[WealthTech Today] BridgeFT Launches WealthTech API

BridgeFT Launches WealthTech API

BridgeFT launches wealthtech-as-a-service platform. I found this to be interesting news considering how much work we’re doing at Ezra Group on integrations, API’s, and integration scoring.

BridgeFT was launched back in 2016. They were originally called Bridge Financial Technology, and they were a portfolio management software company for small RIAs. They originally built their software on top of the Fiserv APL platform, which is now part of InvestCloud. That was their core platform and they built some user interface on top of that, they were targeting small RIAs. They got a little traction, and then they started building out some of their own technology around performance reporting and billing, which they called Atlas. And I think their goal was to be a low cost alternative to vendors like Orion. They got about 250 clients, but never really got enough traction on the platform to really make it.

In February 2022 they hired Joe Stensland as their CEO and Joe has a long history in the industry. We were working for competitors back in the 1990’s when I was working at ADP Brokerage and Joe was working at Thomson Reuters. He launched the Thomson One market data platform. I was working at ADP brokerage at the time that we had our own market data platform that competed with Thomson One.

Joe then went to Scivantage he was Head of Product and Head of Sales he was there 13 years. Scivantage had some interesting products. They had an investor trading portal it was very popular called Wealthsqope. It sold to a lot of mid sized broker dealers and regional banks. And they also had a product called MaxIt for cost basis reporting 13 years until Refinitiv bought Scivantage in 2020 then Joe became the Head of digital investor at Refinitiv and then Feb 2022, he was hired as the CEO at BridgeFT.

Joe looked at the business with a critical eye and saw that the wealth management,  the performance reporting and fee billing software really isn’t growing. There’s too much competition, but we’ve got some great API’s and let’s really go all in on becoming that type of company, which I think is a great idea. Wealthtech API’s, they’re calling it wealthtech-as-a-service platform.

According to the press release, they plan to offer a single open API combining trade-ready data from multiple custodians, as well as analytics and other applications that are powered by the data. That’s the important part for me the other applications and the analytics, because there are a lot of API’s out there. A lot of the bigger firms have API’s. But when you get to the analytics and the other applications, that’s where things start to get interesting.

And they aim to be an infrastructure provider for a variety of firms. Great. We need that. We need more companies that do that type of thing. We are seeing some of the other bigger players also announcing similar initiatives. Orion announced their partnership with Amazon, moving all their data onto their Redshift platform and opening up their data via API’s. So that’s going to be a big move for them and Envestnet also announced their own data application data analytics platform, think it’s called Wealth Data platform, which we know a lot about, and they’re partnering with FNZ, as I mentioned earlier, to launch that in overseas markets. So like there’s more and more competition around these open API’s open data platforms.

Another comment as you make this transition to enterprise beyond just the RIA market, so they’re moving beyond RIAs. We have a number of firms looking at looking at TAMPs and investment product distribution players and other large firms. That’s a great it’s a great way to do that. It’s just too much competition in the RIA market for portfolio management, reporting, billing, all these these very core applications that become commodities. It’s very hard to make money. There’s just too many firms out there. So they’re gonna be offering the trade ready, accurate data from multiple custodians through a single API, including Schwab TD Ameritrade, now the same Fidelity, Pershing, Shareholder Services Group, as well as others. Another interesting point they mentioned they’re gonna be doing integrations with account aggregation providers Plaid for other types of fees. I like to see other aggregation providers become an aggregator of aggregators. If I could connect to BridgeFT and get an aggregated feed from Plaid/Quovo, Yodlee, and ByAllAccounts and accumulate and other other types of aggregator you can bring the all that data into one place, and maybe then clean it up with it. Show me which vendors had the best data from which particular financial institutions that will be also really useful.

There’s some buzzword bingo going on in the press release. So while I do like this idea that some things we want to just cut through some of the the jargon, “this wealthtech API represents the first platform to deliver trade ready accurate data from multiple custodians to a single API”. No, it’s not the first platform doing that all the major vendors who have multi custodial wealth platforms have data from a single API. Now, they may not have all the data. In fact, they probably have a very small subset of their data, which they’re expanding, there’s more and more data being made available all the time. And we definitely have some issues with some of the vendors not offering enough of custodial data through the API’s. But not the first platform to do this. We’re happy that they’re doing it.

Let’s see another thing from the press release “removes virtually all need for manual recon”. The word virtually jumps out at me. There’s still going to be a lot of recon. Now. They can automate it. We always like automating recon out of the decades of our experience here, recon is just always a major thorn in the side of everybody when it comes to managed accounts. There’s always some issues going on with recon. Every vendor has a recon tool that tries to automate it, and there’s always problems. So maybe for basic accounts, they can automate a lot of the Recon but when you get to things like SMAs, managers want their own their own data for recon, and especially UMAs that’s a lot more complicated. You’re not going to live in all the manual recount for a UMA. You require data from the wealth platform for sleeve tagging, sleeve performance, sleeve netting, billing attribution is a problem, filtering out dividends and interests, interest when handling ACATs, money journaling and none of the counselors, so many other issues, but if they can get rid of 80% of the manual recon I’d be very happy to see that.

Providing data enrichment to deliver powerful performance calculations, insights and analytics across all accounts don’t matter the source. Also good stuff. I think this type of service, this wealthtech as a service would be great for startups. So firms that are coming into the space and need to scale quickly, and don’t want to have to build all this connectivity to custodians, especially and we’ve done this a number of times for firms, all the files that custodial files that come in the amount of data that you have to worry about not to have a security type special wedding into bonds, and preferred stock and things of that having to deal with it. And the corporate actions. Well, I mean, just looking at corporate actions, it takes a long time to just understand and build that out and make sure you’re handling it properly. So if they can do all that, that opens up a lot of opportunities for firms to jump into our space, offering innovative solutions that they can bring up and not have to worry about how the custodial data gets sent. So look to see what they’re doing at Bridge

By Craig Iskowitz