Tech's hidden ROI

At most firms, technology is viewed as overhead. Making sure your tech is running is today's equivalent of "keeping the lights on," so we often think of the ROI of our technology in those terms. 

But the real ROI is about people—both clients and the RIA team. A strategic tech stack allows firms to give clients more attention, insight, and options. 

"Ultimately, this is a human business," says Matt Reiner, Managing Partner at Capital Investment Advisors. "All our decisions about technology come down to one question: Are we giving our team more time to spend with clients?"

Each technology tool has the potential to multiply the value of what an independent RIA can offer and improve efficiency across the team. Here are a few insights from advisors and an experienced Schwab consultant who's helped dozens of firms think more strategically about technology.

Integration is about connection

charts and graphs in matrix of connection Placement information: below heading 'Integration is about connection'

Danny Schwartze is a technology engineer for Schwab Advisor Services. He often consults with new RIA firms to help them think through their technology options. And the first place he starts is the portfolio management system.

"Portfolio management systems are the data backbone of your firm," Schwartze says. What makes this possible? Integration.

Over the last 15 years, Schwartze has seen how portfolio management system vendors have worked with custodians and other technology providers to standardize how data is coded, enabling integrations to seamlessly move data to and from portfolio management systems, CRM systems, financial planning systems, and more. "Folks figured out that, if we work together, we can all deliver a better client experience," Schwartze says.

With integrated systems, staff members can focus on what they do best. Rather than become superusers for every system at the firm, each team member can do most of their work in one system and trust that they're getting the information they need. For advisors, this means that when a client is on the phone, the advisor doesn't have to keep moving between windows and scrambling for data. It's all a click or two away.

"We have a lot of pieces of technology. It's important that they all tie together," says Mike McCann, Founder and President of Perspective Financial Services.

Back-office staff often see the biggest benefits of integration because it eliminates the need to manually move data, enter data multiple times, and perform other time-consuming tasks. Integration also reduces errors, reducing the number of times that teams have to scramble to help an upset client.

The cloud is where clients are now

Woman using cloud technology

More than ever, clients expect timely communication and the ability to see their money at work. 

"Before the pandemic, advisors and clients had been used to meeting in person," says Schwartze. "Then, suddenly everyone had to start using digital tools. Now that they have a virtual option, many clients prefer it because they don't have to travel and they can get in touch more frequently."

Zoom calls and screenshares have become the norm, and many clients have quickly adopted new technology tools such as DocuSign, eApprovals, and digital transfers. Clients are not only comfortable with these tools—they see how quickly and easily they can get what they need.

And now that more people are becoming comfortable again with in-person meetings, cloud-based technology is making those one-on-one conversations more dynamic and productive too. With a tablet and integrated portfolio management and financial planning software, advisors can show clients where they stand and make adjustments in real time. They can also run scenarios and let clients see how different approaches can affect their savings.

Clients also have more access and control than in the past. When clients want to look at their finances or think through options on their own, they often have access to a branded client portal via their advisor's website. Advisors can select what information to share and what kinds of actions a client can take, ensuring that clients are getting transparency and an appropriate level of control over their accounts.

Security  demands expertise

A secure safe in technology matrix

Clients' wealth and a firm's reputation depend on secure technology. That's why many small- and medium-sized firms outsource their IT. Virtual IT experts can help firms monitor for malware, run data backups, set up virtual private networks (VPNs) to encrypt data as it moves through the Internet, and make sure the firm is always operating with the most secure hardware and software.

A virtual IT provider can also be a strategic partner to help RIA firms develop technology plans, including incident response and disaster recovery plans. As we've seen in recent years, both large and small organizations have been targeted by hackers. Every firm needs a plan to ensure that breaches are detected and repaired quickly.

Schwab has created a Cybersecurity Resource Center to help independent RIAs protect themselves and their clients from cyber threats. Click here for resources, tools, and tips to strengthen your defenses.  

Get more from your technology

"Technology was crucial to our growth," says Jamie Wilson, COO of Capital Advisors. "We've embraced it."

Once advisors see productivity boosts and enhanced client service, RIAs often add more tools. Scheduling software, automated communications, an AI texting platform, and more can help firms be responsive to clients without spending a lot of time on small tasks.

However, it's important to keep in mind that more tech or bigger, more complex systems aren't necessarily going to deliver more time for an RIA team. The key is to make sure that the tech fits the firm and that staff members are trained to take full advantage of what the tools offer. 

"You see ROI when you get more out of a tool," Schwartze says. "You need to right-size your systems to match what you need now and in the future."

What you can do next

  • Discover how Schwab's technology offerings can help your practice deliver exceptional service with less effort. 

  • Check out Schwab Alliance, the online and mobile platform designed exclusively for clients of independent advisors.

  • Consider a custodian that invests in your success. If you're thinking about becoming an independent advisor, contact us to learn more about the benefits of a Schwab custodial relationship.