Future of Investing

The road to RIA growth runs through technology

  • A leader in unified all-in-one software solutions for financial advisors has yet to emerge.
  • "In three to five years, roboadvice will be ubiquitous," said Tony Stich of Advicent.
close

Email a Friend

The road to RIA growth runs through technology

RIA firms are at a crossroads. Though this market experienced impressive growth over the last few years, some conditions are threatening to change the trend.

As generational wealth transfer increases the risk of losing assets and a consolidation trend puts some firms in danger, RIAs are stuck between a rock and a hard place. Add to this the fee contraction caused by the move to passive investing, and one could understand why RIAs would need to invest in growth. In many cases, that growth is driven by technology.

After realizing robust growth in 2015, RIAs expect to build on their recent success, according to a TD Ameritrade survey published earlier this year. Top management priorities, according to the survey, include improving their firm’s efficiency, enhancing client service and delivery, and investing in new technology.

When it comes to technology, RIAs say cybersecurity is their top priority, followed by implementing Customer Relationship Management systems that can help fuel growth by giving firms deeper insights into their clients, as well as helping them identify prospects.

“We rely a lot on technology,” said Duncan Rolph of Miracle Mile Advisors, an RIA firm from California that prides itself in leveraging technology to offer personalized service to clients.

There are three main prongs to an RIA’s software stack, explained Rolph. The first is the core offering of portfolio management. The second is financial planning software which allows advisors to better incorporate their clients’ personal situations and goals. Last is a good CRM solution that allows the firm to send targeted communications to existing and potential clients.

In an industry where the average professional is over 50 years old, there is naturally some resistance when it comes to technology adoption. Even after moving beyond the price hurdle, designing a workflow that makes the most of the new tools is essential. Many of the older advisors might feel like an old dog trying to learn new tricks.

For Miracle Mile Advisors, the way to overcome these challenges was to go back to the drawing board and build their business from scratch. “It does not bear fruit right away,” Rolph said. ”Some want a quick fix, but it is a longer road.”

Others agree that the industry needs to embrace technology. “We are moving to a digital age, and advisors need to move that way,” added Tony Stich, director of global marketing at Advicent, a financial advice software provider.

There have been some attempts to create a unified all-in-one software solution for financial advisors, but a clear market leader has yet to emerge. Combining the different platforms into one should save data redundancies and enable advisors to better leverage the data they already have.

“When using one platform. you will get efficiencies, compliance, and increased security,” said Stich. “When using multiple platforms, you have less security.”

Both Stich and Rolph predict that portfolio management will become even more commoditized in the near future, which will force advisors to differentiate themselves through additional services like financial planning.

“In three to five years, roboadvice will be ubiquitous. We are going to see more self directed planning. It will get to a point everyone will provide roboadvice,” Stich said. “One thing remains clear. The advisors will be the core of the relationship. Technology will not change that.”

0 comments on “The road to RIA growth runs through technology”

Future of Investing

AT&T’s Cricket Wireless strikes partnership with Acorns to bring investing to its subscribers

  • Cricket Wireless and Acorns are teaming up to bring investing to more people.
  • With the Acorns app pre-installed on new handsets, Cricket customers also receive monetary incentives to use the investment app.
Zachary Miller | August 06, 2021
Future of Investing

‘Lots of music involved, too!’: A day in the life of Chidi Achara, CCO of Stash

  • Consumer interest in investing is taking hold. And for investing apps, that means sharpening their marketing game to reach their target audience.
  • Leading Stash’s marketing initiatives is Chidi Achara, chief creative officer at Stash. Here’s a day in his life.
Rivka Abramson | August 02, 2021
Future of Investing, Member Exclusive

Behind Betterment’s partnership with Zenefits to give SMBs access to retirement planning

  • Betterment’s technology led 401(k) provider teamed up with HR software company Zenefits.
  • Zenefits SMB customers will gain access to Betterment’s retirement planning and financial wellness offerings.
Rimal Farrukh | April 21, 2021
Future of Investing, Member Exclusive

‘We put our skin in the game’: How Clearbanc is rethinking funding for growing startups

  • Last month Clearbanc released ClearAngel, a program that acts as an automated angel investor.
  • Clearbanc’s revenue-based model speaks to the increased need of startup funding.
Rivka Abramson | March 04, 2021
Future of Investing, Member Exclusive

‘Our research shows that consumers find investing to be intimidating’: Marcus by Goldman Sachs debuts automated investment service

  • Goldman Sachs debuted its flagship digital investment platform Marcus Invest.
  • The offering requires a minimum account balance of $1000 and charges an annual fee of 0.35 percent.
Rimal Farrukh | February 19, 2021
More Articles