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Three ways advisors can maximize the impact of technology on firm growth and client experience

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It’s no surprise that the COVID-19 pandemic changed how financial advisors thought about and prioritized technology.

While technology adoption in the financial services industry accelerated before the pandemic, COVID-19 forced advisors to find a way to go digital now or risk being left behind.

Since then, technology has morphed from a once nice-to-have driver of efficiency and additional capabilities to an absolute must-have for meeting evolving client expectations, alleviating operational burdens, and driving firm growth.

Financial Planning’s Tech Survey revealed that most advisors intended to increase their technology budgets in 2021, with 65% of firms indicating that they had already prioritized technology spending over other practice needs in the 12 months prior. Sixty-nine percent of large firms and 66% of mid-sized firms said they addressed technology gaps exposed by the pandemic by investing in new technology.

But it’s not just the pandemic driving accelerated tech adoption. According to Alois Pirker, former research director for Aite Group’s wealth management practice, “More and more, [advisors] get asked to be the quarterback across the client’s entire financial life, not just investments. It takes resources, tools, data, and people to manage all of that. It’s hard.”

Especially for leaner firms doing more with less, taking on the more centralized role of their clients’ financial general manager is next to impossible without the support of technology – but finding the time to vet, implement, train on, integrate, and maintain new solutions is its primary obstacle.

In fact, according to Cerulli’s 2021 U.S. Advisor Metrics Report, insufficient time to learn and implement technology tops the list of the challenges advisors face when it comes to tech. High associated costs, too, are a concern for 74% of independent RIAs and 70% of hybrid RIAs.

Cerulli points out that in the growing fintech landscape, constantly evolving technology offerings with overlapping features can leave advisors with bloated and ineffective tech stacks, turning technology into more of a hindrance than a driver of growth and operational efficiency.

So how can advisors successfully leverage technology to better meet evolving client expectations and remain competitive?

  • Understand exactly what you need. First, evaluate exactly what your clients’ needs and goals are, as well as what you want to accomplish at your own firm. The breakneck pace of technology innovation can make advisors feel like they’re always behind, but you don’t need every solution. You need a laser focus on the technology that makes the most sense for your firm and your clients.
  • Prioritize usability and adoption. The best technology is the one you, your staff, and your clients want to use. If you can, request a customized demo to see the technology in action, or if available, leverage a trial period to better understand how the technology fits – or doesn’t fit – into your current workflows, and thoroughly vet the onboarding process to ensure you’ll receive the training and support you need to be successful.
  • Look for solutions that scale. As your advisory business grows, your needs – and the needs of your clients – are also going to expand. It’s inefficient at best and prohibitively expensive at worst to constantly replace or upgrade technology solutions to keep up with firm growth. As you’re evaluating tech platforms or providers, make sure to keep in mind what you want your firm to look like in three to five years. Will the technology scale accordingly?