Technology is a pervasive part of any industry and one that is constantly changing. One of the keys for advisors to maintain a comprehensive, efficient technology solution is integration.
“When you’re going to purchase technology, I believe a firm should think about how that technology will be brought into the family of technology you have,” Rob Fiore, CEO of Private Client Resources, told Investment Advisor. As companies look to replace technology, they need to ask potential providers how their products integrate with the solutions they’re using in their firms.
As a way to streamline the integration process, Eric Clarke, president of Orion Advisor Services, suggests that advisors make a list of their core technologies including trading, e-billing, custodial platforms, accounting packages and performance reporting packages. Then, as they talk to potential technology providers, they can find out if a new system integrates with their existing platforms.
“Even if it’s something as simple as changing payroll providers,” Clarke, (left), says, “finding out that the new payroll provider integrates with their accounting package can really save the advisor a lot of time.”
Integration doesn’t just mean making new products work with existing ones, though. Advisors need to make sure they don’t grow out of their solutions. Much like how they spend time writing detailed business and marketing plans, they should have a detailed technology game plan that ties to their overall business plan.
“Advisors who are in growth mode need to look beyond the next couple months to one to three years ahead,” says Neal Ringquist, president of Advisor Software Inc. “What processes will they need to change? What are their chokepoints?”
One test of whether a provider is a good fit for an advisor’s firm is to ask what their target market is to “see if it will fit from a scale perspective,” according to Clarke of OAS. “Make sure that the system will not only handle [the number of accounts] today, but as you do your projections, that it will be able to accommodate your business as it grows.”
As advisors grow their firms, they need to set aside time to examine their current solutions, Ringquist of ASI argues. How much time they dedicate would vary from advisor to advisor, but a good rule of thumb is to spend at least 10% of their time each month on understanding technology and reviewing their processes, he says.
Will Clemens, CEO of Zephyr Associates Inc., agrees, reminding advisors to look at their current solutions first when they encounter a problem.
“Advisors buy a piece of technology to solve a specific problem at a specific time,” Clemens says. “Good vendors are anticipating problems that advisors are going to have later.”
One area where advisors are failing is not in picking the right technology. In fact, as Clarke says, “advisors do a great job of selecting technology and bringing it to their firm.” Where they are lacking is in implementation. One reason for that is because advisors neglect to involve staff regarding what technology they should use, Clarke says. Staff members are intimately familiar with the processes that the firm’s technology makes possible; if new technology doesn’t suit their needs, they’re not going to use it.
“Advisors start firms as entrepreneurs,” Clarke says. “Staff grows and before they know it, they have to make decisions like they are a medium-sized firm. They have to be willing to let their staff make those decisions.”
Training on new technology is often overlooked. “Advisors immediately assume that new technology will be immediately easily integrated with the firm’s processes,” Clarke says, but that’s not always the case. Clemens of Zephyr agrees.
“It’s very common for people to shortchange the initial implementation,” he says. Advisors have to assume that their staff needs time to get a new system up and running. “You don’t want to make the mistake of doing the initial deployment wrong, because you’ll pay for it forever.”
One thing that can’t be underestimated is security. “As advisors are looking at cloud-based or Internet-based providers and applications, security’s got to be there,” according to Clarke. “‘What are you doing to encrypt my data? How can I get the data back out when I decide that there’s a different system that meets my firm’s needs better?’ Those are some very basic due diligence questions.”