Best practices for investing in the right technology solutions

Posted by James Capps on March 9, 2017

Financial advisors have more technology options today than ever before. But for technology solutions to work well, they need to be fully integrated with the advisor’s platform. The best technology solutions will enable you to scale, add new components as your needs change, and enable customization for your business’ unique needs. Here are some best practices to consider before investing in new technology solutions:

Find out if it’s really going to be fully integrated with your system. Some software developers promise fully integrated, comprehensive systems that claim to solve a range of operational needs without integration issues. In such cases, it’s important to get clarification on what the vendor means by “fully integrated.” Are they referring to a simple single sign on (SSO) integration or a deep, full integration? Get a commitment up front to what each vendor means when they talk about integration. If they promise deep integration, what level of support and up-front testing do they provide to make certain their technology meets this promise in real-world conditions?

Be careful that your approach isn’t too fragmented. Understandably, many advisors desire the best-of-breed solutions for each separate technology need – from customer relationship management to trading to financial reporting. In a perfect world, these various software programs would be able to communicate effectively with the help of APIs. In practice, this is not always the case. The more vendors you work with, the greater the risk of integration issues. For this reason, it may make sense to select a suite of applications that already work well with one another or that are provided by established vendors that have committed to integration.

Balance security considerations with open-source innovation. The technology landscape has become a fertile area for innovation in part because of its open-source development environment. An open-source environment enables developers to collaborate and incorporate feedback to speed up innovation and responsiveness. This degree of openness can be off-putting to advisors concerned about securing sensitive client information. For this reason, it can be helpful to work with a technology partner who understands the compliance issues and business concerns of financial advisors. This partner can help balance the need for innovation and integration with the protection of client information.

Prepare for some customization No matter what vendors claim about the readiness of their product, most firms will require the services of a software developer to help ensure their technology integrates well with their unique needs. Some firms hire independent programmers to help finalize the process. Others work with a technology partner who can help structure an integrated suite of products through targeted solutions.

Think of technology as a life cycle, not a one-time purchase. One advantage of technology is that it can scale as your practice grows, and can be adapted as you decide to upgrade to new technology and capabilities. Consequently, it’s important to think of your technology investment less as a one-time capital outlay and more as a recurring expense, since time and resources will be needed to see to periodic updates, and to make certain your systems remain secure, virus-free and compliant.

Capitalize on the cloud. Cloud computing provides a popular option for many firms. Through cloud computing, advisory firms can use secure broadband connections to access solutions and data securely stored on remote servers. Because this data is stored remotely, advisors can access these data and applications from different locations (such as their home offices) and from a variety of devices, including smart phones and tablets. In many cases, these applications are accessed on a subscription or pay-as-you-go basis. As a result, they require less capital and carry lower investment risks than purchases of software licenses or on-site hardware.

Prepare for a testing period. Deep integration is achieved through an interactive process of trial and error. Developers will need to test APIs and system integration in real-world situations, with typical data loads. This may require some down time for your existing systems, as well as a commitment of staff time for testing and training. While this can be a frustrating process, it is integral to ensuring your systems work effectively.

Solicit feedback from stakeholders. Ask for input from staff members who will be using the technology. Include them in every step of the technology selection process, from goal setting to exploring vendors, testing, and training. Similarly, explore upfront how your best clients like to use technology. What is their desired means of communication? What kind of online account access do they desire? How do they typically access this data, with their computers or with their smart devices? Let their preferences help guide your objectives. You can do this through client surveys and face-to-face meetings, positioning your exploration as a way to deliver value to the client.

Explore best practices in the industry. Industry conferences are a good place to learn about new technology options targeted to financial advisors. However, it is equally important to look beyond references and reviews and get personal feedback for people already using the software. Ask vendors if they can put you in touch with other advisors who are already using their product. Talk to colleagues and find out what programs they are using.

Consider hiring a third-party consultant. Many advisors have found success by engaging a technology consultant to help make the best decision for their business. Roughly a third of advisors in the InvestmentNews 2015 Adviser Study worked with a third-party consultant or vendor, not only to install and implement new technology but also to provide training and ongoing support.


User login