Photo: Shutterstock/Ra2studio

A great attribute of our profession is the willingness and desire of advisors to exchange ideas and best practices about what is and is not working at their firms. Of course, this can be a challenge to interpret the information and determine what actionable steps to take.

Specifically, it can be hard to know if what everyone seems to say is the “best” is actually good technology advice for your firm. Considering all the variables involved and differences between advisory firms, these decisions often require deeper evaluation.

Common areas that advisors think about when comparing their firm with others include metrics like assets under management, office location(s), number of client relationships, number of employees, growth rate, etc. These are important details to understand and good starting points to compare notes with another firm regarding technology products and ideas.

However, advisors often put too much emphasis on these metrics as they think about whether a technology product might work well for their firm.

In fact, sometimes an advisor might completely “discount” the technology information shared from another firm simply because they are much larger or smaller based on these metrics. Remember that these metrics are just one component of interpreting the information.

Different Needs

Certainly, critical components for interpreting technology advice is the business similarities and differences between firms. In hearing the advice, try to understand if the firm is more of a financial planning centric practice, investment management, insurance solutions, maybe all of the above. For example, a financial planning focused firm might highlight all the success and efficiency gains that they have enjoyed in the client on-boarding process using their technology solutions.

Yet this might not be applicable to a firm that is primarily an investment management firm. The financial planning firm is likely gathering different and perhaps more client data points to build a comprehensive financial plan compared with firms that don’t share the same business focus.

Or let’s say a firm is praising their portfolio rebalancing process and the systems they use to manage investments. No doubt there is something to learn here, but remember that the investment allocation and trading process is another area that can involve important differences between firms.

I have seen many firms spend significant money, time and effort to achieve scale and reliability with their portfolio implementation and rebalancing process, so bear in mind that even firms with a similar business focus can have critical differences. This especially relates to areas that involve customization and unique business processes.

The Journey

Striving to achieve “technology success” is really about the overall journey, the history, and the experiences gained along the way. It is rewarding for advisors to share their technology advice based on the benefits and successes achieved by their firm. We love to hear the “winning” details.

From these success stories we often hear from other advisors, “Just tell me what I should purchase for my firm.” But it’s really important to hear about the experience with products and processes that didn’t work, which ultimately led to technology successes. In addition, when you listen to the technology journey, don’t be surprised if some of the challenges and failures for one firm could actually be successes for your firm.

Also, listen to comments about the employees involved or the “technology culture” of the firm. No doubt there are significant differences in the skillsets and overall experience of employees between advisor firms. For example, you could hear about the success with a complex product that was partially achieved because the average tenure of the firm’s employees was over 10 years. Some firms can be fairly comfortable in trying new technology products and working through the issues, while other firms might consider this a significant distraction and therefore are much more conservative about adopting a new technology product.

Dan Skiles is the president of Shareholders Service Group in San Diego. He can be reached at dskiles@ssginstitutional.com.