Outside-IN

How to choose good tech, rather than costly and complex tech

Don't let perfection get in the way of progress by pursuing infinite customization

Feb 21, 2019 @ 4:05 pm

By Christopher Giles

Your success as an independent adviser depends on a unique blend of financial expertise, relationship management and business acumen. Good technology can enhance each of those skills, but as we all know, the best offerings can be expensive.

Small to midsize businesses that rightly focus on maintaining a healthy pace of revenue growth might not pay as much attention to how technology cost overruns weigh against profitability. Unchecked expenses related to customer relationship management, portfolio management and business administration tools may divert attention from other important development efforts.

Analysis paralysis

The quiet killer that lurks in the shadows is the cost — either in hard dollars or lost productivity — of overcomplicating the choice of technology. Too often advisers become enamored of developments at bigger companies or in tech marketplace news.

Advisers are notorious for spending too much time stressing about this and falling into analysis paralysis. They let perfection get in the way of progress while pursuing infinite customization, which wastes an incredible amount of resources. Yet the more complex a product gets, the lower the percentage of full functionality most users get out of it.

For instance, if you have fewer than 15 people in your business and there is significant overlap in their workflow processes, chances are there is a better solution for you than the most cutting-edge and high-tech CRM on the market. It can take well over a year of R&D and twice as much money as should have been spent to learn that lesson.

Don't settle

The common alternative — settling for cheap but subpar technology — risks eroding the efficiency of your practice in the short run, while suppressing its value over time, which could have grave implications when it comes time to sell. Plus, with tech playing a near-indispensable role in the lives of many younger clients, an adviser with antiquated tech solutions would likely set off alarm bells for them.

So what is the lone shop with a small team of advisers and support staff supposed to do? After all, the most coveted fintech providers have little economic incentive to give special treatment to a practice with less than $500 million in AUM when their services are prized by a host of billion-dollar firms.

Shop with purpose

The answer is to know what you need in order to provide your desired client experience and hit your own goals. Clearly define your metrics for accumulating assets, offering new services, hiring top talent or expanding office space. Technology can help with these goals, although many advisers should adopt tools covering 80% of their basic tasks at a reasonable cost instead of expensive platforms with irrelevant features.

You can find suitable tech vendors by talking with adviser peers whose practices resemble yours in service model and size. You can also find industry groups that offer discounts on vendors. You can even find consultants to recommend the appropriate peers and industry groups. But perhaps the best technology shopping tip around is to recognize what your practice does not need.

(More: Should CFP Board require technology training? Advisers seem to think so)

Christopher Giles is chief information officer of the Chalice Financial Network, a provider of technology and business solutions to independent wealth advisers.

0
Comments

What do you think?

View comments

Most watched

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Latest news & opinion

How to battle sequence-of-returns risk

Retiring during the longest-running bull market in history can be scary, as some begin to wonder when the good times will end.

Tony Robbins loses role with RIA amid charges of sexual misconduct

String of allegations costs the self-help guru his gig as chief of investor psychology at Creative Planning.

SEC sets June 5 date for vote on Regulation Best Interest

Commission adds new item to agenda: Interpretation of broker guidance that qualifies as advice

House passes SECURE retirement bill with massive bipartisan support

The measure allows small employers to band together to offer plans and raises the RMD age. Another provision eases use of annuities in 401(k)s, which critics say goes too far

10 IBDs with the most annuity revenue

Here are the independent broker-dealers that brought in the most annuity revenue last year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print