2. Education and training. He said that his firm goes to extraordinary lengths to educate institutions on the use of his platform. This is a necessary step in the process.
3. Resistance to change. Broker-dealers and/or custodians who are introducing new technology to their advisors/reps need to confront the issues that advisors face in adopting that change. If the advisor/rep has spent years building proprietary systems, the path to change may be too painful to contemplate.
The problem with most technology integrations today is the custom nature of integrating software and data. Because it is a customized process, it is likely to be an expensive and lengthy process, which contributes to the resistance factor by advisors.
Fetter also mentioned that a new trend among software providers that he termed "co-opetition" (defined as the process of companies interacting with partial congruence of interests) has opened opportunities for overcoming resistance by giving advisors the ability to integrate divergent technologies to ease the pain of migrating data and instead offer a seamless conversion. In his words, helping the institution "provide a holistic platform" can not only benefit the institution, but the advisor/rep as well. TD Ameritrade's VEO project and Schwab's Intelligent Integration initiative were cited as examples of steps in the right direction for the financial industry.
Advisors contemplating the use of technology offerings from their B-D or custodian should get a comprehensive calculation of the real return on investment (ROI). This should not only include the hard dollar costs, such as software subscriptions, account opening and data migration costs, but soft dollar impacts as well. Soft dollar impacts could include the positive impact of increased efficiencies, the increased capacity of the firm to take on new business and improved time management. The negative impacts could be such things as the staff time commitments involved in a conversion process and the way it negatively affects the other work commitments they have during the change.
In a follow-up column, I will explore this concept of ROI in more detail.
David L. Lawrence, Ph.D., is founder and president of Efficient Practice, a consulting firm that provides financial practices, broker-dealers and independent firms with comprehensive, profit-driven efficiency consulting and resources. For details, visit www.efficientpractice.com.