Advisors want technology that will give them a comprehensive view of a household's assets so that they can rebalance and deliver goals-based guidance more effectively.
Fiserv Inc. of Brookfield, Wis., has announced a plan to provide such a solution.
"We are going to be delivering the industry's first unified managed household technology that supports all the technology components in the front, middle and back office," Cheryl Nash, Fiserv's senior vice president of strategic marketing and product development, investment services, said in an interview.
The technology is aimed at advisors, broker-dealers, sponsors and others, Nash said. Fiserv has been working toward the solution for some time, she said. It reached a milestone in June of last year, with its acquisition of AdviceAmerica, a provider of integrated financial advice solutions to broker-dealers, independent advisors and insurance companies.
The deal broadened Fiserv's reach into front-office applications including financial planning, retirement income planning, customer relationship management and tools for proposal generation and plan monitoring. Last month, Fiserv began marketing AdviceAmerica's solutions as Financial Advice Solutions from Fiserv.
This summer, Fiserv plans to implement a solution that will move managed accounts using mutual fund advisory and exchange-traded funds on to its existing unified managed account platform. The UMA solution now supports third-party managers; Fiserv says the addition of mutual fund advisory capabilities will add functionality to meet the needs of mutual fund wrap programs, including rebalancing across multiple asset classes and making systematic contributions and withdrawals.
The UMA platform will operate as a product-agnostic platform; multisleeve accounts will work as they do currently, and traditional separately managed accounts, ETFs and mutual fund advisory accounts will be set up as a sleeve. The platform will give clients the ability to seamlessly transition from single- to multisleeve products, according to Fiserv.
And later this year, Fiserv plans to converge its front-office tools with its middle- and back-office technology. The initiative will integrate its financial advice solutions, portfolio management and trading solutions and performance reporting solutions on to the company's unified wealth management platform. The platform is to provide a single system where advisors can plan, trade and report.
The convergence of back-, middle- and front-office technology is essential to offering a true unified managed household solution, according to Fiserv.
A comprehensive unified managed household technology solution is important to advisors because it promises to raise the sophistication of their services, according to Alois Pirker, senior analyst at the research firm Aite Group LLC of Boston.
Today, "investment management decisions are taken on a single-account level at best," Pirker said. Technology of the sort that Fiserv is developing can help advisors make more informed decisions, even if they aren't involved with 401(k)'s and other investment accounts within a household, he said.
"Take rebalancing retirement assets," Pirker said. A household "might have a couple of different retirement accounts, but one retirement goal."
Being able to coordinate accounts, even "outside" accounts, plays in to a developing trend in which investors are more interested in meeting life goals rather than beating benchmarks, he said.
At present, unified managed household solutions typically don't encompass the full range of back-, middle- and front-office technology, Pirker said. Citigroup Inc.'s two-year-old OpenWealth platform and Fiserv's current effort are steps in the right direction, he said. "Slowly, we're getting there," Pirker said.
Nash said advisors' demands for "householding" abilities and goals-based investing are behind its current effort.
"We are every much aligned with the vision of managing your household against a goal or a strategy," she said. And being able to track the goals of multiple accounts provides "a much better view of where you as an advisor need take your" client, Nash said.
Fiserv said its convergence is a crucial building block for a solution that can provide advisors with holistic financial management capabilities for all assets and liabilities of multiple individuals within a household. Advisors will be able to integrate and illustrate investment strategies that take into account the assets of both spouses, across multiple accounts, financial institutions and asset types from qualified retirement accounts to savings to real estate.
Fiserv's solution also plays into a postcrash desire for simpler financial planning tools "versus a comprehensive 60-page financial plan," Nash said. "We're delivering a much more simplistic financial plan, where the advisor and client can sit down and really understand in 15 minutes where they need to go."
