Don't miss opportunities by thinking of tech as expense vs. investment

When considering a new technology purchase, advisers tend to look at costs rather than benefits. That's risky.

May 1, 2015 @ 4:33 pm

By Sheryl Rowling

When considering a new technology purchase, advisers tend to look at costs rather than benefits. In other words, technology dollars are considered an expense rather than an investment.

Framing technology decisions in this way creates the potential for missed opportunities as well as needless spending.

Much like Abraham Maslow's hierarchy of needs, the hierarchy of technology spending should be viewed as follows:

The basic level of technology purchase decision making is a simple “How much money will it save me?” At this level, buying a new printer would only make sense if it uses cheaper ink and will pay for itself within a year or two. This kind of analysis can lead to problems. For example, what if this new printer jams more often? This could cause loss of precious professional time.

Thus, the next level in the hierarchy is time savings. Saving money might not be material if it costs more in time. (After all, time is money, right?) In fact, going beyond simple cost reductions can result in more profitability with time savings. For example, how much time can be saved by going paperless? Think about less admin time, less time searching for documents, more efficient sharing of information — and reduced paper and printing costs.

(More: 3 due diligence steps advisers should take to avoid costly technology mistakes)


Internal savings aside, providing clients with better service and benefits can help keep clients while bringing in new ones. If adding rebalancing software can produce significant tax benefits for your clients, is that worthwhile? Reducing labor hours on rebalancing plus adding tax savings for clients can make this type of expenditure a profitable investment.

The next level of the pyramid is practice efficiencies. Greater efficiency means more time available to spend on key activities (client service, marketing, strategies) and less time spent on repetitive or unnecessary administrative tasks. Consider CRM software. This can streamline workflows, instantly provide client information that is available to all employees and track client communications and projects. This type of efficiency goes beyond time saving in one particular area. It helps with the firm's overall efficiency.

Finally, the “nirvana” peak – “flow.” By this I mean that all company operations are coordinated, working together efficiently, making your office run like clockwork. To achieve flow, investment must be made in integrated software and systems. Will it cost money and time to get there? Yes. Will it be worth it? I say yes.

Sheryl Rowling is chief executive of Total Rebalance Expert and principal at Rowling & Associates. She considers herself a non-techie user of technology.


How do you think of technology spending?

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