3 ways APIs are changing your wealthtech tools

You might not realize it, but you probably use APIs every day, whether you’re checking the weather forecast on your phone or managing the financial lives of your clients. And you’re about to use them even more.

“API” isn’t just another three-letter acronym in our industry. It is our future. It’s the key to the exciting advances and wealthtech platforms already underway. Fortunately, you don’t need to be a software engineer to understand how this technology is solving problems advisers are facing right now.


First things first: The acronym stands for “application programming interface,” and APIs let different pieces of software talk to each other. If you can execute a trade without having to mess with spreadsheets and trade files … congratulations, you’re using an API!

To be clear, API integrations are not new. Our industry, as usual, lags behind other sectors in tech adoption. We are so used to the API-enhanced ecosystems on our phones and consumer electronics that we take them for granted. But the ability to share information between completely different systems is powerful. Think of it this way: what do you get when you connect Google Maps, a payment processer and a messaging service?

You get Uber.

Some of the biggest names in financial services are building the wealthtech equivalents of Uber right now, and they’re using APIs to do it.

This is why Envestnet recently touted its MoneyGuideEngine, an API connection letting enterprise firms build their own planning tools with MoneyGuidePro’s tech under the hood. This gives firms direct access to what Envestnet’s Tony Leal calls “the boring stuff”: the algorithms and back-end code that hum behind your screens when you optimize Social Security filing strategies for your clients or execute trades on their behalf.

In fact, the platform builders out there are closing the door on wealthtech vendors who can’t offer API connections. This is a huge about-face compared to just a few years ago. These platforms have big goals, and they can’t reach them without APIs:

1. Build a wealthtech platform ready for the boomer retirement crisis. According to Pew Research, the rate at which baby boomers retired between February and November 2020 quadrupled versus the same time period the year before. Covid-19 has forced a wave of boomers into early retirement, and most of them have messy portfolios of uncoordinated assets, big families and complicated lives. There is no single wealthtech company out there that can get its arms around everything these boomers need to live their sunset years without fear of running out of money.

But an API-connected ecosystem? That’s a different story. Like Uber, these growing platforms connect separate technologies into something greater: financial planning, unified household management, portfolio management and reporting, all working together to rescue a generation of retiring investors who have never needed guidance more than they do now.

2. Test the waters for deeper wealthtech partnerships. It turns out that an API integration is a great trial run for enterprises with an acquisitive mindset. Orion recently purchased HiddenLevers, but it had years to see how the HiddenLevers API could be used, and to learn about the culture and client support that Raj, Praveen, and the rest of the HiddenLevers team had built.

Everyone wins with this approach to partnership. As an adviser, the last thing you want is for a perfectly good component of your tech stack to get acquired and bolted onto a solution that was never built to communicate with other services.

3. Create a tool kit that stands out from competitors. If every adviser is using the same tech and offering the same client portal template with the same user interface, how are clients supposed to tell them apart? The great thing about APIs is that platform builders take only what they need from their wealthtech partners. When you open Uber, it doesn’t bounce back and forth between Google Maps and the rest of its underpinning tech partners. To you, it’s just Uber.

APIs let platform builders pick and choose the tools they need to solve their unique challenges, and curate a user experience that is wholly theirs. Aside from the benefits in recruiting and retention, this means it is possible to create an ecosystem built from the ground up with your ideal clients in mind.

Our industry has only begun to scratch the surface of what API-powered tech will mean for advisers, their businesses, and the people who rely on them to reach their financial goals and take care of their families. After what feels like years of small steps, wealthtech innovation is at a full sprint, and it’s unlikely to slow any time soon.

Steve Zuschin is executive vice president of enterprise technology adoption at LifeYield.

The post 3 ways APIs are changing your wealthtech tools appeared first on InvestmentNews.

As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.

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