Apart from having the right people to run your RIA business, having the right tech stack to enhance your workflow and productivity is key to your RIA’s success. In some cases, your RIA’s tech stack can even spell the difference between finding and keeping new clients and losing them to another RIA firm with a superior software suite.
Your RIA’s technology stack can be indispensable for handling tasks ranging from back-office work to crucial income-generating tasks. With a cohesive tech stack, you can do important business activities like your RIA’s performance reports, client account rebalancing, and tracking current and prospective clients.
In this article, InvestmentNews discusses the importance of RIA tech stacks. We’ll highlight the benefits of a properly assembled suite of tech tools not just for your business, but for your clients as well.
An RIA tech stack is a set of software tools needed to operate an RIA. This suite of software essentials can provide exceptional service to current and/or potential clients.
A 2023 study by industry expert Michael Kitces mentions the top three tech solutions most desired and used by RIAs:
A CRM platform can help your RIA firm manage relationships with your existing clients. This is also an excellent way to keep in touch with new prospects.
Choose a CRM platform with features like automated lead management and can be integrated with marketing tools – specifically email marketing campaigns for lead generation. This is crucial, since email marketing is one of the best ways to target the right customers.
With a good CRM platform as part of your RIA’s tech stack, you and your staff will find it easier to nurture new leads and cement long-lasting relationships with your current clients.
This type of software is often used for other industries like healthcare but is an absolute must for your RIA firm. The right financial planning software can help you streamline your RIA’s operations and provide excellent service to your clients. Here are the features to look for:
Portfolio management software should allow users to manage a wide range of assets and investments.
Its primary function is to track results, manage risk, and adjust to changes in market conditions.
Here are some features investors can expect from a good portfolio management software:
While these three software suites are among the most crucial tech tools (according to a study), you may get a slightly different picture if you ask an individual RIA. According to Joel Bruckenstein, FinTech expert, President and co-founder of Technology Tools for Today, the most important are:
He says, “We are seeing a comeback of the all-in-one solution, which can include some or all of the above (CRM, Portfolio Management, Financial Planning software). Orion, Envestnet, Advyzon, and Advisor Engine are examples of firms that bundle multiple software tools. I also think that there will be an uptick in the usage of Estate Planning software as we approach the sunset of the 2017 tax bill."
Bruckenstein also mentions the importance of having a tech-savvy custodian. Here are some tips on how to choose the best RIA custodian for your practice.
Some of the other useful tools for an RIA tech stack can include:
Marketing software can include:
When building your RIA’s tech stack, it helps to follow the industry standard of choosing the appropriate CRM, financial planning platform, and portfolio management software. However, building the best tech stack for your RIA is not that simple. InvestmentNews recommends these steps:
This could take a few hours to a couple of days, depending on the size of your company and the intricacies of your business process. By “process” we mean how you get new clients, service their needs, and keep them as clients.
A good starting point is to pose the question, “How do we currently handle the business, starting from a prospect’s initial inquiry, to handling their portfolio, then deducting our fees or commissions?”
Consult with other members of your RIA firm. To make efficient use of time and resources when building your tech stack, find out the needs of each of your staff, from the departmental to the individual level.
Refer to your process of sourcing, onboarding, servicing, and keeping clients. See where your staff and your clients’ needs intersect, then choose the software that fills the intersecting needs.
For example, advisors and marketing staff need to share product information, client information, and coordinate sales and marketing efforts. So, what they'll likely require is an all-in-one platform for file sharing, real-time chat, messaging, investment analysis, performance analysis, and performance reports.
After consulting with your staff on their software needs, look at several options and do due diligence on them. As much as possible, choose software from established companies. When applicable, they issue updates for better functionality and updated protections from cybersecurity threats as they arise.
There’s no rule that says you can’t copy the tech stack of other RIAs. If you have contacts or friends in the industry, ask which software they use. You can even make polls on LinkedIn or ask industry experts straightaway for their opinion on which tools make up a good RIA tech stack.
Some companies may do this as an afterthought, but it’s best to include the people who handle your RIA’s backend operations from the beginning. Make sure that your IT department or IT consultant participates in the tech stack building and selection process. They will likely be more familiar with the tech tools and recommend the tools that work well together. Bonus: your IT staff will also already know how to handle any glitches.
Once you’ve figured out how your RIA does business and determined the tech stack that can help do it more efficiently, decide on how much you can spend on the tech stack.
You can decide on a budget before buying or subscribing to the new software. But don’t finalize the purchase or subscription unless you:
After you and your RIA firm’s accountant have crunched the numbers, you can then set a budget and possibly a monthly target for covering the software expenses. You may also want to know the costs of not getting a tech stack for your RIA as well, if accounting needs a strong justification for the expense!
Here are a few more tips from RIA enthusiast Chuck Failla. In this video, he discusses the essentials of building an RIA tech stack. He goes over some tips and strategies to help you choose the right technologies for your RIA practice:
Here’s a listing of goRIA podcasts for more advice and insights from Chuck Failla on other aspects of building your own RIA practice.
The benefits of having a cohesive tech stack for your RIA firm cannot be overstated. Many clients these days have heightened expectations. With a good tech stack, your RIA can:
A good tech stack can also help RIAs keep key members of their staff.
A recent study from the Financial Planning Association has shown that client portals reap the most benefits for RIAs, ensuring some of the most favorable client outcomes.
In the study, 849 financial planners said that client portals as among of the most helpful and impactful technologies. In fact, different percentages of the financial planners surveyed reported:
Benefits of Client Portals for RIA firms | |
Benefit from client portal | Percentage of advisors surveyed (sample size: 849 advisors) |
Improved client trust | 80% |
Client satisfaction with RIA practice | 55% |
Improved client loyalty | 75% |
Boosted client referrals | 67% |
On the clients’ side, they reported these benefits from using the portals:
FPA President for 2023 James Lee added, “the development of technology solutions has grown exponentially in recent years to serve the needs of financial planners and their clients. Technology has played a critical role in connecting me, as a financial planner, more meaningfully to my clients while connecting them to critical information.”
Lee adds, “this research with our partners... doesn’t just highlight that connection; it quantifies it and provides the rationale for every planner to consider the role of technology in their practices.”
Putting together and implementing a tech stack for your RIA doesn’t have to be overly complicated – it just has to complement your RIA practice. For the most suitable tech stack, remember to involve all the relevant users who must collaborate and coordinate their efforts to deliver the desired results.
Don’t forget to consult IT professionals who can help you choose the most important tools. Prioritize your client portal, CRM platform, financial planning software, and portfolio management software, then add any other helpful tools to your tech stack.
For updates on all things tech in the investment industry, including RIA tech stacks and other tools, read and bookmark our Fintech page.
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