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Growing RIAs Must Focus on 'Process,' Not Technology

It is much less disruptive to take the time and train everyone on existing software tools than it is to convert to an entirely new system that requires you to transfer data along the way.

RIA owners often call our office and frustratedly demand, “Just tell me the best tech stack to support growth, and I’ll go buy it!” By the time they reach out to us, they are at their wits end because after working so hard to generate new business, they are struggling to support the growth in new client relationships, AUM and accounts. Quarterly performance reports take longer to produce than anticipated, portal views don’t match custodial statements, data doesn’t flow freely across the various components of the technology back office, etc. They mistakenly assume these pain points are due to a problem with the technology tools they have chosen, rather than the processes they have built around those technology solutions. 

If the firm has low client adoption of the client portal, for example, they assume, “We must have chosen a bad portal if no one is using it, let’s replace it with something else!” Putting the firm through a complicated technology conversion can be costly both in real dollars and opportunity cost as employees are distracted by the implementation of the new software. Instead, they should focus their energy on the firm’s process for introducing the portal to clients, the training they are providing and the incentives they are giving clients for using the portal.

Is the firm posting performance reports to the portal and steering clients there to receive them, or are they still emailing the reports to clients and then wondering why no one is accessing the portal? Is the firm encouraging clients to post and retrieve documents within the portal through the course of normal business, or are employees still using another method to exchange sensitive documents with clients? Has the RIA’s research team started posting their quarterly market commentary to the portal and encourage clients to log in to retrieve them? Adoption of technology doesn’t magically occur at the flip of a switch—there needs to be a methodical process built around implementation and usage by employees and clients alike.

Another example of misplaced frustration with technology revolves around billing. If it is taking too long to bill accounts after quarter end, RIA owners often assume something is wrong with the billing software itself and go off looking for a replacement. Additionally, if they continually catch errors during billing and are losing sleep over the fear accounts are being missed or the incorrect fee is being applied to accounts, it’s natural to assume, “Our billing software is bad.” But in fact, we’ve learned that most stressful billing processes do not stem from problems with billing software, but from a poor onboarding process.

Typically, data input errors occur during the initial setup of accounts and client credentials as opposed to inherent flaws in the technology. A deep audit of the firm’s process of adding new households into the billing software when the client first hires the RIA could streamline the back-end process of billing those accounts and eliminating any redundant processes like running multiple fee audits before debiting accounts. Improve the onboarding process and after a few quarters of successful billing with minimal errors or hiccups identified, RIA owners can finally sleep well and be confident the speed by which they can process billing in subsequent quarters will be drastically increased. 

While more technology vendors are serving the RIA industry every day, the tech choices aren’t that complicated. Assuming the RIA is using the industry’s major technology vendors and isn’t trying to run the firm on antiquated software, switching from one tool to another isn’t going to pick up a ton of efficiencies.

Instead, RIA owners should focus their time on the processes around those technology tools, the client adoption of those tools and the level of sophistication by which the employees can leverage the technology. Too many times we see RIAs switch vendors before the staff has fully learned the previous tool—and many of the bells and whistles that attracted them to the new vendor were offered by their previous software, they just hadn’t taken the time to learn the old tool. Don’t jump from one technology vendor to another, searching for the elusive “holy grail” -- it is much less disruptive to the organization to take the time and train everyone on the existing software tools than it is to convert to an entirely new system that requires you to transfer data along the way. To save time, money and numerous headaches, we urge RIAs to focus on process, not technology.


Matt Sonnen is founder and CEO of PFI Advisors, as well as the creator of the digital consulting platform, The COO Society, which educates RIA owners and operations professionals how to build more impactful and profitable enterprises. He is also the host of the popular COO Roundtable podcast.  Follow him on Twitter at @mattsonnen_pfi

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