Key Considerations for Selecting Technology

The core components

Customer relationship management (CRM)

CRM is the backbone of the tech stack. This is the place where wealth managers enter their trusted referrals and track those prospective clients through their sales cycle. This is the application where firms create their sales process and information-gathering workflows. It facilitates efficient interaction between wealth managers and clients, enabling firms to track client data, manage communications, and automate tasks. With a robust CRM, wealth management firms can deliver personalized services, thus fostering client loyalty.

Financial planning software

This tool allows wealth managers to create comprehensive and customized financial plans for their clients. It supports various aspects of financial planning, including cash flow analysis, retirement planning, tax planning, and estate planning. The right financial planning software enables wealth managers to offer differentiated advice tailored to individual client needs.

Investment management software

Investment management software aids in creating and managing client portfolios. It offers functionalities for modeling portfolios, rebalancing assets, and generating trade files, among others. By automating these tasks, the software reduces errors, saves time, and allows for real-time portfolio management.

Document sharing and management

A document sharing and management solution ensures secure and streamlined sharing of sensitive financial documents between the manager and client. It simplifies collaboration, enhances compliance, and increases the efficiency of workflow processes.

Performance reporting tools

Performance reporting tools offer a transparent view of the client's portfolio performance. They provide detailed reports on investment returns, asset allocation, and risk measures. By availing this data, wealth managers can make informed decisions to optimize portfolio performance.

Choosing the right tech stack

The process of building your tech stack should be systematic and thorough. The first step is to identify your most important requirements by considering your firm's strategy, operational needs, client base, and regulatory environment. I recommend reviewing the “wealth-client journey” starting with your prospective client and considering all the steps through an annual review meeting. Identify at what stage in the wealth-client journey does your firm provide the differentiating value that makes your firm special. If you are not familiar with the wealth-client journey, you can learn more on our website.

Investment management as your differentiator

Perhaps your firm’s differentiation is in the investment strategies that you create. Your firm may offer separately managed accounts as a strategy or specialized investment portfolios that you develop and maintain. Your firm’s differentiating value proposition would be in the investment management stage of the wealth-client journey. This would drive your focus on ensuring that the investment management and performance management technologies align strongly with your firm.

• Investment management to enable your investments team to create and maintain your specific investment strategies.

• Portfolio management to ensure that your investment strategies are compared to representative benchmarks that you can choose.

CRM as your differentiator

Your firm may be new, have a high growth target, or include several junior advisors. Your firm may be generating most of your new clients on outreach and prospecting efforts as opposed to referrals. In all these cases, your focus may be on your sales process to convert as many prospects as possible into clients. Your CRM is likely to be the most important application in your technology stack. You will look for a service provider that offers configurable workflows that can facilitate your sales cycle and strong management reporting to identify prospects who have been at a specific sales stage for too long.

Document your requirements

When it comes to selecting a technological solution, it is crucial to document your requirements before starting vendor demonstrations. This process will not only help you better understand your business needs and goals but also give vendors a clear understanding of what you are looking for. Documenting your technology requirements will also serve as a reference point during the evaluation process and help you make an informed decision.

Research potential service providers

Once you have defined your requirements, use industry consultants, industry publications, peer recommendations, and industry surveys to generate a starting list of potential service providers. You may consider reviewing the Technology Tools for Today survey or the Kitces Advisor Technology Map as a starting point.

Conduct research on each of the firms on your starting list. This does not mean immediately scheduling demonstrations with the service providers. I’ve never met a software salesperson who gave a terrible demo unless they were ill that day!

Instead, research the firm using its website, industry surveys, articles written about the firm, and speaking with colleagues. Then, narrow down these choices based on factors such as features, cost, vendor reputation, and customer support. This enables you to create a short list.

Create a short list

Create a short list of vendors when selecting a technology solution based on your specific requirements. This process allows you to thoroughly evaluate each vendor and identify the best fit for your business needs. By narrowing down the list, you save time and resources by focusing only on those vendors who are most likely to meet your criteria. You want to complete demos with the firms on your short list as opposed to your starting list. This saves your team time, which saves your firm money. Additionally, having a smaller pool of vendors allows for more in-depth research and comparison, ultimately leading to a better decision-making process.

Send your requirements to your short list

Send your requirements to your shortlisted service providers. Ask the service provider to schedule a demonstration that focuses on your requirements. The service provider should be able to deliver a tailored demo based on your requirements. A service provider who does not listen to your requirements in the sales cycle should cause you to pause. Think about the implementation if the service provider is not listening to your requirements in the sales cycle. Schedule demonstrations to understand how each solution works and how it can fulfill your requirements.

Integrations and demonstration feedback

During these demonstrations, ask about integrations to ensure the prospective solutions can work seamlessly with your existing technology providers or others you might be considering. A wealth management firm's technology stack rarely comprises solutions from a single provider. Therefore, the ability of a potential solution to integrate with other existing or considered technologies is a vital consideration.

Schedule an internal call immediately following the demonstration to discuss the impressions of all the attendees. One attendee of your review meeting should have the role of a scribe and should capture notes. The scribe’s notes should focus on how well the potential service provider satisfied your requirements and additional capabilities that your team liked from the demo.

You are likely to meet with many vendors over several weeks and remembering your impressions weeks later will be more difficult. Capturing your team’s thoughts immediately following the demonstration or at least on the same day will make your selection process run more smoothly.

Selecting your solution provider

Meet as an evaluation team after all the demonstrations are complete and review the feedback notes from each demonstration. Your decision at this stage of your selection process should be easier given your notes from each demo of how each potential service provider satisfied your requirements.

The selection of the right technologies for your wealth management firm need not be an arduous task. By following the steps outlined above, you set your firm on a path towards technological efficiency and improved client service. Remember, the goal of implementing technology in wealth management is not merely to keep up with the times, but rather to enhance the client experience and your firm's productivity. The right technology stack is out there; it is up to your firm to find it.

John O’Connell, founder and chief executive officer for The Oasis Group, specializes in helping wealth management and technology firms to solve their most complex challenges. His newest online training courses serve as a leading source of education for financial professionals at all levels in their careers. With modules ranging from cybersecurity to custodian markets and more, https://training.theoasisgrp.com/ enables firms and enterprises to upskill, learn at their own pace and rewatch lessons to reinforce specific learning objectives. Get an additional 20% off any course with coupon code ADVISORPERSPECTIVES.

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