Only RIAs can determine whether the technology they are using gets them where they want to go. Their investment in tech and services has to support their firm’s core value proposition, and that won’t happen if they are distracted by the shiny bells and whistles on new technology coming onto the market.

Your RIA firm needs both a tech stack for operations as well as a fintech stack. The average advisor’s custodial technology systems and platforms include CRM, portfolio management, billing, trading, rebalancing, reporting, accounting and research. You can choose from multiple providers for these services and use them in a broad range of ways. But these systems require proper due diligence, otherwise you may find yourself restricted in how you work with them.

Is Your Tech Vendor Speaking Your Language?
Technology should help you improve your current processes and move your business forward—not upset the way clients are served. A firm’s technology investments should improve workflow or the client experience, or create efficiencies in other areas.

So when you want upgrades to accomplish these things, it is important for you to work with technology vendors who speak your language.

You should thus pose questions to vendors that invite solutions, for example: “Currently we do this. What would that look like with your system or platform?” or, “How will this scale as my business expands?”

You should listen for responses like these: “We can do what you’re asking, and here’s how we would do it and what it looks like, along with other potential enhancements.” The vendor should explain what happens when certain functionality is turned on, what the integration looks like, and how that impacts your firm’s operations.

This will help you avoid situations where you don’t fully appreciate the consequences of what you’re asking for until after the fact. For example, you might ask for the highest level of cybersecurity protection possible for your firm’s e-mail. But then you might wonder why you can’t access work e-mail through personal mobile devices. The vendor’s answer—it was not set up that way as part of the original ask—may be surprising and unsatisfactory.

If the proposed solution matches your vision of how your firm should operate—or improves upon it in a way that makes sense—there’s a match. If the solution is off base from what you were considering, it is time to move on.

In this era of innovation and heightened competition, there is no one-size-fits-all technology solution, and advisors have plenty of options.

One Change Can Change Everything
RIAs need to remember that one change may impact their entire operation. Integrating new technology into an existing system can be like changing gears—shift or turn one part, and the entire system moves.

So it is incumbent on RIA decision-makers to stay focused on what their firms need and not be swayed by technology vendors’ shiny objects. It is easy to get sidetracked by the offerings that may be integral to one firm’s business but add no value to another.

Let’s say that when your phone rings, you want all of the client information tied to the inbound number to be brought up on your computer screen. The CRM says this is possible. The telephone company says it cannot be done or that it requires a significant investment. You need to decide: Will this feature enhance productivity or client service? Or is it just “nice to have but not worth the investment”? The answer will differ from firm to firm.

Another way to stay the course is to ask for referrals, and not rely solely on technology vendor demos. Talking to others may help you avoid minefields or misguided purchases. Like employee background checks, technology referrals can offer an advisor a more informed picture of what they are getting—good and bad.

Advisors who think through the ways they want technology to help them engage clients are, again, less likely to be distracted by the bells and whistles. Technology investments can be very expensive, non-refundable mistakes to unwind, live with or correct. With so many risks to consider, it is understandable that some RIA leaders may believe the best course of action is to do nothing—“First, do no harm.”

But the status quo in technology can also be dangerous. The shift to the all-cloud environment from on-premises technology is forcing RIAs to consider changes to the way they work. Change may be hard, but it is necessary to stay competitive.

This may mean that the way a firm works today may no longer exist in the future. But that doesn’t mean a comparable or even better way exists. By keeping the firm’s core value proposition at the center of their search, RIAs will have an easier time evaluating the most appropriate technology for the future of their firms.       

Wes Stillman is the CEO of RightSize Solutions, which provides cloud-based technology and cybersecurity solutions to the wealth management industry. Wes can be reached at [email protected].