Search and Selection for New Advisor Technology – Three Steps to Get you Started on the Right Foot

Advisors should apply same planning skills they use with their clients to purchasing new technology

The process of selecting of new technology is similar to the process of selecting a new investment for your client. Before you would pull the trigger on a trade, you would spend time of upfront to ensure that the investment is sound and appropriate for your client’s portfolio. The same holds true for new technology upgrades and purchases. Before making your next technology decision, spend some time upfront developing a plan and understanding the gaps in your portfolio.

 In my last couple of blogs I discussed how understanding your technology personality and your investment portfolio complexity will help streamline the search process when it comes to upgrading your portfolio accounting capabilities. In this blog I will like to discuss three key preparation tasks you should perform when starting a vendor search and selection process.

1.) Create a Plan – Creating a technology plan or roadmap is a lot like creating a financial plan for your client. If you were creating a financial plan for one of your clients, you would want to understand their current situation as well as their future goals before making specific recommendations. Investing in technology requires the same discipline. You need to make an assessment of your current situation and contemplate the future direction of your firm before you can determine what specific investments you should make in your technology capabilities.

Your technology plan\roadmap should be a reflection your firm’s priorities. Prioritization should be given to projects that will have the biggest impact on your business goals—not based on what projects are the easiest or cheapest. A realistic plan should factor in resource availability and any systems interdependencies. For example, you may need to upgrade your servers before implementing a new phone system or you may want to consider implementing a new CRM before embarking on document management capabilities.

Finally, don’t let the development of the perfect plan prevent you from making decisions. You may not understand all the system interdependencies or what the ramification of new legislation will be, but that should not avert you from taking action. Sometimes the greater risk is not taking risks. Your technology roadmap is about setting a strategic direction and helping to define priorities vs. being a tactical project plan. Once created, revisit your roadmap on a regular basis to assess priorities  as new information becomes available. Taking this time upfront will pay dividends down the road by enabling you to make smarter decisions.

2.) Define the Problem Once you have a plan and have decided what you want to do, take some time to define the problem(s) you want to solve. It may sound obvious, but having a clearly defined problem statement will act as a north star during the selection process. When you start looking at potential solutions things can get convoluted fast. Vendors can present some impressive array of features and functions, but does all this cool stuff help you solve your problem? Having a clearly defined problem statement will help you filter out what is nice to have vs. what is must have.

3.) Define Success – I’m sure this is a conversation many advisors have with their clients. What does success look like? How can it be measured? Without this definition how do you know if you are on track or off-track to meeting your goals?

Before embarking on a major technology investment spend some time to define what success looks like and how success (or lack thereof) will be measured. Measuring success can be difficult. It has to be defined beforehand and it requires quantifying things that you may only have an intuitive grasp of. You know that the reporting cycle takes too long, but do you know how many hours of labor it takes to complete? Having a good grasp of your current total cost of ownership will be an important benchmark when comparing potential solutions. Without this information how do you know if a outsource solution provider is too expensive? How would you know if this upgrade will generate an ROI?

The objective of any system search should not be to find the cheapest solution, but the one with the greatest return on investment. Returns can be measured by economic value (i.e. saved $2,000 per year) and intrinsic value (i.e allowed staff to focus on higher value tasks). Set realistic goals for your project that can be quantified and hold your people (and yourself) accountable.

You wouldn’t place a client in an investment without having a firm understanding of your client’s goals and tolerances, so why should it be any different when it comes time for investing in technology for your firm? Applying the same planning skills you use with your clients to your next technology decision will help you can achieve a greater return of your investment and reduce the chances for failure.   

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