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Technology > Marketing Technology

Moving to a New BD or Custodian? Ask These 5 Tech Questions First

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For many advisors, the promised efficiencies of new ‘integrated’software tools have been nothing short of a high-priced scam. Instead of instantaneous, critical and actionable client information at their fingertips, they’ve had to contend with disparate, costly systems that inundate them with useless data. The end result is the creation of unnecessary processes and needless wastes of time. 

The truth is, most of these systems are created without the end user—you, the advisor—and your clients in mind. They’re built to benefit the broker-dealer or custodian and their back offices rather than as business solutions to help you grow and serve your existing and prospective clients. Even worse, the reality is that much of the technology being offered to advisors focuses on tackling yesterday’s problems, not the challenges advisors face today, tomorrow or even several years from now. At their core, they are either thrown together hoping to rely on loose integrations between vendors or, even worse, lack any ability to react to the fast evolving challenges and solutions emerging in our market. 

Okay. You get it. Many technology systems aren’t designed or built to make your life easier. They’re simply minor improvements to old legacy systems and obsolete methodologies. But did you know that these software systems present more than just a technological headache for advisors? 

Many national RIA and broker/dealer technology ‘solutions’ are actually designed to hold your data hostage, locking critical information in a virtual proprietary silo. All the time spent entering your valuable data will have to be repeated when you ‘convert’ to a new system. The result: precious hours wasted that could have been better used growing your business and serving your clients. 

Why Portability Is Crucial

The issue ultimately comes down to portability. As an independent advisor, you can take your clients with you when you move, but taking your data may be more difficult. There’s been a steady flow of  registered representatives moving away from the traditional wirehouse or ‘captive’ model, since they see greener pastures if they move to a more independent model. What a pity to make the change from full-service brokerage W2 employment or 1099 subcontractor status with a regional firm thinking you’d be reaching the ‘promised land’ only to find out that your national RIA or independent broker-dealer, either intentionally or unintentionally, would be chaining you and your data to their technology. 

I believe that RIA and IBD business solutions should be liberating; so our approach at United Planners is to focus on business solutions rather than on technology per se. There are scores of excellent software solutions offered in the marketplace, and advisors are wise to ask hard questions about the solutions any firm provides. 

In my opinion, what best serves the advisor is a way to integrate the solutions so that they work seamlessly, securely and efficiently—with a single secure sign-on, single accurate source of data, paperless solutions, and efficient back office systems. Our approach is to focus on business solutions over technology by acting as the middleware, sometimes know as “software glue.” This is a term used to describe software that provides services to other software applications beyond their current capabilities. In a nutshell, it acts as a middleware that enables business solutions by empowering various system components beyond their general interactions. 

For example, if three systems each have shared data and their own integrations, the software glue will decide which systems should be updated, in which order, and with which data to ensure all systems are in sync. This helps to avoid potential problems such as data out of sync or continuous loops of updates between systems. Software glue answers the question of “Who’s on first?” in the complex world of integrations and ensures that the advisors’ best-of-breed systems all operate efficiently.

Many advisors opt for ‘all-in-one solutions’ as opposed to ‘best-of-breed.’ But while an all-in one solution seems appealing, it’s really the convenience that is so compelling. Please keep in mind that you may be giving something up in the way of functionality and portability if you go with the convenient all-in-one solution. 

My point here is that because middleware can effectively join the applications of choice, it offers the best of both worlds: the best solutions, seamlessly integrated so they function as conveniently as an all-in-one solution. 

Look Under the Hood 

In many ways, when an advisor is choosing to switch to a national RIA or a new broker-dealer—or when an RIA decides that realigning with an independent BD can simplify life by providing significant back-office support—the process is akin to buying a car. While the bells-and-whistles may be enticing, the most important question may be: What’s under the hood? 

In my experience, advisors looking to make a change generally know what they’re looking for (though not always). They’ll do extensive discovery with independent broker-dealers and/or national RIA firms on their “short list” around issues such as payout, culture, ease of doing business and technology.

If you find yourself in this situation, I offer you this caution be sure to check under the hood by asking these five questions: 

  1. Ask direct questions, such as “Can I be technologically independent of this broker-dealer or custodian?” Determine if the company’s technology provides business solutions that truly enhance your independence, or if they are designed to bond you to them. Review any proprietary technology that’s offered and look for an ‘export’ button for your information, rather than accepting their general promise to give you your data when you leave.
  2. Find out whether the various solutions (e.g., CRM, trading, imaging, workflow, portfolio rebalancing, etc.) are “best in breed”—leading their category.
  3. Determine whether the solutions are connected in a way that makes them efficient to use without limiting the portability of your data.
  4. If the ‘engine’ is enclosed in a big black box, consider that a red flag. It probably means that it utilizes solutions customized for only that broker-dealer or national RIA, and may even include cumbersome legacy solutions that aren’t nimble enough for today’s business environment.
  5. Ask specific questions about portfolio and account management; CRM; compliance; security; mobile access; training and troubleshooting. Questions in each area should elicit details. 

While few advisors make this type of major change to a national RIA or new broker-dealer intending to make a similar move in the future, the reality is that “stuff happens” outside of their control and it’s not easy to predict the future. The technology solutions delivered by a national RIA, BD or custodian should make life easier for advisors and staff, not cause headaches and inefficiencies due to inflexibility.

Ultimately, your broker-dealer or national RIA should be helping you run the most efficient, profitable business possible. The relationship should be one you would maintain, even if your business model didn’t require it. So ask yourself, “Would I still be here if I didn’t have to be?” The answer should be an unequivocal “Yes!”


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