Wealth management firms are constantly challenged to improve client service, control costs and uniquely distinguish themselves, and one area they invariably rely on to accomplish these goals is technology.

Simply stated, technology is central to the way wealth management firms do business today. Moreover, firms have to have the ability to adapt to a rapidly changing technology environment.

But firms sometimes lack clear direction on how to implement and use technology. That's why wealth management firms have turned to outside resources to help them address technology issues-from consultants to the full outsourcing of IT infrastructure and operations. Wealth managers should view a technology consultant as an agent for change who can clarify priorities, identify constraints and validate proposed solutions.

Why A Consultant?  
A consultant provides expertise that you may not have in-house.  The consultant may have a broad knowledge of the latest technology solutions or a specific knowledge in areas such as risk management or performance systems.  They bring experience and perspective to the table, including knowledge of what your peers are doing, cost-benefit parameters, pitfalls to avoid, best practices and key factors for success. Additionally, the consultant can call upon people and resources that are certainly more powerful than what one individual alone can provide.

Consultants offer an independent viewpoint to the wealth management office, free from departmental bias and organizational politics. They can add structure and clarity to technology projects and help the entire firm buy into the changes. They can also bridge the communication gap that may exist between non-technical managers who have difficulty understanding techno-talk and staff members who have a detailed knowledge of technology issues.  A qualified consultant should help your firm focus on the business issues behind a technology initiative without being enamored solely with the technology.

The successful use of consultants requires a team approach that includes in-house staff. A consultant is not a "guru" with all the answers, but rather someone who can lead a team to find the right answers.  

The Virtual Resource
A new trend among consulting firms is to offer services with labels such as "Virtual CTO," "Virtual CIO" or "Virtual Tech Guru"-outsourced services that address issues ranging from IT strategy to network or server administration.  Most of these services are retainer-based, fixed-fee, long-term relationships that provide ongoing assistance as an adjunct to a firm's in-house staff.

Outsourcing has its benefits when compared to the cost of compensating, recruiting, training and retaining a full-time technology staff. The fact that technology jobs usually entail high training costs, and high turnover, make this especially true.

A "virtual CTO" can help firms develop, among others, strategic plans, IT budgets, capital spending plans, policies and technology assessments.  Virtual resources differ from traditional consulting in that they are ongoing relationships as opposed to one-time projects.  The relationship takes on a more fluid, ad hoc form than a project-based assignment.  A virtual CTO may work directly with a few key management team members or may head a firm's technology steering committee. The long-term nature of the relationship helps ensure that the consultant fully understands the firm's environment, goals and constraints.  This close relationship enables the consultant to respond quickly to new issues while providing continuity.  More extensive, detailed projects may evolve from this arrangement, but such projects don't suffer the startup costs of a stand-alone project approach.  The virtual CTO who is part of a broader consulting group can bring in specialized resources as needed.

Consultants acting as "virtual staff" may manage or operate applications such as client call centers, internal help desks, client portals, data aggregation or infrastructure components (data centers, servers, wide-area networks, exchange servers and disaster recovery).  Instead of an hourly rate, the fees are often per unit of output-based on the number of servers managed, for example. A consultant's compensation may also be a percentage of achieved cost savings.  This would be in cases where the consultant is focused on areas such as alternative vendors, outsourcing or renegotiated contracts-efforts designed to make technology operations more streamlined and cost effective.