Be careful choosing, as being frugal particularly on compliance software can be a mistake if that function isn't being outsourced.

"Unfortunately, 'newbies' tend to chintz out on some of the fundamentals, which can cost them big time in the long run from the regulatory perspective," says Jennifer Woods Burke, securities attorney and the founder of compliance consulting firm CompliGuide in Palisades, N.Y.

Indeed, compliance is often minimized at start-ups but really needs to be "woven into the fabric of a firm from its beginning," says Jack O'Hara, the Philadelphia-based chief business development officer and director of marketing at BasisCode Compliance of Atlanta.

Advisors can begin with examining the platform tools of their custodian for asset allocation and financial planning that might help them determine if they need to buy additional software, he says.


The classic "core" technology stack that independent advisory firms need are financial planning software, a customer relationship management tool and some kind of portfolio accounting software, says Financial Planning contributing writer Michael Kitces, partner and director of research at Pinnacle Advisory Group in Columbia, Md.
Supporting the latter are usually additional tools for portfolio analytics and reporting, which are often, but not always, included in portfolio accounting software. Such software also include trading and rebalancing tools, but those tools can also be bought separately, and sometimes purchased from a custodian.

Most advisors need a portfolio management system, says Thomas Balcom, founder of Miami- and Fort Lauderdale, Fla.-based 1650 Wealth Management. "When we began our firm, we selected Morningstar Office since it did not require a server, was located on the cloud and had a research component built into the package," he says.

CRM software is "critical" to remain compliant with email archiving, and it is also useful for keeping track of client conversations and other client-related items.

If advisors do use planning software, they need to back up data onto the cloud using such platforms as Carbonite, says Arthur Stein, founder of Stein Financial in Bethesda, Md.

Compliance-tracking and accounting software are also necessary. Firms may want to work with a website development company as well.


Kip Gregory, founder of the Gregory Group, a Washington-based consultant to advisors, says that planners shouldn't overlook researching other technology needed to help get the business off the ground.

"This ranges from learning how to get a handle on Outlook so you can cut the hours you spend dealing with email, to looking at social sites such as LinkedIn as prospecting resources and not just marketing platforms," he says.

Part of learning how to best leverage technology is "just common sense," finding ways to "use it however you think you should use it best," Gregory says.

Katie Kuehner-Hebert is a freelance writer in Running Springs, Calif. She has contributed to Financial Planning, On Wall Street and American Banker.

This story is part of a 30-day series on going independent.

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