Financial advisors who are in the process of breaking away or transitioning, now hold the decision-making power to choose every aspect of their business, from the name of their firm, the clients they want to serve, and the individual components of their tech stack.
While it might not sound like that big of a decision, think about it. For the modern advisor, your tech stack should touch every area of your business (trading, billing compliance, and more)—and most importantly, leave time for you to focus on your clients.
According to a recent Kitces Report, financial advisors spend about 50% of their time on back-office tasks , and only 20% actually meeting with clients. With at least half of their day focused on meeting preparation, planning analyses, client servicing, and administrative tasks, advisors are struggling to devote time to their investors as well as prospects.
If financial advisors can spend more of their day working with their investors and meeting with prospective clients, they can probably scale business growth. This is where an innovative tech stack comes in.
Research conducted by Cerulli found that with the adoption of new technology, firms experienced greater efficiency and increased productivity. Those who were heavy tech users managed $239 million per practice, while those considered medium users managed $183 million, and light tech users, who managed $106 million.
Choosing your technology may seem like an intimidating and daunting task with starting your own RIA, but we’re here to help. To get you started, we’ve identified which pieces of your tech stack you’ll need to get in place upfront.
CRM
Your CRM might be the most important piece of technology you can add. Customer Relationship Management software is the hub of your client relationships—where you’ll keep track of every point of client activity and communication.
You have a lot of options here, some of which are advisor-specific and others that are more general. One thing to keep in mind, however, is that you don’t have to use advisor-specific CRMs. Advisors happily use non-industry solutions, either because of pricing or flexibility.
That being said, far and away, the most popular CRM among advisors is an industry-specific offering: Redtail, followed by Wealthbox and Envestnet/Tamarac.
Non-industry solutions include Salesforce and Hubspot, among others.
FINANCIAL PLANNING
Planning is likely one of the core pillars of your services, so your planning software deserves a lot of thought. Consider what you need, what will make your life easier, and what will keep clients impressed.
Ensure the tool you choose matches your planning style. Most solutions are style-agnostic, but some work best for goals-based advisors while others are better for cash-flow planning.
Your financial planning tool may be standalone, or it may be part of an all-in-one solution. If it’s standalone, make sure it integrates well with your tech stack.
CLIENT PORTAL
You will likely use the client portal that comes with your portfolio management or financial planning solution, but we’re adding it to this list due to the important role it plays in keeping your clients happy.
A good portal can have a massively positive impact on your clients’ satisfaction, and the opposite is true of a bad portal.
TRADING
A trading solution is essential for quick and easy rebalancing, and you’ll especially want one if you plan on offering tax planning.
Chances are some other pieces of your tech stack will include a trading solution. Your custodian may offer one, or it may be offered by one of your other solutions. Many all-in-one solutions and risk analytics tools offer trading as part of their tools, too.
DOCUMENT MANAGEMENT AND PROCESSING
Your document processing systems should allow you to accept e-signatures whenever possible—especially since most advisors offer remote services through Zoom meetings. That may or may not be a non-starter for you, but it deserves to be part of the conversation.
RISK MANAGEMENT
Risk management solutions play a huge role in helping clients understand how you manage their money – particularly in uncertain markets.
Most risk analysis solutions are offered as part of a suite of solutions (including ours!), so chances are you don’t need to consider integrations here.
COMPLIANCE
As an RIA, you will probably need to rely on a compliance solution to help stay on top of things and to always be audit ready.
