Technology is Key Business Asset at Best-Managed Advisory Firms

According to a new report published by Schwab Institutional, the best-managed advisory firms have clear and long-term strategies for their technology investments, but many advisers are under-utilizing existing systems and spending money on new solutions without gaining much efficiency.
The report, “Technology Best Practices: Making the Most of Your Technology Investment,” indicates that top-performing advisory firms spend roughly the same amount on technology as their peers – approximately 2% of revenues annually. However, best-managed firms view technology as a key asset in building their businesses and have plans for where and how it will be used to achieve their established goals, according to a news release on the report.
Before purchase or implementation, best-managed firms ensure that new technologies are compatible with, and can be integrated into, the firm’s processes, people, and existing technology. A clear, effective training program for employees to learn the new technologies is also a key differentiator for successful firms, the release said.
The report explores 10 key areas where targeted spending in technology can lead to sharp improvements in efficiency and a high return on invested capital:
  1. Quarter-end processing and related client reporting,
  2. Customer relationship management systems (CRM),
  3. Electronic document management,
  4. Trading and rebalancing tools,
  5. Web presence,
  6. Business continuity,
  7. Security,
  8. Training,
  9. Outsourcing, and
  10. Data aggregation.
The report says best-managed firms tend to invest in technology when the scalability of the firm is in question, and also think long-term and develop a roadmap of the technology improvements that should be made over the next three to five years.
The report offers four steps to help advisers select the appropriate technology solution:
  1. Understand how the new technology will be integrated with existing systems.
  2. Make sure employees are prepared to use the new technology.
  3. Ensure that the investment considers potential changes to the firm’s physical environment.
  4. Assess the risk if the investment does not ultimately meet the firm’s needs.
The report is the latest in a series of Schwab Market Knowledge Tools (MKT) reports, an ongoing program of industry research reports, white papers, and how-to guides. offered only to Schwab Institutional clients, designed to keep investment advisers on the forefront of trends and competitive challenges facing the industry.
More about Schwab Institutional is at