Bartine: Essentially, software as a service is just what it sounds like. We license our software solution to our customers on a subscription basis. SaaS is also referred to as “on demand software,” which I think is a better short description. In Smart RIA’s case, we host our solution in the cloud to meet the “on demand” part, and that’s typically the case in SaaS companies.
Hortz: Can you quickly review the problems Smart RIA addresses for advisors?
Kiger: To address compliance problems for advisors, the software automates a lot of the compliance tasks that people normally do by hand, and it organizes and locks down the results to make you more audit-ready. Smart RIA runs in the background to look for compliance deficiencies, and alerts you to them as they occur. These are things that typically just take a lot of time from a compliance officer perspective to find. And from an advisor perspective, you just don’t want advisors spending their time looking for compliance deficiencies. You want them building their book of business and taking care of their clients.
Smart RIA can really save a lot of time and theoretically it would save a lot of money from a compliance perspective in the event of an audit. I know that having gone through an audit and what the software did for us in that audit was pretty awesome. The audit only took eight hours where it should have taken five days, and we had no deficiencies—all due to the software. Moreover, I’ve gone from spending a quarter of my time on compliance as CCO for my firm to less than a half hour a day on an average day. Ultimately, that was the goal I was trying to achieve when I created the software: I’m prepared for an audit, and it doesn’t take me much time, thought or effort to maintain that status. I hesitate to think what it would take if we did not have the software—especially now that we’re spread across three states. I suspect it would relate to a full-time employee doing some of these things that the software specifically does by itself.
Hortz: Can you explain the valuation benefits for an RIA in using your cloud-based software solution?
Kiger: More importantly than just the compliance costs savings, we are able to help people get a whole picture view of their practice. We have all the compliance data, the client data, all of the fee data, and for our most advanced version of the software, all of the investment allocations for each advisor's practice. Because that's all in one place, it makes that practice completely transferable and transparent for a potential buyer, which quite frankly makes the practice itself more valuable; it actually adds value to a practice.
Hortz: What trends do you see going forward in the regulatory environment for advisors?
Kiger: This is a question that we look at every day from an RIA’s perspective and from a software perspective. The trend is just not really good for advisors. Between fee compression from robo-advisors and the constantly increasing regulatory environment, I believe it will be much more difficult for smaller RIAs unless they make a core commitment to strategically use technology to streamline and automate all of the functional areas of their business. Without technology solutions, it will be very challenging to stay in business from a regulatory perspective.
Because Smart RIA is a modern, nimble company, with deep pockets of industry knowledge through our founding and our board of directors, we are well positioned to continually spot and stay ahead of the problems that our advisor clients will face now, and in the future.
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