Application programming interfaces (APIs) are no longer the gold standard in fintech. It’s not enough to simply use an API or build your own. You have to use the right one. It’s like if you were building a house. You’d use a slew of tools – a whole toolbox – not just a hammer and nails. When you use the right tools, the job gets done better and faster.

An API is just one tool you need as a financial advisor. And selecting and using the right API is crucial to your firm’s success. What criteria determines an API’s quality?  

First, keep in mind that an API’s essential function is to cultivate a robust client experience. It does this in two ways. An API:

  • Provides financial advisors with real-time data on clients, allowing advisors the opportunity to learn more about their clients to better serve them.
  • Makes technology integration easier, allowing the software that advisors use for services like investments and portfolio building to “talk” to each other.

As technology evolves and the trend to provide better client experiences continues, our dependency on APIs increases.  With so many available options for APIs, it’s important to vet technology vendors on the API they offer. For financial institutions like Carson, settling on an API isn’t an option – and it shouldn’t be for any firm or advisor. Just because a tech vendor has an API doesn’t mean it’s dependable.

Think of APIs like the electrical wiring in a wall. You don’t need to know much about it until something goes wrong. When you flip up a lightswitch, the overhead light turns on. When you plug in your charger to the wall, your phone charges. You expect certain results from these actions. But what if the light doesn’t turn on? Or nothing that you plug into the outlet works?

Now you wonder what’s wrong with the wires within your walls. When we talk about APIs for wealth management, it’s much the same. APIs – like electrical wiring – should be so dependable that users never give them a passing thought. They perform their duty so seamlessly they go unnoticed. When it comes to building and selecting technology at Carson, we also look beyond APIs at speed, depth and abundance as distinguishing factors. I encourage my wealth management peers to hold technology vendors accountable to those performance factors, especially when it comes to speed.

A user experience can look nice and that’s certainly a plus, but if it takes someone forever to log in, the good-looking design serves no purpose. Speed plays into experience. You should test and verify the speed of any application or software. You don’t know how fast a 4.12-second 40-yard dash is until you see it happen. Test the speed of the application’s functions, too. If the application involves calculations, how quickly can it churn out answers? If it involves logging on, how quickly can a user log on? Ask your prospective tech vendors to provide API documentation.

Follow up with more detailed questions about their APIs, like:

  • What API do you have?
  • Is it open or closed?
  • Can I have access to it?
  • Do you have proper licensing to redistribute data via APIs?

When you’re ready, reach out to a developer who knows what they’re doing. If you’re working with an outside third party, ask them to run through the documentation to make sure all critical pieces of technology are available. It’s a lesson I learned the hard way. I worked for awhile to build an API into a largely used CRM, only to find out deep into the documentation that the function I really needed wasn’t available.

And the time it would take for it to become available would be months or probably years later. You need to know what’s available – much the same way an electrician knows what’s available before they build circuitry to wire a house. Developing and vetting technology is expensive and time-consuming.

But you want your clients to stay on your site, not stray from it. Own their experience and don’t allow your clients to venture elsewhere. Fintech (specifically Advisor-tech) is about delivering an enriched and robust client experience – whether you’re building it, buying it or partnering with a firm who has it. And the way to achieve that is through APIs.

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