From the November 2009 issue of Boomer Market Advisor • Subscribe!

Technology tips for the advisor transition

It's tough to see the forest for the trees. However, it's in times such as these that opportunities arise. Those of you who have worked for traditional Wall Street wirehouses may now be looking to transition to the independent business model. While there are potential opportunities to move to a less captive environment, there are many factors to take into account before the leap is made.

While your comfort level regarding a particular firm may be the most important consideration, performing additional due diligence on the operations and the technology capabilities of a firm is absolutely critical. Such issues are complex. It's unlikely you'll drill into all of the details in recruitment meetings. So I've provided technology-related factors that must be considered:

What technology tools and capabilities are available to your clients? Your clients will scream if your transition leads to inferior technology capabilities. We've talked about the need for current clients (and the absolute requirement of your Gen X and Gen Y clients) to be able to access their accounts, statements and other reports online. Not all online solutions are the same, and a feature or service that at the surface might not seem important to you, could very well be for your client.

How does the new firm store paper documents? Beware of any firm that does not have a document management system to store the documentation that you provide. Maintaining all of your client records in paper form puts your business at risk of natural disasters, man-made disasters and identity theft. It is advantageous to work with a solution provider with the ability to go paperless for documents not required.

Will you have transparency regarding your compensation? Many firms provide you with the ability to see how you are getting compensated, and by which products and clients. There are systems that broker/dealers employ that provide advisor-level reporting and automation in the area of compensation. There are also firms that continue to rely on running compensation reports off spreadsheets. It is important you take the time to explore the pros and cons of these procedures, as they play an integral role in helping you efficiently manage your business.

How "straight-through" is straight-through processing? Every firm will tell you that they offer Straight-Through Processing for trading, new accounts and initiating cashiering requests. When considering a new firm, ask them for the metrics behind these activities. If moving to a new firm results in it taking longer to process a new account, to get a trade done or to cut a check, then that's an important factor to consider. An additional consideration is whether the firm you are exploring an affiliation with provides you and your staff with tools that empower you to do things on your own without them being in the middle.

Transitioning to a new firm isn't easy, but ensuring you've conducted the right level of due diligence means the difference between success and failure. Understanding a firm's technology offerings and delving into the details is a critical component of the evaluation process.

Marc Butler is managing director with iNautix (USA) LLC, an affiliate of Pershing LLC in Jersey City, N.J. He can be reached at

Reprints Discuss this story
We welcome your thoughts. Please allow time for your contribution to be approved and posted. Thank you.

Most Recent Videos

Video Library ››