Advisors recognize the need for updated technology to help them serve their clients and grow their practice, and custodians and service providers are helping them with this need.
“[T]here’s a lot of legacy systems that are starting to sunset or not evolving anymore,” and firms are interested in the “next stage of cloud-based integration and adoption,” according to Kristen Schmidt, founder of RIA Oasis, a technology strategy company that works with registered investment advisor firms.
“Firms are somewhat craving an all-in-one system, but then they also want independence, and they want customization,” she added.
Custodians have been playing an important role when it comes to the technology needs of their RIA clients, and the likes of Fidelity Investments, Pershing and Charles Schwab provide support in different ways.
Conversations with clients at Fidelity begin with “a problem statement,” said Majed Daher, a technology consultant at the firm. “This is what we’re trying to solve.”
One example may be a client wanting to mesh systems together, which can be achieved through working with vendors, third parties, internal developers or Fidelity’s full suite of application programming interface and data integration, depending on the size of the firm, Daher says.
Many RIA firms are looking for digital solutions — specifically e-signatures, online access for self-servicing and e-delivery, according to Tim Foley, a managing director for technology at Pershing. Launched in June, the firm’s NetX360+ as an example of a technology platform that can meet those needs, he says. It aims to deliver “a more streamlined user interface and more intuitive experience,” according to the firm.
At Pershing, discussing technology begins with a conversation between the RIA client and technology consultants, who “help the client visualize how the various technology providers can integrate into the Pershing workstation, and help clients make educated decisions about CRM [customer relationship management], portfolio management, performance and how that's all going to fit together,” according to Bill Bruckner, head of consulting and implementation for wealth solutions at Pershing.
At Charles Schwab, technology consultants are also utilized, and “two areas of top demand” are client journey mapping and cybersecurity, said Lisa Salvi, managing director for Schwab.
“So, it's not only just about the technology system, it's also about who does what and how to standardize those workflows,” Salvi noted, adding that part of the process is looking at “every single touch point” that the client will experience, singling out the positives and negatives of that experience. Determining that helps indicate where change needs to occur, and it could be anything from shuffling tasks from senior to junior team members to better incorporating an API, she says.
At RIA firm Personal Capital, a proprietary technology offering called the Financial Dashboard serves as a way for advisors to walk clients through scenarios in an illustrative manner.
It’s “the client's whole financial life in one place,” said Craig Birk, chief investment officer at the firm, noting it can be screen shared, allowing advisors to “lead someone through an experience.”
In the face of technology innovation, Schmidt of RIA Oasis cautions firms against the so called “bling disease,” which she defines as “an impulse buy” that executives often struggle with.
Some advisors will talk to vendors, and be swayed by hopes of what the final product will look like, she said.
Instead of being dazzled by hopes for that final product, it’s important to consider what kind of impact it will have and if it is necessary in the first place. Part of that deliberation means involving other people in the decision, she says.
“Most executives or owners are not using the technology,” Schmidt noted. “So, they should not be the ones deciding on the technology and implementing it.”
A range of people, including operations teams, client services teams, financial planners and compliance teams “need to have a voice in this decision, because all of those people will use it differently,” she added.
At Schwab, there is an effort “to get everyone from the intern to the chief operating officer, sometimes even the CEO” to meet to discuss the client experience, Salvi noted.
Saving Time Online
One of the main reasons for using technology is interoperability, according to Pershing’s Foley, pointing to the CRM, Salesforce, as an example.
“We’ve gone deeper with bidirectional note synchronization,” he said. “So, you can enter a note in Salesforce that carries over to 360 and vice versa.”
Connectivity “helps save time for an advisor who's very busy, to make things more interoperable, deeply integrated, saves them the clicks and keystrokes to get things done,” Foley said.
Besides saving time, it can also save money, notes Fidelity’s Daher because technology allows advisors to work with more clients at a time.
“Historically, they [advisors] would shy away from more technology because they saw that it's just a cost, right?” Daher said. “But now they’re saying, Well, okay, if I spend a little bit more on technology, I'm able to manage more assets.”
“And I probably don't have to hire that extra person because now technology will help make my existing team a little bit more efficient,” he added.