3 Reasons Older Investment Firms Could Fall Behind

February 17, 2021 - Stephen Van de Wetering

For older investment firms, outdated practices and ways of thinking will not cut it in the age of digitization and automation.

There is something to be said about age and wisdom, but there is a downside.

For those 10 years or older, they’re at greater risk of falling behind their younger, nimbler rivals.

Older firms are often guided by visions and decisions from years ago. Since past methods had worked for so long, a “why change now?” attitude may persist.

But in the age of COVID-19, change is no longer an option; it’s a necessity.

Complacency is dangerous in a fee-compressed, technologically-driven, winner-take-all environment. Even the SEC is worried about the changes taking place.

And even if you wouldn’t consider your firm as “old” or at risk, it’s good to be aware of pitfalls as your company matures.

Reasons Older Investment Firms Could Be At Risk

Reliance on Legacy Technology

Many older investment firms have dumped tons of resources into a software or system that they intend to get full use out of.

But over the years, new technology has made the old systems look obsolete.

That portfolio accounting and trading software may have been cutting edge at one time, but newer systems are more robust and effective.

Still, even if firms wants to switch, they face obstacles:

The benefit for newer firms is they aren’t held back by legacy systems. They can access cloud-based and turnkey software that promote flexibility and efficiency.

And during that time, firms with the latest technology can find ways to outcompete their less technologically-savvy brethren for clients and market share.

Old School Mentalities

Some feel they’ve seen it all and have everything figured out. They became successful, and now they’re comfortable.

But the world is changing fast.

What worked then won’t be the recipe for success going forward.

Digital adoption has only accelerated due to COVID.

And while virus cases have fallen sharply, the threat still exists. Virtual meetings and remote work will remain, long after the virus is defeated.

If your success relies on in-person meetings, being in a specific physical location, using specific physical devices, and being heavy in manual processes, you will fall behind.

Investment firms need to expand their digital presence, both for attracting new clients and job applicants. They should leverage automation and third-parties

They should be comfortable growing and doing business online rather than solely in person.

Firms that fully leverage technology will perform better, and software and service providers like us can help you make the transition.


Depending on the size and complexity of an investment firm, the company’s bureaucratic natures gets more developed and hardened into place with age.

The decision-making process is slow. Getting anything important done requires a series of hoops to jump through.

If someone wants to adopt Robotic Process Automation (RPA) or make use of a turnkey asset management platform (TAMP), it becomes a dragged out process for approval.

They pass suggestions to higher-ups in the chain of command, who might:

This situation results in bottlenecks, and it can take months or years to get meaningful and positive changes implemented.

Smaller firms open to change and larger companies that cut the bureaucratic red tape will be more competitive and dangerous to their slow-moving rivals.

Don’t Risk Falling Behind

A fast-changing world requires fast-moving organizations, quickly responding to threats and opportunities.

Don’t let age hold you or your firm back. If you are willing and open to change, it’s never too late to improve.

Look at ways to digitize and automate. You can partner with service providers like Empaxis to help in those areas.

Firms should ditch old ways of thinking. Changes in technology, demographics, and societal values require a modern approach to client interactions, investment strategies, and sales and marketing.

Investment management companies should cut the red tape and speed up decision-making processes. When there’s a good solution, it should be listened to, not stalled by bureaucracy.

With age can come wisdom, as long as you remain open to new ideas and make the necessary improvements.

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