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Tech-Savvy Advisors

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The latest MKT report by Schwab Institutional, Technology Best Practices: Making the Most of Your Technology Investment, finds that the best-managed advisory firms have clear and long-term strategies for their technology investments, though many advisors are “under-utilizing existing systems and spending money on new solutions without gaining much efficiency.” Based on information gathered from more than 1,000 advisors, the report notes that top-performing advisory firms spend roughly the same amount on technology as their peers–approximately 2% of annual revenues–but view technology as a key asset in building their businesses. These firms ensure that new technologies are compatible with, and can be integrated into, the firm’s processes, people, and existing technology before buying. Dan Skiles, VP of technology for Schwab Institutional, said that best-managed firms “bring their employees in on technology investment decisions at the onset and then ensure that the right people have the right training to maximize their investment.”

The report also argues that “the best-managed firms tend to invest in technology when the scalability of the firm is in question.” Top firms also think long term, keeping in mind technology improvements that should be made over the next three to five years. The report offers four steps to help advisors select the appropriate technology solution:

Step 1: Understand how the new technology will integrate with existing systems.

Step 2: Make sure your employees are prepared to use the new technology.

Step 3: Ensure that the investment considers potential changes to your physical environment.

Step 4: Assess the risk if the investment does not meet your needs.