Tips for Financial Advisors to Build the Optimal Technology Stack

Jan 5, 2023 | Guides

If you’re thinking about upgrading your tech stack to level-up your financial advisory practice in the years ahead, know that you’re not alone. The topic of technology is top of mind for financial advisors right now, especially since the wealth management industry is positioned for growth.

According to the 2022 Investment News Advisor Technology study, 86% of financial advisors see technology as the key to unlocking their growth plans. 

The challenge is that technology can be confusing to evaluate. There’s a lot of software out there, and each option has its strengths and weaknesses. How can you make sure that you’re choosing the right solutions for your business?

This short checklist of tips will help you prioritize your time, attention, and focus when choosing the right solutions.

1. Commit to figuring out what your business needs

The 2022 Investment News 2022 Advisor Technology study found that 76% of financial advisors prefer to choose best fit technology solutions as opposed to a limited, unified offering.

‘Best fit’ solutions are tailored to your business’s exact needs. That means, you can customize the technical infrastructure that you build to the human processes that run your business behind the scenes.

One step to take, before you begin researching technologies, is to evaluate the value and performance of your technical infrastructure, overall. You can think about each technical component as a “must have” or “nice to have.”

That means looking at your technology infrastructure from an operational-level view. Consider the experience of Dani Mutz and Steve Iversen at Cross State Financial. Mutz, who regularly performs audits of the firm’s technology stack, 

“We found that some were not advanced enough while others were overly complicated,” she says. 

“As business owners, we are tasked to reassess ourselves on a regular basis. My biggest goal in 2020 and 2021 was to assess our technology stack and to ensure that we were using the best possible solutions for our needs.”

With a clear perspective into your business’s needs, you can make sure that you’re choosing the best-fit solution through core software and a network of integrations.

2. Ask your teammates for feedback

If your software is doing its job correctly, it will help make work-life easier for your colleagues. Ultimately, your financial advisory technology stack needs to address the needs of everyone. Where are people wasting time in their days? What are some pain points that come up? 

The key, when asking your team members for feedback, is to uncover patterns. Here are some examples, for instance, that can be addressed with a technology stack:

  • Clients are expecting more communication
  • There needs to be a more consistent way to share information with clients
  • Advisors need tools to help with making decisions (i.e. determining model portfolios, assessing client risk, administering digital marketing campaigns)

As an example, Pat Herir at Princeton Financial Partners recently implemented CircleBlack at his firm. During the process of selecting the right software, he asked for his fellow partners’ ideation and input.

“I was the first person to start using CircleBlack at our firm, and I was able to get the other guys to use it,” Hehir says. “This helps us work together to better support our clients.”

This collaborative approach helped ensure that everyone finds the technology useful. 

3. Talk to fellow advisors for recommendations

There’s a lot of technology out there, and everyone has their own individual preferences about the best software to purchase. As a result, it’s helpful to rely on suggestions from trusted peers in your industry who may have navigated similar decisions.

As an example, Kevin Andrews at Eagle Financial Group has joined a small,

community meetup of peer financial advisors. This group gets together remotely to discuss challenges and best practices in the industry.

“I ask a lot of questions and am inherently skeptical about things,” says Andrews. “I like to get to the bottom of what’s smoke and what’s not — to focus on what’s real — when putting together the puzzle of clients’ investment plans. I try to know my little corner of the world better than anybody else.”

These groups provide helpful environments to evaluate software in an open, trustworthy, and candid manner.

4. Familiarize yourself with important technical concepts

Knowing exactly what software to purchase can be a challenge. How do you identify exactly what you need? Understanding the terminology of the landscape of options can be helpful. Here’s a few concepts to keep in mind:

CRM vs. Wealth Management Solution

One common question that comes up among financial advisors is the difference between customer relationship management (CRM) platforms and more comprehensive wealth management solutions. In general, advisors tend to be familiar with CRMs but less so than other types of tech.

“If you think of the financial advisors’ ecosystem, CRM is one of the key components,” explains Tricia Haskins, vice president of digital strategy and platform consulting at Fidelity Institutional, in an interview with Investor’s Business Daily. “We found that 82% of advisors had a CRM. More than half of the advisors said that their CRM platform became more valuable during the pandemic.”

Tactically speaking, CRM software helps financial advisors better manage their marketing, sales/prospecting strategies, and campaign outreach.  Wealth management solutions, on the other hand, are specifically designed for financial institutions and wealth management firms to strengthen client relationships. 

Financial advisors use their wealth technology stacks for the specific purpose of tracking and analyzing a client’s investments, assets, and debts, helping them to identify opportunities and develop strategies to maximize returns. Wealth tech can help assist with the decision, for instance, to identify portfolio diversification opportunities or to assess the risk profile of a client’s investments. Here are a few example features that the ideal wealth technology management platform will have:

  • Planning capabilities to connect financial data from custodian and held-away accounts
  • Performance reporting to help get clients on the same page 
  • Trading & rebalancing capabilities to create, edit, and store models composed of stocks, ETFs, mutual funds, and options
  • Billing functionality to bill in arrears or advance using flat, tiered, or banded structures based on end of period or average daily balances; collect fees by uploading automatically-generated billing files to major custodian platforms; and share easy-to-understand invoices with clients
  • Risk score assessment capabilities to make the best possible decision for every client
  • Integration with custodial platforms to access account registration, balance, position, transaction, security/price detail, and tax lot data

Wealth management solutions can also be used to automate and streamline various financial processes, such as asset allocation, portfolio rebalancing, and performance reporting. For example, a wealth management solution might include features such as automatic rebalancing of a client’s portfolio based on predetermined criteria or the ability to generate customized performance reports for clients. By automating these processes, wealth management firms can save time and improve efficiency.

Software Integrations

Software integration refers to the process of combining different software systems, applications, or tools in order to allow them to work together and exchange data. This can be achieved through various methods, such as using APIs (Application Programming Interfaces), integration platforms, or custom code. Some tech works together seamlessly in a plug-and-play environment. Some integrations will require custom technical development.

That’s why, when choosing software integrations, it’s important to take inventory of what your company is going to need. What are some workflows that will benefit from being automated? What are some tools for improving communication with your clients? 

Here are a few popular ones from CircleBlack’s wealth technology ecosystem, as examples:

  • Riskalyze, which provides tools and scoring systems for analyzing investment risk
  • Wealthbox, which is a CRM that brings people together
  • EnvestNet MoneyGuide, which is a planning solution for intelligent wealth planning

Piecing it all together

Modern technology stacks are similar to puzzles. The key difference is that you’re not building a one-size-fits-all solution. You are piecing together a picture that’s relevant to your unique situation. 

As an example, consider the experience of Martin A. Smith of Wealthcare Financial Group

“My apps speak to each other,” explains Smith. “Our CRM speaks to our portfolio reporting and performance reporting software. Both of these systems speak to my retirement planning software, in addition to my video software. Everything is interrelated technology wise.”

This technology stack has helped him run a nimble, 100% virtual operation. 

“If I needed to, although I haven’t done this a lot, I could run my entire business — including compliance — through my phone,” he says. “It would be a bit tedious on my smartphone window with a stylus pen. But if I had to, I could do it. Through the use of apps that are integrated with one another, I have built a practice that is technologically very efficient.”

The key is to understand what you want and need the technology to do for your business. From there, you build towards the exact foundation that you need. 

5. Pay attention to podcasts and other media sources about recent trends

In today’s modern media landscape, it can be a challenge to pinpoint the signal from noise when identifying true innovators in the financial advisory profession. Beyond what others in the industry are saying, one powerful skill to build is a filter for your own judgment.

If you’re looking for thoughtful, deep-dive discussions, podcasts can be a helpful way to discover new ideas. If you’re interested in in listening to some thoughts about choosing the right wealth technology software, this FinancialPlanning magazine interview with CircleBlack CEO Lincoln Ross will be helpful:

“So what we’re working to do is to be able to tell an advisor, you pick the source of truth for the household. So whether that’s the financial planning system, the CRM, the risk tool, wherever you go. The first place that you think about configuring households and you want that to be the source of truth, you tell us what that is in our system, then we’ll make sure that we reconcile and synchronize that household throughout your chosen ecosystem. So that’s just one example of how we’re thinking about how orchestration actually happens in the world.”

“We really think that with this, we can enable higher quality conversations between advisors and clients. And by having their chosen ecosystem orchestrated, we can then deliver a unified experience through our client portal. We also have a mobile app, which has some of the similar features in the client portal where that client portal experience becomes so much more complete.”

6. Build towards your future

In the years ahead, financial advisors and their clients will need to be in close alignment. There are many macro-level trends taking place, including a generational wealth transfer.

When choosing software, it’s important to implement a platform that can expand with your business. Ultimately, the direction that your financial advisory practice will expand is the direction of your client base.

Here are some considerations that financial advisors will find themselves needing to prioritize:

  • Marketing strategies
  • Diversity & inclusion goals
  • Values-based investing trends
  • The path to steady, sustainable growth
  • Business succession planning
  • Expansion of staff
  • Digital brand presence

Price and scalability will be important considerations. If the software will help you achieve your firm’s client growth goals, the investment will have been worth it. Some financial advisors will think about their technology platforms as foundations to be built upon.

Prioritize the right investments for your business

One common challenge that financial advisors experience when choosing technology is feature overload. It’s important to make sure that you focus on the best fit for your business.

You can think of your software as foundational infrastructure for your business. It’s important that you start with the right bare bones, so that you can continue to build and evolve over time.

The right software will help your business improve over time, as a strategic value-driver. It will be important to continually assess its performance.

“Every six months, I scrutinize the software that I use,” says Smith. “I ask myself what’s working and what’s potentially a waste of money. I also evaluate whether technology is too expensive, in addition to meeting its highest and best use for my practice.”

Remember that your software needs to work for your practice, not the other way around.

Learn more about CircleBlack

CircleBlack is an all in one management platform for the wealth management industry. You can think of it as an operational dashboard to better connect financial advisors and their clients around a shared perspective. The outcome is better collaboration and communication for relationship-focused advisors.

To learn how our software can help you build, manage, and grow your wealth management practice, get in touch to request a demo.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.

Guide to Tax Planning

Financial advisors constantly seek ways to increase value, create personalized solutions, and secure their client's financial futures. Congress has passed a number of omnibus bills that have significant tax consequences, especially for high-net-worth households. This...

How Financial Advisors Can Highlight Their Brand Value on YouTube

If you’re part of the Financial Advisor Magazine community on LinkedIn, you may have seen this thoughtful, recently posed question:What this informal poll suggests is that storytelling is crucial for financial advisors to communicate effectively with prospective...

Ready to try CircleBlack?

See how we can help you simplify your daily tasks, delight your customers, and grow your practice.