Maximizing Independence Through the Power of Technology

Freedom and opportunity are perhaps advisors’ two greatest motivators when considering independence through the investment advisor channel. Independent Registered Investment Advisors have the freedom to select from a wide array of investments for their clients, and the opportunity to serve clients in whatever way they feel is best under a fiduciary umbrella. Today, they also have the freedom and opportunity to select the best technological tools to make all that happen and to support the profitability and growth of their own RIA business.

Once the province of only giant securities firms, advanced advisor-oriented technology has become democratized and is available to independent advice providers of all sizes. In fact, advisors have so much choice that some feel daunted by the challenge of selecting the right technology for their needs. Setting one’s objectives, having a plan, and being able to tap knowledgeable sources of advice are keys to making the right technology decisions. The following can serve as a guide to advisors considering the technology needs of their new business.

What new RIAs need

In place of systems and tools that were provided to them by their employer or the firm with which they were affiliated, independent Registered Investment Advisors may assemble their own technology to perform the investment- and customer-related tasks their businesses require. According to Adam Moseley, National Managing Director of Technology Consulting for Schwab Advisor Services, these basics include:

  • A portfolio management system. Used by roughly 75% of RIA firms according to the 2020 InvestmentNews Advisor Technology Study, what started out as automated portfolio accounting systems for investment managers has morphed into a suite of comprehensive tools that form the heart of RIA technology. A portfolio management system typically allows advisors to open accounts; construct, account for, and rebalance portfolios; manage portfolio models; trade and reconcile trades; and report on performance. Depending on the nature of their business, some RIAs use separate, more sophisticated systems for each of those functions.
  • Customer relationship management (CRM) software, used by roughly 90% of firms according to InvestmentNews, records and details interactions with clients and integrates with the portfolio management system to help manage workflows. CRMs can include document management features, although there also are discrete document management and storage/archival systems that tie into CRM software. Client portals often come as part of CRM systems and portfolio management systems; other advisors use discrete software for their portals.
  • Financial planning software. This is another case where the software — used by some 80% of firms — can come built into other core software or as an à la carte choice.
  • A trading and rebalancing system, whether incorporated into portfolio management software or discrete, is essential for efficient operations because it automates cash and capital gains management, tax-loss harvesting, and consideration of held-away assets.

Moseley notes that other software widely used by independent advisors includes those that provide risk analysis, account aggregation (which allows clients and advisors to see all financial holdings in one place), compliance management, and marketing support and administration.

Making the right tech choices

Especially for those who were never given a say in the tech tools they were required to use, the breadth of advisor technology choices can seem daunting. For many advisors on the threshold of independence, the biggest issue becomes making sure their technology choices are the right ones for their new firm. Also important is that everything selected works in a smooth, integrated way.

Fortunately, those seeking independence don’t have to go it alone. Custodians offer a wealth of resources on technology selection and can facilitate connections to advisors who have made the transition to independence and are more than happy to share their technology choices with entrepreneurs who are following in their path.

“Having worked with so many advisors and getting to know their businesses well, we understand which tech products would work best for the specific kind of business an advisor wishes to pursue and the particular profile of their clients and prospects,” Schwab’s Moseley said. He suggests that to make the technology selection process more efficient and productive, advisors should document all their requirements, rank them, and then use those criteria as discussion points when evaluating potential tech providers.

As far as integration is concerned, custodians are the go-to source.

“Everything that we build for the Schwab platform we make available for third parties to integrate into theirs,” said Andrew Salesky, the firm’s senior vice president of Digital Advisor Solutions. “We have 145 tech partners, and their platforms are directly integrated into our comprehensive digital platform, enabling RIAs to deliver a high level of tech-powered service to clients.”

A tool for business growth and profits

The experience of those who have made the transition to independence confirms that, when thoroughly employed, the advanced technology tools now available to RIA firms power their ability to grow and prosper. For example, the largest and most profitable RIA firms in the InvestmentNews Technology Study are planning to make greater tech investments than other firms and are more likely to upgrade existing core technology applications than other firms.

Schwab’s 2020 Benchmarking study found that the fastest-growing RIAs embrace tech at higher rates than their peers, and that top-performing firms — those that rank in the top 20% of Schwab’s firm performance index — had the highest adoption rates of tools like e-signature, virtual client meetings, and screen sharing. Those top-performing firms, too, had a net organic growth rate (assets of new clients minus assets of exited clients) of 12.9% in 2019 compared with 7.6% in 2018.

In short, the data seem to confirm a strong connection between technology and business growth and profitability. Becoming an independent RIA and being able to use the tech tools that best meet their needs positions an advisor to capitalize on the power of technology and create value for their clients and themselves.


Schwab does not supervise investment advisors and takes no responsibility to monitor the services they provide. Schwab Advisor Services™ includes the custody, trading, and support services of Charles Schwab & Co. (Member SIPC) (www.sipc.org).
This is a sponsored special feature developed by the InvestmentNews Content Strategy Studio and supported by Charles Schwab. (0920-0CNY)

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