Financial advisory firms continue to bleed money on tech with failed adoption rates. So we asked why and here is the answer: You can NOT adopt tech without first deciding your business model. This may seem like common sense but humor us and read below so you don’t make the same mistake as your peers.
Business model decisions you MUST make before tech decisions
Type of clients you wish to earn – company retirement plans, endowments, individual families
Type of clients you want invest the most time and money into to grow
Services you will provide to each segment of clients – investment management, planning, oversight of investments, insurance, tax, all?
Fee structure, level, and profitability for each segment of clients. What will your fees be – Hourly, retainer, AUM, commission/trails? What level – above industry standards, lower, or average? How will you compare the fees to internal costs to determine profitability?
Staff servicing structure – will only your advisors interact with the clients? or will it be the associate advisors? admin staff? or very little staff interaction and instead provide an online interaction experience?
Why must you decide before choosing tech?
Fellow owners or partners will rebel if you invest in software that is used for the least profitable and least wanted client segment. This happens if you haven’t all decided on the business model answers as an executive team.
Staff rebel, quit, become distrusting and unproductive when you choose software and then shut it down after finally realizing it wasn’t a match. If you do this often enough to your staff, you will lose them mentally or physically. It is cheaper and easier to answer #1-5 first so your choice of tech matches the business model and earns the trust and adoption of the staff. Lately, we see firms spending big $ on staff retention, bonuses, and HR consultants to come in and fix the broken cultures that constant change without purpose has created
The wrong tech choice will cost you new clients. The money and time it takes to implement a new software, realize it doesn’t work, and then shut it down is money and time that could have been spent on business development and valuable client interactions. So the cost of the license is the least of your concerns – it is the cost of lost new business that should concern you.
Each tech has a slant toward a particular segment of clients so buyers beware. Some tech is only for retirement plan business while others might say they are for all types of clients. If you add new tech without looking at your entire business model, you will find yourself spending excess money on tech that doesn’t talk to each other and isn’t reducing the workload or improving communications among staff and clients for all the client segments.
Don’t add tech just for the sake of adding – be deliberate and make it count
Your staffing plans dictate the complexity and functions of the tech you would want. For example, if you want your advisors to service the clients, develop new business, and do new account paperwork, you will want to invest in a more comprehensive, quick-to-use set of software that reduces as much of the admin and sales tracking work as possible. The advisors will want to focus on business development and servicing the clients so the back office work must be automated or eliminated as much as possible.
All tech costs money and time. Money for licenses. Time spent learning the software.
In summary, if this article causes you to pause and question the strength and conviction of your business model, it is time to save yourself money and revisit your business. Sit with your owners and talk about where the business is heading, what the firm should invest in and why, and get clarity. We promise you that choosing and adopting the tech will be much easier, less expensive, and more rewarding for all.
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