When advisors operate under a wirehouse or bank, they become accustomed to accessing some small subset of technology solutions curated by their larger organization. When these advisors break away from their firms, they are introduced to a broad and confusing technology landscape, and tools that expand far past what they had been using in their previous role.
These advisors are also simultaneously learning how to operate their own practices outside of a larger entity, perhaps for the first time. Through my experience running an RIA and an outsourced chief investment officer service, I have learned that technology consultants are the most effective with helping to get up to speed on a tech offering with minimal disruption from a breakaway transition.
The 3 Major Tech Mistakes Advisors Make
Upon making the transition from wirehouse or bank to running an independent shop, advisors can find it hard to know where to begin. Because of the overwhelming amount of technology solutions available, advisors tend to make one of three major mistakes:
1. Enlist subpar technology. Advisors are faced with dozens of technology options, and for an advisor without deep knowledge (which, let’s be honest, is a full-time job to stay on top of!) of the tech landscape, it is very easy to be drawn into a solution that does not provide the range and depth of resources necessary to build a firm and improve client relationships.
2. Become a vendor manager. Advisors can end up juggling a variety of disparate tools that may overlap in functionality or may not be properly integrated. Many financial technology solutions address some small part of an advisor’s workflow — dealing with multiple technology solutions that may not be properly integrated can become a huge time drain and can lead to confusion for advisors and their clients.
3. Not using the tech to its full potential. All-in-one technology solutions have been steadily gaining popularity. According to the T3 2019 Software Survey of more than 5,500 independent financial advisors, around half of all advisors have employed all-in-one technology solutions. These all-in-one solutions like Envestnet provide the advisor with seemingly limitless capabilities, but this can often overwhelm the advisor and lead them to not use the tech to its full capacity.