From left: Joel Bruckenstein, Heather Fortner, Shannon Spotswood and Teri Shepherd. (Photo: Jeff Berman/ALM) From left: Joel Bruckenstein, Heather Fortner, Shannon Spotswood and Teri Shepherd. (Photo: Jeff Berman/ALM)

There are many technology options available today for independent RIA firms to pick from, but not every one of those options is right for each organization, according to fintech and RIA experts who spoke Wednesday during a panel session called “Cutting Edge or Bleeding Edge” at TD Ameritrade’s National LINC 2020 conference in Orlando, Florida.

Meanwhile, panel moderator Joel Bruckenstein, president of Technology Tools for Today, raised concerns about the ongoing wave of industry consolidation and what it could mean for innovation.

“Technology for technology’s sake is no good to anyone,” Shannon Spotswood, president of RFG Advisory, a hybrid RIA that started in 2003, told attendees. “It is not going to provide any efficiency [and] it is not going to give your clients a differentiated experience,” she said.

Reflecting back, she pointed out there was a decision a few years back to rebuild her firm “from the ground floor up.” While doing that, she said her company had to decide “who are we as a company” and “what are our values,” and it was decided the firm was a “service company first, we’re a technology company second and we’re an RIA third.” She noted: “The order of those was so incredibly important.”

And that’s pretty much what each RIA firm needs to figure out before selecting the right technology to help run their practice, she told attendees. They need to figure out what their company’s values are and “how are you going to be an ambassador” for the technology they decide to use, she said.

It’s important to have a “mindset that you’re going to drive the success and the profitability of your firm by leveraging technology to create a really differentiated client experience,” she said.

Whether an RIA is large or small, when searching for the right tech, “you really have to start with a purpose” and decide “what are you working towards, and then work backwards,” Teri Shepherd, president of Carson Group, said.

“Technology has to enhance your experience [and] it has to enhance and improve your efficiency, and so you have to start with knowing where you’re going,” she said, adding: “You really have to start thinking with the end in mind and make sure that you’re not just thinking about technology” because it’s “just a piece that helps you get there.”

Although technology has significantly improved over the past decade and “we’ve really made some great strides … it still seems to be something that a lot of folks in the audience struggle with,” according to Bruckenstein.

“Whenever advisors think about making a technology decision, they’re always a little bit nervous about it,” he went on to say. After all, what happens if they end up making a bad decision?

Mistakes are bound to happen “when you blow up a firm and you build 2.0” of that firm, Heather Fortner, a partner, chief compliance officer and chief operating officer at Atlanta-based wealth management RIA SignatureFD, pointed out.

But she said her company learned a lot from the experience. For one thing, it’s become “obsessive about whiteboarding” new ideas designed to address problems it’s trying to solve, she noted, adding it’s also important to have input from all the key players within the organization. If you do those things, it’s more likely you’ll be able to spot what any potential weaknesses are and what issues not only your firm, but those partnering with it, may run into, she noted.

In addition to the costs involved with technology, another challenge is that, although there are a lot of universities and programs that teach people how to become advisors, “there’s really no training ground to create great back-office people and operations people,” Bruckenstein pointed out. That’s “very frustrating,” he said, noting that, after all, “we’re more and more dependent on” those types of experts. “It’s something, as an industry, we should probably spend a little more energy on,” he said.

Another potential cause for concern is the continued consolidation of fintech players. Although panelists were mostly upbeat about all the acquisitions in the industry, Bruckenstein said that for each one that worked out well, he could point to one that didn’t.

While some large firms just buy smaller ones to kill off the competition, in other cases, the cultures of firms that have been bought “changed significantly … so that worries me,” he said. In the case of Schwab’s purchase of TD Ameritrade, he told the panelists: “If some of the TD technology were to go away, it would be a lot more disruptive to your firms than you are admitting to yourselves. … Because everything from the way they buy and sell to the way their workflows are — they’re not the same. And so, your back-office ninjas are going to have to learn some new skill sets. And that’s going to be disruptive and it’s going to take some time.” Bruckenstein previously expressed similar concerns to ThinkAdvisor.

What is “most worrisome” to him, however, is the “openness that TD has to those bleeding-edge vendors,” he said, expressing concern that there may be a stifling of industry innovation among startups.

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