We sat down with Covisum President Joe Elsasser, CFP®, the author of, “The Tailored Fit: How Advisors Can Use Technology to Mass-Customize Financial Planning,” to ask a few questions about his newly released white paper.


Q: The white paper focuses on the shift in the financial services industry’s technology from open architecture to full integration. What is open architecture, and why is the industry shifting away from it?

A: For the past 10 years, financial advisors have looked for solutions that tout open architecture, which is the ability to connect multiple external systems to each other and transfer common information from one system to another without double-entry.  At best, it introduces some additional ease of use.  At worst, it creates the appearance of a unified system, but fails to reconcile inevitable conflicts between assumptions and methodology, which puts added responsibility for reconciling information on the advisors and not on the tech. Most advisors have several tools in their tech stack — it is almost impossible to get all of the tools' assumptions, or outputs, to agree. When they don't agree, you ended up with the inconsistency in your plans. 

Q: Why has it taken it so long to get here?

A: It’s extremely difficult to align the interests of multiple software companies, especially when they all have ambition to grow. Inevitably, the growth paths of these different software companies are going to step on the growth paths of other software companies. Nobody wants to equip another company to beat them. Also, software companies don't want to pay each other when they're competing in some spaces. But I don't believe they're going to have a choice because companies that decide to pursue full integration will win the battle because they'll eliminate inconsistencies.

Q: So ultimately, is this white paper about improving the user experience?

A: All the way down to the consumer level. Advisors want things to be easy. But when that “ease” costs them the client, it’s a different story. Then, advisors want things as easy as possible without sacrificing business. The two are very, very different. Ultimately, as more AI comes into this whole process, we're all going to be judged on the quality of our results, and if our results are inadequate, we will be replaced.

Q: You make a lot of comparisons in the white paper to the fashion industry – specifically ready-to-wear suits from Men's Wearhouse. Why Men’s Wearhouse? 

A: The first decent suit I bought was from Men's Wearhouse and I was blown away by the experience of going into the store and talking to people who knew what they were talking about it. When I walked out, I really liked the way I looked.

Men’s Wearhouse recognized if they created a unique experience for a specific customer and if they focused on the customer’s emotions – how they felt about their experience – then they could be more successful than their competition and create a niche business focused on the mass-affluent client. I think we have that same opportunity in financial services. 

Q: What’s the main message you want advisors to take from this white paper? 

A: Financial advisors can ask and ask and ask for open architecture and for more and more integrations, but ultimately, the standards of the industry mean that it's never going to meet your need. More of a broken system isn't going to fix it. Instead, you should be trying to identify your target market first and then identify the software that can be the hub of your business to serve that market. And that software needs to be focused on full integrations with other tools that answer complimentary questions for your target market.  Ultimately, we’ll likely see fewer, deeper integrations and niched software stacks win the next ten years.   

Q: So, instead of waiting for open architecture to solve these problems, advisors should instead look to integrated software stacks that work together seamlessly? 

A: Exactly. And Covisum does not have intentions of being that hub for all financial advisors — we build tools specifically to help advisors and institutions focused on the mass-affluent client in or near retirement. But ultimately, it is my expectation that other fintech companies will build targeted and fully integrated stacks for other niches. 

Looking for more? Download the full white paper now.