Create a technology scorecard to measure how well your firm utilizes core systems.

Three technology executives say there are several key ways advisors can use technology to achieve scale and efficiency in their firms, which they shared Thursday during a webinar hosted by ThinkAdvisor and sponsored by Pershing.

Dan Skiles, president of Shareholders Service Group and a columnist for Investment Advisor; David O’Brien, founder of Evolution Advisors; and Kim Gaxiola, registered principal and founder of Tech Girl Financial joined IA’s Jamie Green on the webinar to discuss how they’re using technology in their firms.

Technology purchases aren’t like purchasing a car, where once purchased it needs infrequent maintenance to run efficiently, Skiles said. “Technology is something that you should always be actively looking at and reevaluating,” he said.

He recommends advisors create a technology scorecard for their firm to takes stock of what they have already accomplished from a technology standpoint, as well as any improvements in the quality of the work, ROI on existing tech initiatives and how successful overall adoption has been.

Skiles says the most efficient firms build a foundation on their core system or platform, whether that’s their reporting system, their CRM or their custodian’s technology platform. When they’re evaluating new technology, advisors can rule out anything that doesn’t work with those core systems.

Advisors can’t forget about the “seats on the bus” – their staff. Firms need to evaluate how technology is used by their associates and employees.

“Part of the strategy is including everybody in the decision,” Skiles said. In the past, technology decisions might have been made by IT, he said, “but I would argue that those days are long gone; that all of your associates […] should be involved in these decisions because it does touch everybody.”

Skiles recommends advisors write a technology quiz for employees to get an idea of how familiar and comfortable they are with technology currently used by the firm. “Oftentimes in these conversations, you’ll learn that someone might be very proficient with your CRM or performance reporting, but they also don’t know about other solutions that are available within the firm,” he said.

Critically, advisors need to consider their clients’ technology needs.  He asked, “Is it one size fits all or have you truly thought about” what clients need and how they interact with your firm’s technology?

(Related: Do You Have a Technology Segmentation Strategy?)

O’Brien warns that too many firms look at “technology as a cost that can be minimized.” He suggests firms look for ways to automate processes so they can leverage their current resources, improve the quality of their offerings, and free up time to focus on more valuable tasks.

“You should only automate repeatable processes that are designed with quality built in,” he said, such as rebalancing or client onboarding.

Manual process are “at best 95% right,” he adds. Take portfolio rebalancing for example; “you don’t want 5% wrong in a process like that,” O’Brien pointed out.

Measuring the return on investment in technology “can be squishy,” he explained. Firms can look at tech ROI from a cost standpoint or a revenue standpoint.

Regarding cost (which O’Brien said can lead firms in the wrong direction), firms should determine the cost per hour of a certain process and multiply it by the number of times that process is repeated. They may find ways to eliminate local vendor support to find cost savings.

O’Brien likes to consider technology ROI from a revenue standpoint: “How many more clients were you able to bring on board because of the great technology and automation of processes that gave you better quality and better use of your time?”  

Gaxiola focuses on serving women in the technology sector. She has learned that advisors need to be flexible in how they communicate with clients. She maintains an office to meet with prospects, but otherwise does most of her client communication virtually. “Most of my clients don’t like face-to-face” meetings, she said.

“Don’t be fooled. If you think your clients are mostly baby boomers — that older generation, we are all connected,” Gaxiola explained.

She also points out that “technology is never perfect, because we’re always making it better.”

Advisors who are considering a software purchase need to make sure it’s “going in the same direction as you,” she adds. A firm’s software should be able to keep up with the firm’s growth trajectory.

It’s important for firms to build a digital presence that reflects their firm accurately, according to Gaxiola. Most prospects have already decided they’re going to work with an advisor the first time they meet, she noted.

“Nine out of 10 prospects that I meet with always end up doing business with me,” she said. “If you’re not interested in what I have to say, you never will call me after you look at my website.”

Advisors need to make sure their website is easy to find, Gaxiola stated: “If you’re not online and you’re not on that first page, you don’t exist.”

— Read How One RIA Uses Technology to Nurture Client Relationships on ThinkAdvisor’s TechCenter.