What should RIAs expect – and demand – from their cloud platform?

As advisory firms seek increased operational and cost efficiencies, many wealth technology providers with on-premise, desktop platforms have extended them to cloud applications in recent years. A strong preference towards low-impact, small footprint cloud-based or software-as-a-service (SaaS) solutions is understandable. Throughout the pandemic, the importance of supporting remote workforces elevated acceptance and adoption of cloud solutions.

However, the success of cloud initiatives in the wealth management industry has varied significantly. Some cloud-native providers have closed shop while others faced significant challenges with their cloud rollouts and migrations. How can RIAs and wealth managers reduce migration risk and ensure a future-fit path to the cloud? We see four main qualities emerging from providers with the most effective cloud initiatives.

1. Clear Strategy & Roadmap

Providers that rushed to expand their offerings to the cloud experienced more challenges than those that were more strategic and methodical with their rollouts. Solutions that are best-in-class, feature-rich, and highly advanced with many integrations should take a proportional and strategic approach to rearchitect certain functions for the cloud to achieve maximum performance, reliability and scalability.

When considering a cloud edition, it is crucial to have a clear understanding of the provider’s strategy and roadmap for all of its solutions. For example, is there common code across the cloud and desktop versions, including integrations? If the answer is yes, then that means greater efficiency for ongoing development through both models. This gives firms more choice in delivery as they grow and evolve.

2. High Level of Parity

An initial cloud expansion should provide a majority of its original desktop version’s capabilities, workflows and integrations. That high level of parity should not only be present in the near term; it should be a long-term commitment.

Once a technology provider launches a cloud version, it is not unusual for development efforts to diverge favoring one model over the other (usually the cloud version), causing long-term disparity and problems down the road. While cloud is now gaining more widespread adoption in the wealth management industry, a provider’s solution strategy should also account for potential change down the road as firms grow organically or through mergers and acquisitions.

For example, a firm with $500 million in AUM may change its infrastructure policy that may not necessarily favor the cloud should it merge with other firms to become a $5 billion firm, or a new parent company may impose its own. Therefore, advancing both the desktop and cloud versions of the platform in tandem allows firms to shift seamlessly with their IT strategy while continuing to offer choice in delivery model.

3. Cloud-Enabled Innovation

While a high degree of parity between the desktop and cloud solutions is crucial, so is the provider’s caliber of expertise in understanding the unique benefits of the cloud, and a strong focus on leveraging those advantages to further innovation, from the user interface to detailed workflows.

One example is providing sophisticated order management and rebalancing capabilities in the same platform to enhance operational efficiency and risk control – a concept conceived in the cloud environment that can be applied in full parity across delivery models. A centralized trading infrastructure with efficient workflows for order review sets, trade blotters, and order archives can make a huge difference in an advisor’s effectiveness in taking immediate action on model drifts from anywhere in the system.

4. Scalability

Although attractive to smaller firms due to reduced infrastructure and staffing costs, cloud solutions should be expected to scale to support the firm’s growth for many years to come in terms of users, accounts, multiple custodians, and complex investment strategies.

Fit for the Future

Fewer financial advisory firms today have a desire to manage technology in-house, while others face internal IT or resource constraints to support such infrastructures within their organizations. However, not all cloud solutions are equally created, developed or supported over the long term in the wealth management industry.

Too often, wealthtech providers fail to deliver on the promises of stability, innovation and scale – and the ability to truly improve front, middle and back-office operations. Many times, the very cloud solutions firms rely on are short-lived, creating unnecessary risk, cost and disruption for the firm.

We believe wealth platform providers with cloud offerings have a responsibility to help firms future-fit their businesses with a clear, uniform and strategic development approach across all delivery models, a strong commitment to innovation, and the ability to support any firm’s business continuity and growth trajectory.