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:
- Quarter-end processing and related client reporting,
- Customer relationship management systems (CRM),
- Electronic document management,
- Trading and rebalancing tools,
- Web presence,
- Business continuity,
- Outsourcing, and
- 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:
- Understand how the new technology will be integrated with existing systems.
- Make sure employees are prepared to use the new technology.
- Ensure that the investment considers potential changes to the firm’s physical environment.
- 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 www.schwabinstitutional.com.