The right technology can make a big difference for an RIA practice — allowing financial advisors to compete with large wirehouses and address increasingly complex client needs. According to a recent study commissioned by Million Dollar Round Table (MDRT), 95% of respondents believe it’s important that advisors are both technologically savvy and use updated technology-based tools in their practices.
The conversation around RIA-focused technology often centers on automation, but it’s really all about building scale, not just automating existing processes. That’s why it’s important to understand what you’re trying to accomplish with a technology platform before you decide to implement it.
The Importance of In-House Advocacy
Regardless of which platform you choose, it helps to have an in-house champion — someone on your staff who understands the ins and outs of technology and is dedicated to its success.
In addition, RIA leadership must provide a firm commitment to implementing technology and providing sufficient resources. We’ve seen numerous deployments stumble due to resource constraints. That’s unfortunate because there are so many things you can do with today’s technology with the appropriate support and resources.
Here are three areas where RIAs can incorporate technology to improve their practice.
1. Model-based Management
One of the most compelling features of today’s advanced RIA technology is model management. Managing assets at the model level builds scale by affecting multiple accounts with a single transaction.
For example, let’s say you need to reallocate assets within a portfolio. Traditionally, you might have executed individual trades within each client’s account. Using model-based management, you can simply adjust the position at the model level with a few clicks. That, in turn, affects the positions of each client holding that portfolio.
2. Account Aggregation