternative investments can be held and tracked on a centralized, digital platform that integrates with existing "mainstream" portfolio accounting systems, the ability to include such investments may no longer prove to be as big of a differentiator for platforms like Addepar.

Meanwhile, to the extent that advisors do begin to integrate alternatives within their non-UHNW clients' portfolios more often, their existing systems may still need to step up their capabilities at least somewhat in order to support performance reporting on non-publicly traded assets. In other words, we may be seeing the beginnings of a convergence between UHNW and non-UHNW systems, where providers like Addepar adjust their offerings and pricing to accommodate alternatives going "downmarket", while at the same time providers like Advyzon start to bring their offerings upmarket to support the more complex investments that advisors are increasingly offering their clients!

For Advyzon, which has already built the CRM, document management, and client portal aspects of the advisor tech stack into its core platform, adding additional capabilities for managing and reporting on alternative investments makes sense: not only as they seek to expand into the market of advisors serving UHNW clients (where there is both less competition with fewer all-in-one providers serving that space, and less price sensitivity among UHNW advisors who generally run at higher margins than other advisors), but also because they may well need to include those capabilities into their core product to serve the greater number of non-UHNW advisors allocating to alternatives in their clients' portfolios.

Ultimately, there will still be a need for "pure" UHNW platforms, since the ownership structures, tax reporting, dynastic planning, and other aspects of UHNW planning still remain distinct enough from non-UHNW clients' needs to justify a platform that can integrate them together. But from a pure investment management and reporting perspective, it seems that the gap between what's needed for UHNW clients, and what's needed for "mere" mass affluent and HNW clients, is shrinking. So the question going forward is whether other "mainstream" systems like Orion will feel pressure to integrate more nontraditional investment reporting into their systems, and if so, whether they'll take Advyzon's lead in introducing a specialized UHNW offering – and in turn create more competition for the likes of Addepar and Black Diamond in the heretofore relatively insulated segment of UHNW platforms?

SmartAsset Introduces A New Prospecting Tool To Help Advisors Better Market To And Convert The Leads It Generates

Marketing is a notable challenge for many financial advisors, with industry benchmarking data consistently showing average organic growth rates struggling to surpass the mid- to high single digits each year. And the difficulty has only grown over the past decade as independent RIAs have proliferated, and signifiers like fiduciary status and fee-only compensation models have largely ceased to be effective for differentiating one firm from all the others. Which has led to the rise of numerous paid lead generation services like SmartAsset, Zoe Financial, and WiserAdvisor that gather inbound leads from retail clients and sell their advisor customers the opportunity to sign those leads on as clients, with the advisor generally paying the lead generation service either a flat fee for each lead sent or a percentage of revenue from those that are converted to clients.

The caveat, however, is that any lead sent to an advisor from a lead generation service is still "just" a lead: It's up to the advisor to follow up with them, establish that they are a trustworthy provider, and convince them to become a client. And for advisors who do get a meaningful number of leads via paid services, it becomes incredibly important to have a way to scale their follow-up and sales process, to ensure that the advisor can at the very least call back every lead sent their way, and ideally to set up a repeatable process that guides and nurtures a lead through the sales funnel until they ultimately become a client.

This is the reason why it's often the biggest RIAs that have the most success with paid lead generation services, since they have the resources to hire dedicated sales development staff who allow them to respond to and nurture a large number of leads, which then translates to a lot of those leads ultimately becoming clients. Not that there's any reason why solo or small ensemble firms can't have success with paid lead generation (and some certainly do already) – but given that (1) handling a sizable volume of leads requires spending time and energy on marketing to those leads; and (2) not wanting to spend time and energy on marketing is why many advisors pay for lead generation in the first place; smaller firms are more likely to struggle with effectively turning paid lead generation into consistent client growth when their lead advisors can't or don't want to devote the time to marketing to those leads.

It's notable, then, that SmartAsset, one of the most popular paid lead generation services for advisors, has introduced two new prospecting tools in the form of an "Activity Report" and "Pipeline Report" that respectively aim to help advisors better track their efforts at following up with leads, and measure their success in converting paid leads into clients (which is important because, as the saying goes, "you can't manage what you don't measure"). Which comes on the heels of SmartAsset's launch of a new "Advisor Marketing Platform" (AMP) earlier this year to help advisors automate their marketing campaigns towards leads, as well as a "Business Development Startup Kit" targeted specifically towards newly-launched RIAs.

From an advisor perspective, SmartAsset's introduction of a suite of new prospecting and marketing tools over the past year clearly aims to address what has been a longstanding gap between solutions meant for the "top" of the sales and marketing funnel (i.e., lead generation services that are only effective as far as the advisor can nurture and convert those leads) and those aimed at the middle and bottom of the funnel (i.e., marketing tools that can nurture prospects and bring them closer to conversion, but require a steady stream of inbound leads in order to have anyone to market to). Which makes sense for SmartAsset, who can now claim to have a more complete "front-to-back" marketing solution than most existing lead generation or marketing platforms (and one that's fully integrated to marketing towards paid SmartAsset leads, rather than requiring the advisor to patch together multiple solutions). Effectively making SmartAsset a more ‘turnkey' lead generation system than just a "pay for the leads and you should know what to do with them yourself" approach.

At the industry level, what's striking is how low the bar is for innovation in marketing for financial advisors, such that a lead generation service rolling out a tool that simply tracks the number of leads whom the advisor called back and how many of those prospects were converted to clients rates as a significant improvement over the status quo. But that's just a sign of how fundamentally not wired for marketing many advisory firms are, as few advisory firms really have a robust dashboard of marketing KPIs to track their results and determine where to make improvements. Which, in the end, is good for providers like SmartAsset: By introducing new products to automate more of advisors' marketing funnel, they can help advisors more efficiently convert the leads SmartAsset sends them. And when it takes less of an advisor's time to convert each client, and the success rate increases, that means they'll likely be willing to buy more of (and pay more for) the prospect leads that SmartAsset wants to sell them.

Ultimately, though, SmartAsset's evolution is also an interesting reflection on the advisory industry at large, and how challenging it is to help advisory firms grow organically. Even when SmartAsset developed a system to provide a steady lead flow to advisors, SmartAsset still had to acquire and build its way to a more holistic marketing funnel just to help advisors be successful with the leads they were receiving. Which raises the question more broadly of the potential limitations of selling marketing technology to financial advisors (who struggle to know how to use it), and whether the future of advisor marketing will increasingly be about turnkey systems or more "done for you" services than selling advisors marketing tech they can (or perhaps, can't) use themselves?

AI Note Taker Zeplyn Raises $3M Of Seed Capital, But Will Differentiating On Accuracy Be Enough To Break Into The Meeting Note Market?

The last two-plus years have seen an explosion in the number of AI-powered note-taking tools, which went from being an essentially nonexistent category prior to 2023 to having no fewer than 9 different advisor-specific AI notetaking tools on the Kitces AdvisorTech Solutions Map today (including Jump, Zocks, Finmate AI, Focal, Filenote AI, FieldKo, Zeplyn, Thyme, and Mili). And those are just the tools that are specific to financial advisors: In addition, there are several popular "generic" tools like Fireflies, Fathom, and Zoom's meeting notes function that also see substantial adoption among advisors. All of which reflects the pure usefulness of a tool that can, by ingesting and analyzing the meeting content and automatically outputting a meeting summary and follow-up tasks, save a substantial amount of the time advisors need to spent on meeting preparation and follow up (which Kitces Research on the Financial Planning Process found to be around 1 hour each per meeting).

But for all the interest and the proliferation of new solutions in AI notetaking, it isn't clear what the future holds for the category. For starters, one of the biggest open questions is how many advisors are even willing to pay what's usually $100 per month or more for a standalone AI note-taking tool, when there are options like Zoom's note-taking tool that are already embedded within its meeting software that they use. And while the advisor-specific options do have an advantage in that they integrate with the CRMs like Wealthbox and Redtail that advisors commonly use (allowing them to automatically sync meeting notes to the client's file and trigger tasks for follow-up actions), the challenge is that most AI meeting note tools still don't embed all that deeply into advisors' workflows – in part because workflows vary substantially from advisor to advisor, which makes it extremely difficult to solve for every advisor's workflow needs with a single API integration.

And so it's notable that Zeplyn, an advisor-specific AI meeting notes provider, has recently announced it has raised $3 million in seed capital as it works to gain adoption in its increasingly competitive category.

What's notable about Zeplyn is that, in an environment where other AI meeting note tools have often sought to differentiate themselves by proving how much "more" than a meeting note tool they can be – from generating one-pager meeting prep documents from CRM records to having a chatbot function to ask questions about the client using the information from previous meetings – Zeplyn has instead put more emphasis on the accuracy of its meeting data than on the number of different functions it's capable of. Which makes sense at a certain level: Without an accurate transcription of the text coming out of the meeting, the amount of time the advisor saves in follow-up tasks is immediately eroded by the time spent correcting the AI's mistakes. And at a time where there's been a substantial "unbundling" of tools in AdvisorTech owing to many advisors' preference for picking the one tool that works best for them rather than buying an "all-in-one" platform with multiple solutions of varying degrees of usefulness, there's value in offering a tool that does a few things very well instead one that does many things with less of an emphasis on how well it does them.

Still, it isn't clear exactly where platforms like Zeplyn go from here. The difficult reality is that, with half or more of advisors likely to keep relying on general-purpose AI meeting note tools like Fathom or Zoom, there isn't likely to be enough of a market for 8 different standalone advisor-specific tools all performing the same core function. And at the moment anyway, Jump and Zocks appear to have a substantial lead in adoption over the rest of the field, which puts the other competitors in the difficult position of choosing whether to continue on the same path and try to catch up with the leaders, seek to be acquired by another platform (e.g., by a CRM provider that wants to integrate AI meeting notes within its own software), or pivot to another use case for its AI models.

And so ultimately, the question going forward will be how well Zeplyn's emphasis on accuracy will resonate with advisors – or perhaps with a CRM platform that might want to offer its own AI meeting note capabilities without needing to build it from scratch. But in either case, it probably makes more sense for Zeplyn to position itself as the tool that does the best job with capturing reliable meeting notes, than claiming to be the one that can do the most with those notes, since while not all advisors (or all CRM platforms) are going to want to integrate AI meeting notes into their workflows in the same way, they all presumably want to make sure the notes that they feed into those workflows are accurate to begin with!

Advisor CRM Launches As The Latest Solution Trying To Raise The Game Of The CRM Category

For almost as long as there has been CRM software, there has been a relatively low bar for what it needs to provide at a base level. Owing largely to CRM's roots as essentially a glorified Rolodex of client names and contact information, advisors haven't had exceptionally high demands for what it was capable of: as long as the software made it fairly easy to enter, retrieve, and update client information, that was largely considered good enough. Any additional features, like workflows, data integrations with other software, or compliance archiving, were essentially icing on the cake.

For that reason, even though CRMs are likely the single most-used technology for advisors – according to the most recent Kitces Research on Advisor Technology, over 94% of advisors use a CRM solution of some kind – advisors generally haven't been willing to pay a lot for it when its base function is essentially as a warehouse for client notes and contact information. For example, Redtail and Wealthbox, which together make up around half of the market for CRM, charge $39/month and $59/month per user respectively for their basic solutions. And while it's certainly possible to spend significantly more for a solution like Salesforce that can be fully customized to support the needs of bigger teams, that's traditionally only been the case for firms that are large and complex enough where the additional workflow and task management functionality really is necessary.

There's been growing evidence, however, that even at smaller firms, some advisors would like to see more features in their CRM that can help them run their business more efficiently, even if they'd have to pay more than the traditional $40-$60 per month range to get them (but not so much that they'd want to pay nearly 10x more to transition to Salesforce). The same Kitces Research on Advisor Technology showed advisors rating their satisfaction with their current CRM systems at "only" a 7.6 out of 10 on average, suggesting that advisors find their current systems somewhat limited in their capabilities – but until quite recently, the lack of a "middle" option between the Wealthbox/Redtail price point and Salesforce has left them feeling stuck with their current solution.

More recently, a number of solutions have cropped up to fill that gap in the marketplace. Advisors can use Hubly as an overlay of their CRM for workflow and task management capabilities, or Salesforce overlays like XLR8 and GBST WealthConnect that provide an out-of-the-box product with Salesforce-level functionality. Even more recently, Quivr launched as a new standalone CRM with workflows and process automation at its core, which made enough of an impression to win the "Advicer's Choice" award at the 2024 XYPN AdviceTech Competition. With all of these, advisors can end up paying what might be 2-3x the cost of the basic tier of Wealthbox or Redtail – but since those don't cost all that much to begin with, the price increase ends up being worth it for the upgrade in functionality it represents.

In this vein, it's notable that this month saw the launch of a new CRM for advisors, called simply Advisor CRM. Founded by two financial advisors from the RIA Fusion Capital Management (which was also the software's first user), Advisor CRM aims to add even more features to the core CRM functions, including not only workflows and task management but also digital account opening, trading management, and an AI-powered writing aid for drafting follow-up emails to clients.

For advisors, Advisor CRM provides one more option among the newer generation of CRM providers that aim to be less of a warehouse of client information and more of a true operational hub for advisory firms. Notably, the breadth of different functions that Advisor CRM purports to offer makes it almost similar to an all-in-one platform like Advyzon, which started as a portfolio management and reporting tool but added in features like CRM, billing, and a client portal. Although it's also worth noting that recently the tide in the AdvisorTech marketplace has been shifting away from all-in-one solutions, with companies like Orion and Nitrogen that invested huge sums into building or buying multiple solutions to package together having now begun a process of substantively unbundling those offerings to be sold separately. Which is a reflection of the simple fact that the more different solutions a provider bundles together, the less likely it is that all of them will actually be appealing enough to any given advisor for them to want to buy the entire package.

Still, the fact that solutions like Advisor CRM and Quivr are cropping up with a new vision of the role and functionality of CRM in advisory firms' operations signals that there's enough discontent among advisors with their existing systems for the marketplace to take notice. And the fact that both Advisor CRM and Quivr were founded and created by financial advisors provides further evidence that there really could be a market for a CRM that does more than the current options – or put differently, if multiple advisors have been so dissatisfied with the solutions available that they took the trouble to literally build their own new systems, there are likely many more out there who feel similarly, but would rather pay someone else to build it for them. Which goes to show that there's ample room for disruption in the CRM market for a solution that can hit on the right combination of price and functionality.

Ezra Group Launches A New Product Integration Portal To Improve The Transparency Of How Good AdvisorTech Integrations Really Are

As financial advisors become increasingly reliant on technology to run their practices, and buy their preferred "best of breed" solution in each of the key categories of their advisor tech stack, there's more and more need for integration between their different software solutions. Smooth integrations between software can make the difference between a firm that's actually made more efficient by technology, and one where the time savings are eroded by the need to manually re-enter and vet and reconcile data across a number of different tools. And as evidenced by the most recent Kitces Research on Advisor Technology showing advisors being more satisfied on average with each of their individual technology tools than with their tech stack as a whole, there's still room for improvement in how well different solutions integrate with each other to make for a smoothly running whole.

Part of the challenge is that, while many technology vendors tout their integration capabilities, the reality is that not all integrations are created equal. Vendor A might say they're integrated with Vendor B – but if the extent of that integration is a "single sign-on" (SSO) capability that doesn't actually do anything or allow any data to flow from one to the other, it doesn't actually solve any of advisors' real integration and workflow challenges. Much more useful for advisors are integrations that actually move data from one system to another, or are bidirectional (where the information in one system is automatically updated in the other system, and vice versa). And, ideally integrations can allow an action in one system to trigger an action or workflow in another system (e.g., an advisor updating their client's address in their CRM pushes that update into their portfolio management system, which then triggers a change-of-address form for the custodian to update the address in their systems).

The upshot is that while most technology vendors' websites will list the other AdvisorTech solutions that they integrate with, they don't go into any detail about the depth of each integration. Which then makes it hard for advisors to evaluate how a given piece of technology will integrate with the other tools in the advisor's tech stack in particular, or to compare its integration capabilities with any other tools the advisor might be considering.

Ezra Group, a consulting firm that advises RIAs on how to build their tech stacks, sought to solve for these challenges by developing a proprietary "Integration Score": A rating on a 10-point scale of an individual software solution's ability to integrate with other technology, taking into account data points like the number and depth of integrations to other popular AdvisorTech tools, the availability of APIs to other developers, and data privacy practices (e.g., SOC 2 certification). To date, Ezra Group has scored over 500 different AdvisorTech solutions, which are publicly available on its website (as well as being included on vendor pages in the Kitces AdvisorTech Directory). But up until now, Ezra Group has needed to do all the leg work itself to collect the information from technology providers needed to calculate their Integration Scores – which meant that, in an environment where providers are constantly changing and updating their integrations, it was a challenge for them just to keep the scores on existing technology up to date, let alone tracking and scoring the steady stream of new technology that comes along every month. Resulting in Integration Score data for advisors that could turn out to be ‘stale', and limiting the ability of Ezra Group to go deeper on its integration scoring analyses.

So this month, Ezra Group announced the launch of a new Product Integration Portal, where vendors themselves can log in and update their products' integration information any time there's a change to one of their integrations. Which greatly cuts down on the amount of time needed for collecting and entering Integration Score data, and in turn opens up more time for Ezra Group to validate vendors' submissions and ensure the accuracy of each vendor's score on their website, while greatly expediting how quickly new integration capabilities are expressed in an updated Integration Score.

For advisors, the main takeaway is that the scores listed on Ezra Group's website and the Kitces AdvisorTech directory are more likely to be up-to-date and reflective of providers' actual current integration capabilities. And with a more scalable way to collect the Integration Score information, Ezra Group can focus on building out more tools to help advisors improve on the integration of their tech stacks, such as the ability to map out integration capabilities between multiple vendors to see how choosing one solution or another affects the integration capabilities of the entire tech stack.

At an industry level, the implication is that, the more transparency that exists into the quality of individual providers' integrations with each other, the less incentive there is for technology vendors to build "Potemkin" integrations that might look good on a website or sales proposal but don't serve any useful purpose for the advisor using them. With independent entities like Ezra Group starting to do objective evaluations of the breadth and quality of a product's integrations, it puts more pressure on vendors to build integrations that really make a difference (since it isn't a great look for a vendor that lists a whole swath of integrations on its website to have a low score indicating that most of them are really for show). Which in turn means vendors that do the job building the most meaningful integrations will be better recognized and ostensibly rewarded for their work (by advisors that seek out their validated-as-better integration capabilities).

Ultimately, in an era where some notable providers (e.g., Nitrogen and Orion) have begun to unbundle their offerings in recognition of the reality that many advisors would prefer to use individual "best-of-breed" solutions instead of a single "all-in-one" platform, it will become all the more important for different AdvisorTech solutions to have high-quality integrations with one another. Having an objective and accurate scoring system, then, is a net positive for the industry, as more transparency in the integration landscape will give advisors more ability to compare tools and pick the one that fits the best in their own tech stack. Which holds vendors accountable in a positive way, by ensuring that those who build a high volume of shallow integrations don't hold sway over those vendors who work hard to build useful integrations that really move the needle for advisory firms, as Ezra Group's Integration Scores helps the best integrators to  get recognized among advisors and in the industry at large.

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In the meantime, we've rolled out a beta version of our new AdvisorTech Directory, along with making updates to the latest version of our Financial AdvisorTech Solutions Map (produced in collaboration with Craig Iskowitz of Ezra Group)!

So what do you think? Will TradePMR's advisors and their clients be comfortable with having Robinhood as their custodian? Will more support on nurturing and marketing to prospects make paid lead generation a more valuable service? Is it better to have the AI meeting note tool that can take the most accurate notes, or the one that can do the most with the notes it takes? Let us know your thoughts by sharing in the comments below!