The Hidden Risks In Wealth Platform Migrations

Sharat Priya is a Senior Manager in EY’s U.S. Wealth & Asset Management Technology practice, leading wealth platform modernization.

gettyThe best migration is the one your clients never notice. Clients should see the benefits, not the disruption.

​Wealth platform migrations rarely fail on conversion weekend. The cutover finishes, reports turn green and problems appear later once real activity begins. A tax lot shows the wrong cost basis. A sweep runs an hour late. An outside manager calls to ask why a trade file never arrived.

In my 22 years in wealth technology, I’ve found that the most serious migration risks are often the least visible. They’re easy to miss during testing and only show up once the platform is live. Knowing where to look makes the difference.

Copying records from one database to another is the easy part. The real work is transforming them so they behave accurately under the new platform’s business logic. That takes business transformation rules, and a business owner must sign off on each of these mapping/transformation rules.

Critical data includes client and account records, relationships, standing instructions, transactions, cash balances, positions and tax lots. Even a single tax lot migrated incorrectly can change a client’s realized gain or loss—and with it, their tax obligation.

Complex instruments should be looked at more carefully. For mortgage- and asset-backed securities, check original face, current face and paydown factors. For Treasury Inflation-Protected Securities (TIPS), confirm the index ratio and inflation-adjusted principal. For pooled funds, verify units and unit values. Then run accretion, amortization, inflation adjustments, interest and paydowns through a full cycle and compare against the old system. These errors don’t appear on day one. They appear on the first factor date.

Every legacy platform holds years of settings: firm and region structures, users and entitlements, fee rules and schedules, ACH and wire cutoffs, sweep run times, corporate action recipients and approval thresholds. Most of it lives in the system, and very little of it is documented anywhere.

An inventory of such configurations should be prepared and compared line by line. Then decide what carries over, what changes and what goes away. Get entitlements wrong, and users can see client data they shouldn’t, which is a regulatory problem. Miss one approval step, and a large transaction executes without sign-off.

Before cutover, map each function on the old platform to its place on the new one. Some map directly. Some need a workaround. Some get retired. The gaps that cause problems are usually small, such as a custom fee discount or a report operation run every month.

New capabilities need the same attention: data, configuration and testing before they’re switched on.

A new platform changes who does what. For example, in one of the implementations I’ve seen, back-office operations moved to the platform provider. That shift needs a close look at what the firm still owns and which teams, roles, features, reports and controls change hands.

Then map current and future ownership; a RACI matrix helps. When no one owns the exception queue, unresolved items pile up, and clients are often the first to notice.

Vendor manuals and job aids explain the platform, not the use cases and custom scenarios specific to your firm. They should be tailored to the firm and built for the new operating model.

Timing can vary, but they must be ready before go-live so that staff know the new process on day one.

Controls don’t migrate automatically. Each existing control needs to be reviewed and set up again on the new platform.

Inventory current controls, including those covered in SOC reports. Decide which ones to retain, which ones to retire and which ones the new platform handles differently. Then enable any new ones it offers. Engage risk, compliance and internal audit early.

Advisors use client statements and performance reports. Operations uses exception reports. Finance uses billing reports, and compliance uses regulatory reports.

List the reports each team uses currently, and check how the new platform will produce each one: built-in, from a data warehouse or not at all. Run important reports on both platforms until the numbers match. Client statements must be right from day one.​

Integrations don’t carry equal risk. I sort them into three groups.

Core integrations, such as CRM, financial planning and trading systems, shape the advisor’s working day. External manager integrations matter wherever a third-party manager holds investment authority. Models, trade files and position feeds must keep flowing, and many of these relationships are shared with the firm’s clients, so a broken feed quickly becomes a client conversation.

Market data is the third group. Know which vendors will supply pricing, reference and corporate action data, and whether those feeds come ready-made or need new build and licensing work.

For each integration, know the owner, the testing window and the client sensitivity. Engage third parties early; they have their own release schedules.

Sometimes, a firm changes its custodian, clearing broker or cash agent during a platform migration. Find this out early.

In such cases, the firm may need to plan for client communication, updated account agreements and new reconciliation processes. These scenarios may also need additional steps during the conversion event.

Reconciliation is how the firm confirms that its records match those of its custodians and cash agents. It needs to work from day one.

Decide what will be reconciled (positions, transactions and cash), how often and what differences are acceptable. Decide who owns it: internal operations, the platform vendor or an outsourced provider. Set clear rules and tolerances for how long a mismatch can stay open before it is escalated.​

A migration isn’t just a technology project. It changes how the firm operates. Firms that get it right give each area a clear owner and test through full processing cycles so that the platform is accurate and meets the firm’s objectives before the go-live decision is made.

The best migration is the one your clients never notice. Clients should see the benefits, not the disruption.

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