By Mike Overdorf, Founder and President, The Sycamore Company
As industry leaders look to modernize their tech stack, advisor-facing tools are usually placed at the top of their wish lists. Today, they are often chasing tech’s shiny, new object – artificial intelligence. And while AI is creating meaningful opportunities for advisors, many firms are overlooking a much greater challenge: technology fragmentation.
In short, the industry’s tech stack problem is not really a front-end, advisor-facing issue. It’s a back-end, operational one.
I often tell my clients that AI has some really nice tools for an advisor, from meeting-note taking to task creation and email summarization — many of which can bolster productivity. However, the bigger issue facing firms today is redundancy.
Less is More
Over the past decade, wealth management firms have accumulated advisor-facing technology at a remarkable pace. New applications have been introduced to solve individual problems, satisfy advisor requests, or keep up with competitors. As a result, many firms are paying for overlapping capabilities without realizing it.
There’s a significant opportunity to consolidate. What may have become a tech stack of 20 applications can probably be consolidated into five.
Keeping Up with the Joneses
Technology decisions are too often driven by a need to keep up with what other firms are doing instead of by a clear understanding of operational needs. They may see that the broker-dealer down the street has some new apps, and a fear of missing out drives them to want the same, without really understanding why they are needed in the first place.
This tendency has grown rapidly with the introduction of AI. Advisors learn about new tools, competitors begin to experiment with them, and then firms feel great pressure to respond. However, implementing technology before identifying the underlying problem does not create lasting value.
As I often advise clients, the first question when seeking out new tech should always be: What problem am I trying to solve?
Are workflows slowing down client service? Are operations teams backlogged? Are advisors spending too much time searching for information or waiting for answers from the home office?
Technology should address these issues first.
Creating Seamless Workflows
The most productive and successful firms are not always the ones with the biggest technology budgets. It’s those that create seamless workflows between advisors and the home office that come out on top. I’ve seen some of the greatest productivity gains come from improving operational processes over adding new advisor-facing tech.
That doesn’t mean technology meant for advisors isn’t important. It means technology should make information easier to access, automate repetitive tasks and remove friction from daily workflows. Advisors should be able to get answers quickly, complete routine tasks efficiently and spend more time serving clients. And this is where AI is beginning to deliver meaningful value.
Don’t Back-Burner Operational Infrastructure
Many firms continue to prioritize front-end tools over operational infrastructure. Part of the reason is simple economics.
Advisor success pays the bills, so it’s important to keep them happy. When top advisors ask for a new application, firms often find the budget to accommodate them. The challenge is that every dollar spent on another advisor-facing tool is a dollar that isn’t invested in operational efficiency.
This is critical because back-office investments often determine whether a firm can scale successfully. The firms that regularly outperform their peers understand this distinction. You can see a well-run broker-dealer versus a not-so-well-run broker-dealer just by looking at their tech stack.
Industry Leaders vs. Laggards
Looking ahead, scalability will increasingly separate industry leaders from the laggards. In fact, every firm should ask itself a simple question: What would happen if we doubled in size next year?
Would operations break down? Would we need additional staff across every department? Could systems absorb a major acquisition or recruiting win?
The next generation of successful wealth management firms will build infrastructure capable of supporting growth long before that growth arrives, and their technology won’t need to be reinvented every time they add advisors, acquire another firm or expand into new markets.
The firms that thrive in the coming years will be those that invest in scalable workflows, integrated systems and operational efficiency today.
In the end, the industry doesn’t need more technology for technology’s sake. It needs fewer silos, fewer redundancies and a greater focus on the infrastructure that makes growth possible.
