Today, in a world that is changing more rapidly than ever, knowledge becomes the most valuable of all assets. For example, if an investor or financial advisor is able to find out useful information in good time, they can make worthwhile investments. With leaders of WealthTech companies, we discussed the API landscape and the APIs provided by their companies. Below, are some of their ideas and insights.
Aaron Schumm, CEO at Vestwell, said:
“In today’s technology landscape it’s crucial to be able to establish connectivity across any industry player that either brings value to you as your core business or to your clients and their core business.”
Open APIs provide a range of market data and information. Harry Temkin, Chief Information Officer at DriveWealth, spoke about the advantages that API users can access: “In the API today, we provide basic history performance. We can tell you how the equity of the account has changed, deposits, withdrawals, cash balances. You can pretty much build historic performance from inception of the portfolio while breaking out any cash infusions or withdrawals, aside from straight equity performance.”
Using open APIs in wealth-management platforms provides access to financial data and facilitates communication with banks. All sides of the process can benefit from it:
- Banks can increase their assets under management by providing financial infrastructure to new industry players, and improve own offering due to integration with new financial services.
- Wealth-management technology firms can create new products thanks to the increased availability and access to financial data.
- Investors can enjoy a better customer experience and access to all personal financial data in one app.
Lex Sokolin, Global Director Fintech Strategy at Autonomous Research, said,
“Since the financial advisory industry is very entrepreneurial and decentralized, advisors can choose any technology they want. And that in turn drives the diversity of FinTech solutions that are able to build software. As apps compete for similar functionality (i.e., rebalancing, CRM, planning), they are evaluated not just on features, but ease of use within the rest of the ecosystem. And similarly, platforms are evaluated both on native functionality, as well as third-party integrations.”
To be useful, open APIs should be valuable—i.e., backed by data or services that are in demand. According to Lex Sokolin, open APIs should be “a byproduct of modern software design methods, not a separate initiative that is scotch-taped to large humming engines from the 1980s.” Lex emphasized that CRM, client portals, planning apps, and data aggregation should have an easily accessible and permissioned infrastructure.
Greg Vigrass, President of Folio Institutional, believes that “a good API is one that should be clear and easy to work with, and should be very straightforward for a third party to make work with their systems.”
Folio Institutional
According to Greg Vigrass, President of Folio Institutional, the API strategy is a huge part of what they do. The company provides a full set of REST APIs that allows third parties to integrate with the platform and get the full functionality of the Folio site. This includes everything from account opening APIs to trading APIs, information on cash movement APIs, etc.
“The third parties that are interested in integrating with us via API are typically companies that are very conscious of the experience that they are trying to promote and provide to their clients. They want to be able to maintain and reinforce that, and still get the full functionality of the Folio platform.”
With a great number of third-party integrations, Folio tries to provide generic APIs so that they don’t have to support a number of custom installations. Greg said, “One of the things we’ve found is that if we’re able to simply support a generic set of APIs, we do so on a consistent basis. Then the quality is much higher. We’re not in a position of having to do a lot of customer one-offs. We simply provide the specification.”
To maintain a high standard of APIs, each one goes through a rigorous testing set. This allows Folio to provide clients with the current, top-quality version of the API set.
The primary consumers of Folio’s APIs are enterprises, larger institutions, and financial advisors. Greg explained, “We have a number of advisors operating on the platform who do so exclusively on an API basis. They’re trying to create and maintain a very unique experience for their users. From an enterprise basis, some enterprise firms that we work with, the API is purely an efficiency tool. For them it’s far more efficient to interface with us on an API basis. So there’re a number of firms that are taking maximum advantage of APIs, that do virtually everything on an API-driven basis.”
Folio Institutional is consistently expanding its APIs to provide API support for all the existing and new functionality. In the near future, tax optimization and training tools are going to be supported by APIs. “We have something called the Tax of Football, which is a patented inventory tax optimization tool. We will add APIs to support that. We also do a lot with model-based training. We’ll continue to add APIs as additional trading methodologies.”
Vestwell
Vestwell facilitates a lot of API integration. For example, the Riskalyze retirement solution was built by Vestwell and its partners. This solution is centered around a risk number based on a series of questions. The whole process is carried out with end-to-end (E2E) APIs.
The company also uses APIs to design retirement plans and structure legal documents required by their record-keeping partners.
According to Aaron Schumm, CEO at Vestwell, its APIs are created to work with its partners behind the scenes, and are not outwardly focused.
When working with other firms, whether on the advisory side or on the end-user portal, Vestwell’s API framework allows the company to provide data to its partners and receive data augmented by its partners’ experiences.
DriveWealth
DriveWealth provides the following sets of APIs:
- Front-end APIs that allow financial advisors to provide onboarding, execution, clearing, etc.
- Back-end APIs that allow financial advisors to monitor their customer activity from their own dashboard in real time.
According to Robert Cortright, CEO at DriveWealth, these sets of APIs allow advisors to create a sophisticated product and not have to worry about its implementation on the back-end. All they need to think about is the customer experience.
All their APIs have a JSON format, and are REST-based and SALT-secure. Harry Temkin, CIO at DriveWealth, commented,
“Every client is given a specific API key that they must use for each of their requests alongside of an additional session key that is granted on a per-session basis. That session key is only valid for a single user. It must be accompanied by a specific API key that we grant the customer, and so the combination of those two pieces across an SSL-encrypted request is how our clients engage with us at this point in time.”
DriveWealth is continually enhancing its API set based on customers’ requests and the products that they’re trying to build. Harry said, “We’ve recently built out a series of JavaScript APIs, JavaScript toolkits that make it easier for a customer who’s building a web-based application to work with our APIs.”
According to the company’s CIO, DriveWealth is servicing five to seven million API requests per day. “But the system is scaled in such a way that if we see a significant increase in the number of calls coming from the system, we can easily scale up and handle it.”
DriveWealth plans to build portfolio management APIs that will allow registered investment advisors (RIAs) to effectively manage their customers’ portfolios. Harry explained, “The APIs would provide a system whereby the client doesn’t need to do the rebalancing and drift factor calculations. We can provide that service, so effectively an API would allow a client to define the portfolio that they are providing to their customers, or a series of portfolios that the client is specifically assigned to. Through an API, RIAs tell the system how often they want to check the portfolio allocation, what the drift factor is that would trigger a rebalancing event, and a series of parameters around it. And the system would realistically do all of the rebalancing and trading for the customers.”
Hedgeable has created the 
The company offers E2E APIs that allow users to provide specific functionality (e.g., goal planning, goal investing, onboarding), automate certain actions (e.g., sending alerts, pulling marketing information), or build an application on top of the Hydrogen platform. According to Mike there are about 400 endpoints on the API set, and these may be used to build five different kinds of platforms, including wealth, investing, savings, wellness, and insurance.
Steve believes that custodial integrations are the most important aspect for any wealth-management firm because they give access to data. Before considering integrations with custodians, Trizic first looks at workflow, user experience, and ease of deployment.
Charlie Haims, Vice President of Marketing at 
Regarding challenges that MyVest faces when integrating with other systems, Charlie underscored the following: inconsistency in data models, a lack of readily available interactive online documentation, and limited testing and sandbox environments.
