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A Boon of Independence: Choosing Your Technology—Cost and Time

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One of the best aspects of being an independent advisor is that you have the freedom to choose your technology. In this post, we will look at how to select the right technology for your business and traps to avoid.

There are two primary factors to consider when it comes to technology purchases and subscriptions. The first is cost and the second is time. Let us look at each of these. 

Cost of Technology

Cost is the simpler of the two because most, if not all, advisors have a limited amount of capital they can spend on technology. Even though adding technology can improve efficiency and save money, it still requires an outlay of capital. Since you are limited in the amount you can spend, it is important to select the right products for you and your business. Therefore, before making your technology decisions, you should consider asking yourself the following three questions:

  1. How much am I currently spending? This question is important because it provides you with a baseline. Some advisors may not be spending enough while others may be wasting money on technology they rarely use.
  2. Which types of products do I need? This is the most important question because it requires that you think about your company and the technology you need. You should begin by listing the services you offer to clients and those that are outsourced. For example, if you outsource all portfolio management activities, you will not need a robust software for securities research and analysis. In short, list all of the services you will offer, consider what technology you will need to carry this out, and search for solutions to meet your need.
  3. How well do they integrate with each other and with my custodian?

The final question is important because even if you subscribe to the best products, if they do not integrate with each other or with your custodian, you will not achieve the best result. This is why it is best to list multiple products in the previous question. 

Time of Technology

This is a bit more difficult to examine. Conceptually, there is only so much time in a day. If you subscribe to too many products, you will not be able to utilize each to its fullest and thus will not be getting the full benefit. 

What is the optimal number of products? This is entirely subjective. However, after you finish the second question, if you have done a thorough analysis, you will know all areas that need to be covered. Then, if you can find the right products, or to be more precise, the right combination of products, you will have spent your money wisely. 

Next week, we will expand on this and discuss some of the key questions to ask when researching various technology tools.

Until then, thanks for reading and have a great week!