Starting a new advisory firm: Selecting technology

In my two previous columns, I’ve delved into both the marketing and outsourcing aspects of starting a career as an adviser.

In today’s third and final installment, I’m going to discuss the technology I would use were I to move to a new city and start an advisory firm from scratch today.

Choosing an ideal technology is difficult because your needs are constantly changing. And since some benefits of technology are quantifiable, while others are intangible, how do you prioritize them?

But if you’re just starting out and cost containment is key, the standard for determining the value of a technology should be that it affordably helps you increase efficiency and profit (and doesn’t take on a life of its own).

Beginning technology

If I’ve just passed the CFP exam (or earned a CFA or ChFC) and I’m moving to a new city to start my advisory career, the first technology I’m going to nail down is my customer relationship management software.

Your CRM is the backbone of your practice. On the advanced (and potentially more expensive) side, you could use Salesforce or Tamarac (we use both, along with Hubspot for digital marketing). On the inexpensive and simple side, you could conceivably use Outlook.

Initially, I’d find something in-between.

Cloud-based CRMs support your mobility, so if you ever work from home or if you’ve yet to establish a permanent office, a versatile CRM that doesn’t break the bank is essential.

For new advisers, a CRM software like RedTail is easy to use, inexpensive to operate (starting at about $100 a month) and it keeps client information accessible and safe. Its service offerings are not incredibly robust, but it’s adviser-centric, well-regarded, and you can use it to enter the name and contact information of everyone you meet. Once in your system, each client record can be updated with additional information about every interaction, their life situation, names of their children, their interests, and so on.

(More: Making a habit out of CRM best practices will help your business)​

Another beginning technology that you absolutely need is a transcription service like Copytalk. The legal issues of our industry demand it. After every appointment, you pick up your phone, dial and then dictate the details of your meeting, along with anything you need to remember pertaining to that appointment or client.

There are still advisers who prefer to have their assistants transcribe meeting notes. But in my opinion, that’s a poor use of time. The dictation portion can be completed from anywhere, it helps protect you legally, it increases efficiency and a transcription of your recording will be delivered to your inbox in almost no time at all.

(More: Better time management can require financial outlay)​

Next comes your portfolio accounting management system. While there are some viable options that are free, this is one of those instances where, even if you initially use a free source, you might quickly need to make the decision to overreach a little bit financially and upgrade to get where you want to be professionally.

Once I’ve acquired a block of clients, I’d turn to Orion,​ Black Diamond or Tamarac for my portfolio management. All are excellent rebalancing tools that allow you to look at a client’s position 24/7. And every single year they get easier to use. Tamarac, for instance, now allows you to open an account for a client, rebalance, make a trade, manage a portfolio and view a report, all in a single window.

The next starter technology involves simple accessibility and client communication. If I was starting over today, I’d immediately get my own domain name. [email protected] looks a lot better, and is a lot easier to remember, than [email protected]. As you grow, you may want numerous domains. Think ahead and secure them now.

As for technology and marketing, while vital, it’s a much larger conversation that includes everything from SEO and SEM to social media and email marketing. We’ve used technology to expand around the country, and without it, we never would have experienced the growth we have.

But for a beginner, I detailed in Part One of the series how I would market myself were I starting over today. There are more than enough potential clients in one or two large companies nearby to market to if you’re just starting out.

Last thoughts about technology

Over the 25-plus years I’ve been CEO of Hanson McClain, the business has segmented from what was an industry almost entirely built upon personal relationships, to one that is heavily technologically dependent.

It’s helped us grow in ways I never could have foreseen all those years ago.

But you have to learn how to manage technology or it will soon be managing you. At the end of the day, if technology is not used thoughtfully, especially for lone advisers, it can create as much work as it solves and add nothing to your bottom line.

Never forget that you are in a relationship business. You’ve got to figure out, sometimes client by client, what they want delivered to them electronically versus what they want delivered to them directly (by you). The No. 1 complaint I hear from new clients about their previous adviser is that he or she never contacted them.

Personal relationships matter.

When the market starts to slide, when a client isn’t sure what account to pull money from, or when they planned to retire in three years, but their employer is offering a buyout, these are the times when no technology can replace the personal side of what you offer. Don’t forget that. In the end, marketing, outsourcing and technology aside, the most important asset you have to offer a client is yourself.

Scott Hanson is the co-founder and a senior partner at Hanson McClain Advisors.