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Technology Sweetens Independence

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Financial advisors at independent RIA practices who integrate at least some degree of technology earn approximately 20 percent more in annual income than those who do not.

Such an eye opening stat, from a 2013 whitepaper by Envestnet and Aite Group called, “RIA Productivity and Profitability: Integration Pays,” is just one of many cited in the report regarding the positive role of technology in the independent space.

But it is not about technology for its own sake. Overwhelmingly what advisors want from their tech spending is better efficiency, increased productivity, enhanced client service and more time to spend on client relationships.  Simply put, they want it to be top-notch and to work together as a complete technology stack.  Choose correctly, and that is what happens.  But there are a lot of choices out there.


Profitability and control still rank high on the list of reasons advisors move to independence, but the ability to have new and better systems – especially software – also plays a compelling part.  The continued growth of cloud computing is giving advisors a myriad of options to customize their technology functions without making huge investments, either in equipment or the staff needed to run it.  Continuous real-time evaluation of how well systems are serving practice and client needs will determine when and if it is time to update. 

Client reporting is critical to get right.  In the independent space, you can report across multiple custodians in multiple currencies.  You are better positioned to be the senior strategic advisor to your client.  You can build a virtual vault and include insurance documentation, wills and trusts and investment policy statements, all on your client portal that also includes aggregated reporting. Technology in the independent space enables you to become the center of your clients’ financial lives.

Client expectations are high, and as younger ones take a bigger share of the client base, their demands will only increase.  This “always on” generation wants full and immediate access, and if banking relationships are any guide, they will have no problem switching firms to get what they want.


Along with a team’s own experience with technology, tapping a seasoned transition partner and seeing what successful peers are using will help narrow the field of choices. Custodians and broker dealers can provide great insights – what tools do they have and how can their capabilities be integrated?  As always, client account transfer and on-boarding need to be seamless, but also look at communications tools, reporting, archiving and client portal access.

Speaking of access, what computer should be sitting on an advisor’s desk (or conference room table, client meeting space, airplane tray table)?  The lines between office and out-of-office have blurred to the point of non-existence, and the delineations between what constitutes a desktop, laptop, tablet or even smartphone are fewer and fewer. Capabilities are growing, and combined with cloud technology, advisors are becoming almost self-sufficient. Interestingly, while Microsoft dominates the desktop and laptop landscape, advisors are just as likely to choose Apple or use Android OS for tablets and phones.  Whatever gets the job done best seems to be the rule of thumb.  Many firms now have smart boards in their offices, use video to interact with clients, and frequently conduct client reviews on iPads.


All this information flow leads to the need for bulletproof privacy and security policies and practices.  Advisors should work with leading legal and compliance professionals on helping establish appropriate safeguards for their firms that encompass system-wide components.  In addition to regulatory considerations is the need for straight-up security – after all, where there is money there are hackers.

The most prevalent areas of focus are:

  • Data protection:  SEC requirements detail what’s needed in terms of ensuring security and privacy of investor data.
  • Electronic records:  Archiving, maintaining and reporting on written and electronic records, historical data and vast amounts of other information are a major consideration – and challenge.
  • Business continuity:  As a subset of SEC compliance, continuity plans address the process and procedures to follow during crisis periods or technology interruption.
  • Email and messaging:  The news is full of reports about emails or IMs (instant messages) at financial firms that went missing, and the consequences of letting that happen. RIAs are responsible for archiving all email and instant message communications, and ensuring they’re retrievable quickly.
  • Third-party controls:  Since most RIAs work with third-party providers, it’s important to ensure those companies adhere to stringent privacy and security policies that meet the requirements of the firm.

Ultimately, the choice, and role, of technology comes down to each individual business model, advisor practice and general philosophy. And budget, naturally.
But, if there is one key performance indicator that should drive technology decisions, it should be getting a return on satisfaction. If clients are happy, it’s probably working.

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