By Anthony Stich
Countless firms—the vast majority, in fact—in the industry have not adopted basic fintech into their practices. It could be they are just unaware of the options before them, but considering the many trade publications, events and advertising opportunities highlighting fintech offerings, I would suggest the opposite is actually occurring: Advisors, wealth managers and other financial professionals are simply overwhelmed by their options and are defaulting to nothing.
Industry analysts and researchers repeatedly highlight the considerable return on investment (ROI) someone leveraging fintech will experience. For example, a great deal of research demonstrates that share of wallet, referrals, and cross-sell opportunities all increase by using financial-planning software, while data entry, back-office, and administrative work all decrease.
In short, financial professionals are more efficient and more profitable with effective technology. Here are four ways to help you both select and implement fintech into your practice.
1. Take test drives
All software should offer free trials, and you should take full advantage of this. Sign up with each of the technology providers you are considering and perform client simulations, inputting (or acquiring) data identically, adding goals and scenarios, and generating results. At this point, you should have a handful of reports to review. Evaluate each report and “battle test” the calculations. Consider questions such as, “How did this probability stack up to your projection?” or “What simulation was used [Monte Carlo], and how many scenarios were run?” And most importantly, “Will this technology grow with my client’s financial life?” Finally, compare each report side by side. How are the results? Are they digestible, easy to understand and accurate?
2. Learn more about the company
This should be done in two parts—understand their history (and future), and speak with current customers. History is important as it not only paints a picture about the solvency of the technology vendor but it’s also a barometer of trust. Companies with more experience (in not only company age but also employee base) and that have withstood various industry dynamics are reliable enough for your needs. Furthermore, err on the side of caution and choose the vendor trusted by more users (or firms). Bucking the trend in choosing a technology to manage your .mp3s is understandable, but not when it comes to the financial lives and security of your clients.
The second component is asking a friend. Seek out current users of the technology you are considering and ask for their perspective. Leverage social media to post a message, asking your network if you have any colleagues or peers using the considered technology to get an unbiased, valuable referral.
3. Ongoing support is critical
Purchasing software, much like financial planning, should not be an episodic event. When you acquire software to improve the efficiency of your practice, you'll want to maximize the use of your technology. This will be done through various training and support options of the vendor. When performing this review, make sure you ask to see the area at which all support and release notes are held. Give their support line a call and visit areas of their public site that house various blogs, webinars and other avenues of continued education. You should be selecting a partner that will help you grow your business rather than a technology vendor that is onto the next sale.
4. Perform an ROI analysis
Considering the different levels of complexity, how technology will impact your business should play a far greater impact on your decision than the technology’s price. By performing an ROI analysis, either with a third-party calculator or some back-of-the-napkin math on how much faster you would be at generating plans, how much more AUM you would uncover, and how many additional products you would likely sell with each household than a software program.
Understandably, the acquisition, implementation and adoption of new technology are all daunting considerations. However, the answer should be clear if you use these four steps in analyzing your options.
When choosing any new software, don’t just purchase a technology, select a partner.
An enterprise partnership—rather than a vendor-buyer relationship—can result in long-term mutual growth and provide a solid counterpart to the overwhelming decision-making processes that come with organizational or regulatory changes. A technology partner that is able to leverage a staff with enterprise-level expertise will not simply sell a product but also work with the business to determine the root problem and define a true solution to the overall business need.
Anthony Stich is director of global marketing at Advicent, a provider of SaaS technology solutions for the financial services industry.