Tech Strategy More Important than Tech Spending

Independent registered investment advisers (RIAs) who have a strong, hands-on approach to technology are seeing more benefits than RIAs who spend more money on technology, yet use it less aggressively.   

A report from Charles Schwab Advisor Services, “Integrating Technology into Your Practice: Keys to Improving Productivity,” divided advisers into two types: those that have a technology strategy and those that don’t–which can also be described as an active versus passive approach to technology.  The study showed that even though the strategic users spend half as much on technology, they are twice as profitable as the passive users who spend the most money.   

“Our research reveals that advisers who view technology as a critical part of the firm’s business strategy benefit the most from that technology and see real financial results,” says Neesha Hathi, vice president of Advisor Technology Solutions at Charles Schwab, which gives custodial, operational and trading support for more than 6,000 independent RIAs. “However, even when there is an appetite for doing so, integration and implementation are challenging for many firms.”

Integrating technology into daily practice management is a real hurdle for advisers.  Using data from the 2010 RIA Benchmarking Study, Schwab found that the top three technology challenges facing advisers are: 1. integration, 2. selecting the right vendors or solutions, and 3. implementing changes into workflows or processes. Even though many of today’s technology applications are highly customizable by task or function, there is limited cross-system functionality.

Schwab recommends integrating key systems such as customer relationship management (CRM), portfolio accounting and document management into one program. The report shows integration yields bottom line results as well: more than 40 % of firms with high levels of CRM integration report productivity savings of more than 20%.

“Integrating Technology into Your Practice,” formulated by using the 2010 RIA Benchmarking Study and additional interviews with advisers, is part of the Schwab Market Knowledge Tools (MKT) series and includes:

  • Emerging trends in technology for RIAs
  • Success drivers for marrying technology with business strategy
  • Integration approaches, issues and benefits
  • How technology can enhance client experience