RIAs must develop a technology roadmap to guide the technology that they implement, but how, why and when?
The challenge for large, midsize and solo firms is the same - determining how to improve quality, productivity, client experience and profitability, figuring out where to start and implementing the changes, all the while not dropping the ball on running the business. Most firm owners are very knowledgeable about financial planning and investing, many are solid managers, but few have a technology background. This justifiably makes us cautious in evaluating technology - a critical component of our businesses that seems difficult to evaluate, expensive and risky.
What if a new technology solution compromises client data security? What if the time and money spent implementing a tool cripples our ability to perform core functions? What if we can't send or receive email, or phone calls?
The cautious eye many firm owners cast is justifiable. However, we already follow a process in our business that can help us approach technology in a familiar manner. We can leverage our planning process to determine why a technology tool can help our firm, evaluate options and implement the solution.
As financial planners, we ask our clients to identify their goals, we evaluate their resources and generally prioritize our activities based on the client's greatest needs or concerns. The same approach works for technology.
Think about how you want your firm to look in the future. What are your goals: Client or asset growth? Do you want to increase staff? Merge? Reduce costs? Is your goal to reduce the effort needed to deliver your current results? Do you want to improve quality or consistency? This list will help prioritize your technology strategy.
Next, catalog your resources and processes. What do you "do"? Make a list of your core processes, the information they need and how that information is passed to other processes. (This "data flow diagram" may be the subject of an upcoming post.). Also, list "what" you have. This is a catalog of technology hardware and software tools. What are they, where do they live (on your phone or tablet, computer, on a server in your office, or on a server somewhere on the Internet), what information do they access, and how (in-office, only, or accessible anywhere)?
So far, this might seem like a painstaking exercise, but you are building the foundation for important work that can pay you back in multiples of the time you invest.
Now it's time to define your pain points. Where in your week do you and your team find your process or your technology (or lack thereof) creating frustration, rework, duplication of work or excess cost? Don't hold back, it could be your pricey phone bill and frustrating phone system, difficulty in doing core job functions from offsite (what if the office loses power?) or a time consuming, manual portfolio rebalancing process.
If you have a tough time prioritizing, an approach that might help is to put things in four quadrants: easy to implement/big impact, easy to implement/small payback, hard to implement/big impact and hard/small. This list will help prioritize where to implement technology solutions first, the ones with the biggest payback.
This process needn't take an offsite all-hands meeting, either. In fact, it can be helpful to build these three lists over a period of time while you work. When someone in the firm comes upon a pain point in your process, catalog it. As you work through a week, add to your lists of goals and existing processes and technology tools and devices. At the end of a week or a few weeks, compile this information into a baseline for your technology strategy.
This is a start, and by no means comprehensive. In the weeks ahead, I'll discuss some of these areas in more depth as we build a how-to guide for your firm.
What do you think? What are some critical questions (and hurdles) on your technology roadmap? Just the conversation
Dave O'Brien is a NAPFA-registered financial advisor in Richmond, Va., and owner of O'Brien Financial Planning, Inc., a Fee-Only Registered Investment Adviser. Prior to launching his firm in 2006, Dave spent 18 years at GE where he managed information technology and operations teams in several industries.