One of the most critical tools for any advisor going independent is ensuring they have the right technology.
Thankfully, there are several tools at their disposal. While leading CRM brands like Salesforce and Red Tail might be top priority, it ultimately comes down to envisioning your practice and knowing what the true value proposition of your practice is, says Matt Radgowski, CEO of Halo Investing, a Chicago-based financial products platform.
“Do your due diligence to make sure that those technology providers share that view and vision of the world, but also integrate well with the other offerings that you intend to provide?”
Radgowski says it's important to not only pick best-in-class technology solutions for portfolio reporting, portfolio management, and portfolio rebalancing, but also making sure that “it's really an optimization problem of identifying the best in class in each of those categories.”
Eric Franklin, advisor and co-founder of Prospero Wealth, says advisors who are going RIA and starting from scratch should consider an all in-one-platform that gives access to a bundle of free core services. For those who might be coming with an existing client book, he noted most advisors are also using all-in-one platforms like Advyzon, Orion, Tamarack or Black Diamond.
“Look at these big providers that are giving you investment management, CRM, fee reporting, performance reporting… and find the one that fits with your clientele and your check book, and open it up and try to put it all on one of those.”
Other advisors say starting with the custodian should be top priority.
"A custodian should be able to provide knowledge on technology vendors they would suggest or recommend," William Nedza, financial advisor at Ventoux Financial, wrote in an email. "Some custodians also offer both proprietary and non-proprietary technology to RIAs who custody with them, such as portfolio design or rebalancing, investment research, and cybersecurity."
Mike Watson, senior vice-president and head of RIA custody for Axos Advisor Services, says he’s witnessed advisors start with what he calls “the holy trinity” of FinTech: a CRM, a portfolio accounting solution or performance reporting, and financial planning software. He says the big issue for advisors isn't necessarily about the tech that they pick, but rather the utilization of the tech that they have.
“What ends up happening is these advisors are spending tens of thousands of dollars a year on this technology stack, but they haven't really figured out how to maximize that investment, so they're just really scratching the surface,” he says.
Learn more about a software RIA called tech stack needed to operate an RIA in this guide.
Instead, what they should be looking at is delivering an automated experience for clients.
“The [other] issue is most advisors come from a background in which they're more revenue focused,” Watson added. “They probably were a pseudo salesperson when they got started and now, they're responsible for working in the business and using technology as an enabler. They’re just not that equipped.”
Franklin highlighted a hot area of tech right now is the implementation of AI notetaker programs.
“They’re really helpful because they allow you to be much more attentive to your clients while you're meeting with them,” he says. “They let you come back with a pretty accurate transcript and a pretty accurate list of follow ups so that you don't miss things and drop them on the floor. I think they can be a huge time saver and that a lot more advisors will be adding to their tool stacks.”
Watson recommends advisors lean into their partners - whether it be a custodial partner or IBD partner - and make sure that the firm that they're working with has good integration with the technology that they picked.
At the end of the day, Franklin says advisors should also consider receiving a lot of differing opinions and join a community where “they can talk to a lot of people about the real experiences on these platforms.”
“A skilled salesperson can sell you almost anything, but talking to a lot of users of the tech is the most important thing you can do,” he says. “Talk to a lot of people who use it every day, because once you make that spend, you can't back out of it. It’s a long contract.”
"While I would not advise any specific resource - to stay neutral and not give advice - many advisors know Michael Kitces to be a good source of information," said Nedza. "Going independent can be a daunting task and my best advice is to seek trusted sources for advice."
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