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The fintech ecosystem continues to expand. Every week, a new exciting advisor technology is launched. Financial advisors and their management teams face an abundance of choice when it comes to organizing their tech stacks. Michael Kitces’ Financial AdvisorTech Solutions Map (“the Map”) is evidence of this trend – it lists hundreds of technology companies supporting financial advisors, neatly organized into categories by use case. The Map is approaching its five-year anniversary, having first launched in April of 2018 – since that time, it has doubled in size and (as of February 2023) boasts 384 companies across 33 categories.
Choice is a good thing, particularly when it is well framed and architected. But with so many offerings to choose from, how should an advisory practice build or refine its tech stack? Let’s examine options to maximize your chances of success.
The “inside-out” approach
Management teams, financial advisors and specialized tech consultants often take an “inside-out” approach when optimizing their tech stacks. This method begins with analyzing what is currently in place, which is a very natural starting point for most practices. You’ll want to ask yourself: What is working well for your firm (and clients) and what isn’t?
From there, eliminate anything that isn’t driving day-to-day efficiencies and evaluate any options and capabilities that could benefit your firm. With the explosion of vendors on the Map, you may find that there are newer technologies available that weren’t around when you first set out to build your stack.
This approach is anchored in today’s operating realities and your comfort zone. But this “inside-out” approach runs the risks of getting caught up in incrementalism and missing the bigger picture.
“Outside-in” thinking
A complementary approach is to apply “outside-in” thinking, starting with how you envision your stack in an ideal world, versus what it looks like today. Using this approach, you’d first ruminate on your firm’s value proposition and the client experiences you wish to prioritize. Once that is clear, examine the Map and select additional fintech options that will bring that vision to fruition, enhancing both the client experience and your practice’s operations.
While this approach may sound appealing and direct, there are challenges when it comes to the implementation. Once you have identified the value proposition and defined the client/advisor experience, do you know how best to bring them to life?
That requires broader and more extensive information technology knowledge, which specialized tech consultants bring to the table. Firms and advisors can use publicly available resources to help facilitate that journey, whether in consultation with a specialist or on their own.
One option is the Kitces AdvisorTech Directory, which makes the Map searchable and dynamic, enabling interested parties to research different categories and the companies within them efficiently and effectively. The Ezra Group WealthTech Integration Score is a useful resource in identifying technology that integrates well with the rest of your tech stack. This is of the utmost import, ensuring that all the disparate tech works as a cohesive unit.
Place particular emphasis on your stack’s “hub”
When reviewing the Map, whether you’re building a new or reconfiguring an existing tech stack, consider that not all parts of a stack are created equal. Some systems will be core, serving as the “hub,” and will serve as the nucleus around which to organize the tech architecture.
For example, if your value proposition hinges on delivering investment alpha, your portfolio management and reporting systems will need to be center stage, with others complementing them. However, if your value proposition is focused on providing comprehensive, holistic advice, then your CRM system will most likely be the star of the show, with all other systems, for example advice-engagement solutions, integrating seamlessly into your CRM.
The Map is not comprehensive. It focuses on technology-based solutions and does not include service offerings, even if those offerings are based on a core-technology component. For example, technology has emerged to allow advisors to help clients manage their healthcare services and expenses, yet this category is not part of the Map yet. Don’t limit your search to just those categories on the Map.
The fintech landscape has evolved and grown at a rapid pace since the Map’s inception, and the financial advice community is eager to see what solutions will emerge over the next five years.
Philipp Hecker is chief executive officer of Bento Engine, a fintech empowering financial advisors to deliver proactive, comprehensive advice at scale to better serve clients, deepen relationships and convert more prospects faster.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
