Getting the House in Order: Consolidating Investment Platforms in the Wake of the Department of Labor Conflict of Interest Rule

by William Trout, July 27, 2016
Industry Trends
North America


Operational efficiency has been an objective of banks and brokerage companies for some time, but the opportunity costs of maintaining multiple back office systems have made infrastructure investment a priority. These costs, which follow from the manual processes required to operate these legacy systems, carry negative implications from a servicing, scale, and risk management standpoint.

In the report Getting the House in Order: Consolidating Investment Platforms in the Wake of the Department of Labor Conflict of Interest Rule, Celent explores the degree to which the imposition of a uniform fiduciary standard upon retirement accounts and the emergence of robo advisory platforms have magnified the platform proliferation problem for incumbents.

The existence of multiple and often overlapping investments technology platforms for large firms has long been a drag on efficiency. Integration allows firms to downsize platforms that are burdensome from a compliance perspective, and invest in those that offer more favorable economics and greater internal control.

Transition is not just about products and systems, of course; it implies a whole new mindset. The ubiquity of consumer-facing technology and a shift in the regulatory pendulum from balancing the needs of investors to advocacy has made the client king. Relationship-based pricing, a simplified onboarding protocol, and real-time reporting have become wealth management table stakes. Firms must embrace this development, as well as the benefits that consolidation offers them.

“Collapsing multiple product lines and their technology underpinnings into a coherent whole reinforces client segmentation and helps expand the business to encompass new geographies, client populations, and product sets. Because the benefits of deploying a single technology chassis are not wedded to any particular platform, they are highly scalable,” says William Trout, senior analyst and author of the report.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary



Key Research Questions




Getting the House in Order



Platform Integration



Product Stacks



The Wirehouses


The DoL Rule


What Comes Next?


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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