Rapid advances in RIA technology present great opportunity for process efficiency and scale, but too often wealth and asset managers find themselves in situations where technology works against them rather than for them.
The RIA space is well aware of the potential that cutting-edge platforms and AI tools can deliver, and firms have wasted no time jumping on board.
According to one report, almost 84% of wealth management professionals expect their technology budgets to increase, with 33% expecting significant increases in the coming years.
With these investments comes the expectation that technology will make work easier: streamlining and automating operations, integrating systems, enhancing client service, and ultimately giving us more time to focus on what matters most.
… but that isn’t always the case.
It’s easy to get caught up in the hype. A new platform comes out with all the bells and whistles, and in an effort to gain an edge of competitors, you feel compelled to follow suit.
The problem isn’t the technology itself, but the "buy first, figure it out later" mentality.
Firms acquire sophisticated platforms without a clear understanding of how they’ll genuinely integrate into their specific workflows or address actual firm needs.
This results in an expensive, underutilized system that adds more operational burden than strategic value.
Whether it's a significant investment in a new portfolio accounting platform or a long-standing commitment to legacy systems, there's a tendency to double down on past decisions.
Sometimes politics is at play with doubling down, because those who set the path don’t want to admit they made a wrong move, and it might make them look bad at the next executive meeting.
In any case, the desire to justify an initial expenditure or demonstrate "ROI" can lead firms to stick with underperforming technology, pouring more resources into its upkeep rather than acknowledging its limitations and exploring more suitable alternatives.
It’s tough to admit a past investment wasn’t optimal, but sometimes it’s necessary.
Many RIAs operate with a patchwork of outdated systems never designed for modern integration.
These older portfolio accounting or CRM platforms often struggle to communicate, leading to disjointed data flows and a heavy reliance on manual data transfers.
This creates a series of workarounds, exceptions, and reporting nightmares – a house of cards that is neither sustainable nor scalable as your firm grows.
Don’t underestimate insufficient technology as an issue: one survey found that over nearly 50% of advisors had left firms because of lagging tech.
Some technologies, especially advanced portfolio management or data analytics platforms, involve intricate setup, upgrade, implementation, integration, and data migration processes.
Without access to specialized technical resources, this burden often falls on already overburdened in-house teams who may lack the specific expertise.
This leads to inefficient deployments, ongoing firefighting, and a failure to fully unlock the technology's potential.
Before signing on the dotted line, define precisely what problem you’re trying to solve.
Understand your firm’s unique workflows and ensure any new platform, whether it’s for automating data entry or generating client reports, directly addresses those needs.
Demand tailored demonstrations that prove the system can handle your specific requirements.
Objectively evaluate your current tech stack.
If a system is consistently causing more problems than it solves, or if the cost of maintaining it outweighs its benefits, build a clear case to your leadership team for a change.
Focus on the future benefits and the opportunity costs of clinging to outdated or inefficient solutions.
When assessing new technology, robust integration capabilities are non-negotiable.
Look for solutions with open APIs or pre-built connectors to your core systems – CRM, portfolio management, analytics and reporting tools.
Equally important is developing a clear data strategy, ensuring clean, consistent data across all platforms to minimize manual intervention and maximize information value.
Whether you hire in-house specialists or partner with external experts, ensure you have the technical knowledge to effectively implement, manage, and optimize your tech stack.
Integrations, migrations, and platform upgrades are no simple tasks. These examples require a high degree of specialization that most internal teams lack, and usually there’s little room for error in time and budget.
Fortunately, there are RIA technology and operations services providers like Empaxis that specialize in these workflows.
Our systems integration and implementation expertise allows wealth and asset managers to take control and get the most ROI for their technology.
RIAs are right to be aware of all the new platforms and tools out there for their tech stack.
After all, leveraging technology will be the key driver and separator of one firm from the rest in the pack. But don't jump into everything without a clear plan first.
While it may be easier said than done, never lose sight of this one point: technology should work for you, not against you.
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