Today we’re sitting down with Joel Bruckenstein, President of Technology Tools for Today (T3) to talk about advisor technology. Joel has some incredible insights, both about how advisors can be better utilizing technology today and the evolution of advisor tech (and how it will impact the industry) in the future.

Technology is undoubtedly an ongoing challenge for financial planners. In this episode, Joel will emphasize the importance of continuing education in technology. He guides listeners through different ways to invest in new tech products, where you can seek out technology training, and how to start implementing these changes in your practice in 2018!

Don’t forget to register for the 2018 T3 Conference. If you use FPA’s promotional code, you’ll get $75 off your conference pass. Code is: 2018T3FPA

Hannah's signature

“I look at technology not as an expense, but as an investment. I believe that if you invest in technology often enough, not everything is going to work out. Some people in our industry…think of that as a failure. I think of that as a learning experience. If you have the right attitude about technology, and you’re willing to learn and experiment, you’ll have some great successes.”


What You Will Learn:

  • How a CRM should be benefiting a practitioner.
  • How to measure ROI with technology.
  • How to get started auditing and evaluating technology for your practice.
  • What signs to watch for if you’re working with the wrong practitioner.
  • How to seek technology training.
  • What technology “nightmares” should you look out for?


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Ep77 Transcript

Hannah:               Well, thanks for joining us today, Joel.

Joel:                       My pleasure.

Hannah:               Technology is always a hot topic, especially with new planners, and one of the biggest issues that I’ve heard just in talking with other planners is that there seems to be a technology gap in the workplace where young planners are the ones who are expected to be just good at technology, so I guess my question for you would be how do we bridge this technology gap that’s in the workplace?

Joel:                       Well, I would start off by saying I don’t think it’s easy because not everybody is speaking the same language. People of my generation are not technology natives. They didn’t grow up with technology. It’s something they are still struggling with in some cases and trying to learn, and later generations basically grew up with an iPad or an iPhone or a computer in their hands, so yeah, I think there is a gap in the sense of familiarity with technology and the way people interact with technology. You know, having said that, I think there’s a couple of issues, so one issue is that when you have a firm owner or owners who are, let’s say, in their late 50s, early 60s, they may be using older technology. Maybe they have computer monitors that are five to 10 years old. In some cases they have older version of Windows, they’ve got crappy keyboards, and then they’re going out to try and hire young enthusiastic advisors, and they can’t figure out, “Well, we’ve interviewed all these people. How come none of them want to work for us?”

                                So I think there’s an education gap there where they have to realize that they have to put younger advisors in a position to succeed, and part of putting them in a position to succeed is giving them the right tools, so they need modern technology. Young folks want to work with smartphones, so you need to have good mobile technology. You need to be cloud-based. It needs to be a technology-friendly environment, and also they need to provide training on those tools, so even if they have good tools and they’re not really providing the education for advisors, younger advisors, to become competent on those tools, there’s going to be challenges.

Hannah:               I think what’s interesting with what you’re saying, you know, talking about being native to technology, I mean, I’m 31 and I look at what my younger brother who is 19 is doing and I’m like, “Oh my gosh, there’s a gap there,” so will there just always be a technology gap between generations?

Joel:                       I think there’ll always be some gap. I think it’s particularly large now simply because, as I said … but even the gap between you and your brother, at least you’re both technology natives. You grew up with technology. He may have grown up with more of it, different types of technology, but you’re both accustomed to using technology. I think there are still some people in the industry who are less accustomed to using it, less comfortable using it, and not willing to experiment, shall we say, with new technologies. I think there’s also a fear of making a mistake. You know, I look at technology not as an expense. I look at it as an investment and I believe that if you invest in technology often enough, not everything is going to work out. Some people in our industry, typically people my age, think of that as a failure. I think of it as a learning experience, so if you have the right attitude about technology, and you’re willing to learn and experiment, you’ll have some great successes.

                                I think what a lot of advisors underestimate is the opportunity cost, so they say, “Hey, everything works right now. Why should I fix it?” Well, it works, but it doesn’t work well. You may be losing a lot on efficiency and you may be losing opportunities to engage with younger clients and to hire younger advisors, and that’s the cost you’re paying. You may not see it right now, but you’re going to feel it over time, so I think you have to have the right attitude about technology.

Hannah:               It was interesting. You made a comment. “The fear of making a mistake,” and I liked your perspective. That’s really just that learning opportunity, but from a firm’s perspective what would a mistake look like in technology or in regards to technology?

Joel:                       There could be a lot of perceived mistakes that not necessarily are mistakes, so for example, you invest in new CRM and you can’t get your staff to use it. Well, is that a mistake? Well, I don’t know yet. It could be that the reason they’re not using it is because you didn’t do the proper due diligence and you picked the wrong system, or you picked the system that doesn’t integrate with your custodian or your other technologies, so in that case it would be a mistake, but it could also be a mistake that’s easily correctable. For example, if you’ve bought a new system and you haven’t explained to the staff why you’ve made the change, what the benefits are to the firm and possibly to them, and you haven’t trained them on the new system, it’s a short-term mistake, but it’s something that’s easily remedied, so it really depends.

Hannah:               You mentioned technology is an investment, and with any investment usually you can measure ROI. How do you measure to ROI when it comes to technology within a financial planning firm?

Joel:                       I think you measure it over time. Again, in the short-term it may be difficult to measure simply because it takes a while for the full benefit of the technology to take effect, so for example, let’s just stick with the CRM example just because it’s a pretty easy one. You go out and you buy CRM tomorrow, and either you’d been using Outlook before or some other CRM. Well, you’re not going to get an immediate efficiency boost because you have to train people up on it, so at the beginning there’s actually a cost involved and it’s not just the dollar cost. It’s also a time cost, and the time that your employees are learning the system, they’re not servicing clients, so that’s a real cost.

                                You may not have built out workflows, or you may have workflows but they’re inefficient workflows, so until you get all of the … everything configured properly and get through all the training, you’re not going to see a big return on your money, but once you’ve done that, you’re going to see a productivity boost and you’re going to see other benefits that, again, are a little hard to quantify in dollar terms, but definitely are real. For example, if you’re an SCC registered advisor, the SCC wants to see that all clients or in a given group or tranche, because you got to have A, B, and C clients, who are paying for the same service at the same tier of service are in fact getting the same service. If you don’t have CRM and you don’t have workflows that everybody is following, it’s very difficult to document that everybody is in fact getting the same level of service.

                                But if you have a process and everybody uses it and it’s documented, you can feel assured that everybody is getting the same level of service, so from a customer service point of view that’s a good thing, from business operations point of view that’s a good thing, and from a compliance viewpoint that’s a good thing. That’s something that you can document, but it’s not going to happen on the first day you install the system. If it’s something like trading and rebalancing, we know from experience that if you have a complex household with just, let’s say, a husband and a wife, each with multiple accounts, some that are taxable, some that are not, and you try and rebalance at the household level, doing that manually can take 25, 30 minutes an account. You can get that down to a minute or two with the proper rebalancing software, so I think over time you can demonstrate that you save a tremendous amount of staff time.

                                You can probably, depending on the size of your firm, you may be able to save one or two full staff people, salaries and all the other expenses that go with those people, on rebalancing alone, so I think there are ways to demonstrate and to really quantify in many cases what the costs are, but I just want to emphasize there are hard costs which are easy to quantify and there are a lot of softer costs that are more difficult to quantify, but nevertheless are real and something you can document.

Hannah:               Yeah. Well, and it’s just now part of the business. I mean, I don’t know how you’d run a firm without a lot of these technologies that we have today.

Joel:                       Right. I mean, a good example of a soft cost is, let’s say, not having a really great client portal experience today, so a lot of advisors who have never had one don’t really feel perhaps like they’re missing anything today, but who knows how many prospects walking in the door chose a competing firm that did have that experience, or better yet, how many prospects did you never even see because when they looked at what you offer clients and your client offering, they saw you don’t even offer a client portal, so they didn’t even give you a shot at getting the business? You maybe loss that prospect before they even walked in the door. How do you quantify that? I don’t know. It’s kind of difficult, but we know it’s happening.

Hannah:               I like what you’re … you’re talking about like, almost these blind spots, if you would, with advisors related to technology and that was a great example. What are the other blind spots that you’re seeing a lot of firms have as it relates to technology where they could be improving their firms?

Joel:                       I think another big blind spot is the coming wealth transfer. You know, everybody talks about this $30 trillion of wealth that’s in motion, and in many cases today advisors, when their clients die, they’re not capturing that next generation. Again, I think some of it has to do with the client experience in technology. We talk about engaging with the next generation early, but how? If you’re using 1980s technology like Advent Access and you’re printing out paper reports and displaying things on spreadsheets, it may work for your 75, 80 year old client because that’s what they’ve been used for the last 30 years with you, but guess what?

                                That’s not the experience their kids want, and when the parents die, I can almost assure you, if you’re doing financial planning and reporting that way, you have no shot at getting the next generation client, so I think that’s a big mistake that a lot of advisors underestimate. They all talk about how, “Hey, we want to capture the next generation of clients or retain the assets we have,” and I just don’t think it’s going to happen for probably somewhere between 20 and 40% of the firms out there because they have antiquated technology to this day.

Hannah:               It’s so funny. I hear that, and as a young planner that’s really exciting to me because I’m like, “They’re going to come to the younger planners and the younger generation of advisors.”

Joel:                       Yeah. First of all, I think they want to deal with somebody who’s a peer, but I also think they want to deal with somebody who understands the kind of user experience that they want, and probably someone like you is much better suited than a lot of the advisors out there today to provide that kind of experience to them.

Hannah:               Looking holistically at a firm, are there any rules of thumb around how much money a firm should be spending on technology?

Joel:                       Yes and no. I mean, we get asked that question a lot. Sort of the rule of thumb, I guess you would say, is 4 to 8% of revenue, but there’s tremendous dispersion around the mean, and the reason for that is how much have you spent on technology over the last three to five years? You have a regular program of investing in technology over a period of years and your tech stack is already excellent, you’re probably at the low end of the range. However, I’ve done consulting jobs with clients that haven’t bought a new piece of technology in a decade. 4% is not going to cut it for them to get up to speed, right? So they’re going to need to buy multiple new systems, probably some new hardware as well, and they’re going to have to train their staff on it. You’re talking a lot of money.

Hannah:               You mentioned experimentation earlier, and that’s part of that implementation, like you were just referring to. What can firms do to help implement all these technology changes in their firms?

Joel:                       I mean, implementation can be difficult. I think the first thing you need is, as I said, a culture of technology and a culture of innovation within the firm. If you’re not aware of what’s out there, if you’re not aware of what your competition is doing, if you’re not aware of new technologies that are on the horizon that may impact your business, you’re probably not going to be successful. Ongoing training is something that every firm should be doing. People always ask me, “How much should I spend?” Right? On technology a year. I almost never get the question, “How much should I be spending on technology training a year?” I think that’s a significant gap throughout the industry. They think it’s one and done. Again, okay, let’s go buy some new technology, let’s train people up on it, the best case scenario, and then let’s never train them again.

                                Almost every web-based application is being updated incrementally on a ongoing basis. Some of the firms that we work with at T3 have sort of a two-week development cycle. Every two weeks they’re putting out new enhancements, and usually they have a blog or they have some way of communicating with their client that, “Hey, we’ve just added these new features, yada, yada, yada.” Nobody ever reads that stuff and they’re just not aware, so I talk to advisors all the time and they say, “Well, I want to get rid of X, Y, Z CRM because it can’t do A, B, and C.” I’m like, “Yes, it can.” And vice-versa. Sometimes people are under the mistaken impression that their software actually can do something that it can’t do, and I always find that a little bit puzzling because I’ll say, “Show me,” and maybe they show me something, but it’s not what I think they’re talking about, so there are challenges around the education with software and training that are ongoing.

                                If you want to stay current, if you want to be successful, you have to encourage people to take some ongoing training, and from a management point of view, I think it’s a little bit of the carrot in the stick. I think every job description in every firm should have a technology component, so if you’re, I don’t know, a receptionist and you’re dealing with people coming through the door all day, and CRM and having to send emails to those people, it should part of your job description that you have to be able to master that, and be aware of all the changes that take place in the software and check the workflows from time to time to make sure you can make them better, etc. And if you do do it, you should be rewarded, and if you’re not, it should impact either your salary or your bonus. Or your job performance, right? It’s a part of your job.

Hannah:               Yeah, absolutely. We have an interview coming up with Cheryl Holland where we’re talking about, like you’re saying, those career paths and those job descriptions and how important they are, and I love that idea of technology just is, it’s the air that we operate in. You can’t survive without it today.

Joel:                       Every aspect from marketing all the way through has some technology component, and I think part of the issue is, because a lot of the owners of these firms that are a little bit older are not technology natives, they don’t think about putting that as part of the job description, so they’re not setting expectations for their employees. Hence, you have this disconnect. Employees then feel, “Well, it’s sort of optional. It’s not something that’s required of me.”

Hannah:               Looking at how to develop your skills or continuing training on technology, do many of the technology firms offer that themselves, or where can people go to, to get that ongoing training?

Joel:                       Well, I’m a little prejudiced, of course, but I think the T3 Advisor Conference, February 6th through 9th, is one of the best places. You can probably learn more there in three days than most people know about technology today, and yes, depending on who your providers are, some of them do have excellent training. For example, all the major custodians have tech consultants that will come in and help you learn how to maximize the value of whatever technology they’re providing to you. Some of the third parties do a better job than others.

                                One that really stands out in my mind is Redtail CRM. Redtail University is one of the best training programs in the country. They visit, I don’t know, probably 15, 20 cities a year with one or two day university courses. Laserfiche is another company that does great training at the international conference every year. I’ve seen eMoney do training at some conferences, primarily broker-dealer conferences. MoneyGuidePro offers training. You can either do it by web or they’ll come in and bring people. Orion offers training. There’s a lot of firms that offer training. You have to reach out them, and yes, there are third parties for widely used programs that also have independent training.

Hannah:               What do you see as the future of advisor technology?

Joel:                       You know, advisor technology is evolving all the time. I think every year advisors get a little more efficient and a little better with technology, but I just think the pace of technological change right now is so fast that it’s a challenge for advisors to keep up, but I think they have to because there are competitors out there that have full-time staff people devoted to this, and if you ignore it, you ignore it at your own risk. The exciting thing is there’s all these new technologies which I think are going to have a tremendous positive impact on our industry, everything from augmented reality to blockchain to simple things like voice commands for software, mobile devices and what you can do on mobile devices today, a much better user interface for end clients and for advisors themselves, so there’s a lot to be excited about.

                                On the other hand, like I said, it’s an ongoing challenge for advisory firms to keep up, and if they don’t have a culture of innovation and if they don’t devote the same amount of time to learning about technology, continuing education, if you will, on technology that they do with other core subjects, they’re going to be challenged. Sort of on the subject of continuing education, I personally think it’s sinful that the CFP Board does not offer any continuing education credits whatsoever for technology. I don’t know how you can say you’re a competent planner today with a CFP mark and say you’re not competent on technology, and I think it’s disgraceful that the CFP Board does not offer CPF credits for technology. Want me to tell you how I really feel?

Hannah:               That’s why I like to talk to people who’ve been around. They’re not afraid just to say it like it is.

Joel:                       I’m certainly not.

Hannah:               You’ve kind of hinted at this a little bit, but what are the biggest mistakes that you’re seeing firms make right now with technology?

Joel:                       Probably the biggest is not to think holistically about technology, so they’ll read an article or they’ll talk to a friend, and the friend will say, “Well, you should have this CRM system.” They’ll go out and get it, and they really haven’t thought about how it fits into their ecosystem. Does it talk to their financial planning software? Does it talk to their portfolio management software? Does it integrate even with their custodian? It could be the best system in the world. If it doesn’t integrate with anything else you use, it’s going to be a problem.

                                The other issue I think is just in general advisors struggle with integration issues. Unless you’re probably, I don’t know, a two or three billion shop at least, most likely you don’t have your own in-house technology person, you don’t have somebody who’s responsible for thinking about how everything integrates, and so for smaller firms it may make sense for them to have fewer providers even if they’re not best of breed, but essentially be paying for a more integrated solution, so if you have a problem, it’s a one stop shop or at least two or three, not five or 10, and to know that whatever you’re buying from your primary provider or platform is well integrated. There’s a number of firms out there that are trying to offer that, everybody from Tamarack to Morningstar to AdvisorEngine, RobustWealth, and the list goes on. Orion to some extent.

                                You know, I think it’s really important to think strategically about what your strengths and weaknesses are, and what you think you can reasonably accomplish. Your ideal may be, “Hey, I want to have the best of breed of everything.” But if you say, “Look, I really don’t know how to make these systems work together,” maybe you should be concentrating more on more of an integrated platform.

Hannah:               Well, and that goes back … I mean, ever since I started, 2008, 2009, I mean it’s always been, if there’s one technology that could pull everything together, that was kind of always the silver bullet.

Joel:                       Yeah.

Hannah:               You know, if somebody could figure that out, it would solve a lot of problems.

Joel:                       I think it already exists. If you look at what RBC did, RBC Black and their partnership with CircleBlack, you can really, if you want to do business with them, go get a totally integrated platform today that has some best of breed providers on there like Redtail and MoneyGuidePro. If you look at some custodians that perhaps are not quite as well known as the big boys like TradePMR, they offer an integrated platform today, which is much turnkey. AdvisorEngine is building an all-in-one platform. In a sense, companies like Orion and Black Diamond can act as integrators because they have very deep integration with a number of best of breed partners that do CRM and financial planning and other digital tools. So I do think it’s out there. You just have to seek it out, and you have to do your research and know what you’re looking for, or hire a consultant who knows how to do this because mistakes can be very expensive.

Hannah:               Yeah. The more I look at technology, the more I’m like … the cost can add up quickly if you’re not careful.

Joel:                       Right, and again, I mean, I really believe there’s an ROI if it’s done right, but if it’s done wrong, yeah, then you’re dealing with the cost and you’re going to have to make another change, and that can be very costly, very quickly.

Hannah:               Yeah, so how often should firms be evaluating their technology, like on a formal, thoughtful, intentional way?

Joel:                       You know, I think informally they should be doing it on an ongoing basis, and I think at least, minimum once a year, you need to do a thorough evaluation of everything you have and say, “Do we still have the right technologies to best serve our clients and to support the growth of our firm and to keep us running efficiently?” But it should be on an ongoing basis. At least informally, there should be people within the firm who are always reading about what’s going on out there, following whatever is written, going to conferences, visiting with your existing providers and saying, “Hey, have you developed anything new that I should be aware of?”

Hannah:               When firms do these evaluations of their technology, how do you recommend that they approach that?

Joel:                       Again, I think first of all holistically. It’s great to get feedback from employees that are using the technology, but again, you have to take it somewhat with a grain of salt because everybody has got their own interest and they maybe can’t look at the big picture, but I think it’s very useful to find out if there’s anything specific about a product, a technology or a workflow or what have you that’s really aggravating all your employees because that needs to be addressed, if there’s something that is creating friction for your end clients. Like, if they want to get on to your web portal and it takes 10 clicks and then they have to go wait for it to load for five minutes, or it doesn’t look good on a tablet or a smartphone. Yeah, I think those are things that you need to address, and then you also look at it holistically and say, “Is everything working well together? What could we be doing better? Are the products and services that we are subscribing to still the best of the best, and if they’re not, have they fallen enough to justify a change?”

                                You know, firms go back and forth all the time. One firm that you use may be adding a new feature and it may take a little while for the competitor to do it, but if they’re both good firms, ultimately they’re both going to provide similar services, but if clearly the firm that you engaged with is falling behind technologically, not reinvesting in the product, if there’s service issues, then it’s time to at least evaluate some alternatives and see if there is something that’s substantially better or better enough that you want to make a change.

Hannah:               Like you said, there’s a lot of new technology that’s coming up. As a firm owner myself, one of my concerns is always, are they going to be sustainable in the long-term? Have you seen advisor tech firms go out of business within a year or two? Is that just something that happens or is that not really reality?

Joel:                       I mean, yeah, it happens. I think when you’re dealing with a younger firm, you have to do even more due diligence than normal. You know, there’s a couple of things. If within, let’s say, 24 to 36 months a firm doesn’t get much traction, odds are they’re not going to, so that’s one thing to look at. I think you have to look at a new firm and say, “Who are they? Have they developed other technology for the space before? Do they understand the needs of advisors, or are they coming from the outside? Are they cash flow positive and financing their own growth, or do they have a lot of VC money and have somebody behind the scenes pulling the strings, making decisions that may not be in the best interest or the long-term interest of the firm and their advisors?” You know, does it look to you like a firm that’s going to be in it for a long haul or is it a firm that’s clearly being built to be sold?

                                So there’s a lot of judgment, decisions you have to make when you’re dealing with a newer firm, but yeah, if they have a unique space, if they’ve created a better mouse trap whether it’s financial planning, CRM, whatever, and you think the advantages outweigh the disadvantages, there’s advantages to getting in early because you may be able to have more of an impact on the future development roadmap of that firm if they’re willing to take constructive advice from their users. I don’t know how to explain how to do that. I mean, I make those decisions all the time, but I’ve been doing this for close to 30 years, so I think I have probably a better eye than some people for what to look out for, but every advisor has to make those kind of evaluations if they’re going to do business with a new firm.

Hannah:               This larger question of how to evaluate technology, and we’ve talked a little bit about how it’s holistic, but if we can get into some specifics, looking at like, CRM systems, what does a CRM system need to provide for firms today just to be meeting the bare minimum? Then what would be the difference between one that’s excelling versus one that’s average?

Joel:                       Yeah. I think it’s somewhat firm-specific. There’s no one CRM that’s right for everybody, so you have to look at first the size of your firm, to some extent what your budget is, and to some extent what are the features that you’re actually going to use? It makes no sense to pay for features that you’re not going to use. If you’re a small firm, for sure, something like Salesforce is almost overkill, right? Because you can’t really leverage all of the productivity tools or you have a large enough staff to really make it worthwhile, so then you’re looking for something that checks off the basic boxes, that’s already pre-configured for advisors, that has some workflow capabilities, ease of use, cloud-based, inexpensive.

                                For a lot of people, Junxure … sorry, Junxure Cloud or Redtail check all those boxes. They’re built by advisors for advisors. They understand the business, they’re reasonably priced, and there’s not a lot of configuration. You can sort of sign up, flip a switch, give them your credit card, and as soon as you get the workflows built out, you’re in business, so what should you look for? You should look for a firm that’s got a successful track record serving advisors. You should look for a firm that has the pre-configured fields that you need. You should look for something that has workflow capabilities. You should look for something that has good user experience, and all other things being equal, you want to look at price. I tend to look at price last, not first, but I don’t want a potential consulting client of mine spending a lot of money for features I’m never going to use either, so you don’t get always the most robust software. Your use case may not justify all those robust features.

Hannah:               I was just on an online forum and reading some stuff about technology in there talking about how difficult it was to make the change. From your perspective, when you’re evaluating technologies like a CRM, do you factor in how easy it would be to move your data to another platform?

Joel:                       Like I said, to get a marginal improvement that’s not meaningful, it never pays to change technology because there is, again, a cost. Even if somebody does the conversion for free, there’s still an aggravation factor and it takes time and there’s a training factor, so you have to get or believe you’re going to get a noticeable improvement either in … well, in productivity and that can be from a number of different areas. It could be better software, it could be easier to use so your staff uses it more, it could be a lot of different things, but there has to be a meaningful difference to changing technology. Some are easier than others. It also depends how long you’re in business. It’s really ironic, somebody will be in business 10 years and say, “Well, I have a lot of data, so I’m not going to move it now,” and they’re using something that’s really antiquated that has a big opportunity cost. Well, guess what? If they wait another five years, now they got 50% more data to move.

                                It’s not going to get any better, so if you’ve clearly identified software that’s not working for you, the first and the fastest move is the best, and yes, there is … it’s never easy moving data. Sometimes it can be relatively painless, but it’s never totally painless, but the point is you’re going to have to do it sooner or later, so it’s not a matter of if, it’s a matter of when, and usually when sooner is better than when later.

Hannah:               And is that a thing, like hiring an intern or something like that? I mean, is that a solution to some of that manual work that’s needed for moving data?

Joel:                       I mean, it depends. In most cases no, okay? Because in most cases it’s something that’s going to be automated by the vendor. If you’re moving from one portfolio management system to another, they have teams that do that. It’s a competitive thing. Everybody does it, and they have experience moving hundreds of databases and they’ve dealt with it before. To a large extent, they can automate it, and what they can’t automate is not something probably that an intern is going to be able to do at that level. The decisions and the type of knowledge you’re going to need to do the reconciliation is not something an intern is going to be able to do.

Hannah:               You made mention of all the bells and whistles that, well, specifically CRM systems have. What are the ones, when you’re consulting? What are features that firms may not need that other firms would need?

Joel:                       Well, I mean, one typical one is the sophistication of the workflows, so you can get very complex with workflows and you can have sort of mother/daughter relationships and sister/brother relationships, and get these very complex workflow trees built. Unless you’re a big firm, odds are you’re not going to need much of that, so it’s something you’re paying for you may not need. Another thing is just the ability to sort of serve as platform as a service, to be able to plug in all kinds of other software into it. Most small to midsize advisory firms just need to be able to integrate with a select group of other technologies, and pretty much those are table stakes today in most cases and with a select number of custodians, so not as big a deal. Some software, you’re paying for a sales funnel to be able to really manage very large numbers of prospects and leads. Again, if you’re a multi-billion dollar RIA that may have a lot of value. If you’re a solo practitioner, or even a two, three men shop, it’s probably of zero value to you, so those are just a few of the things.

Hannah:               If somebody is looking at starting their own firm or maybe even buying a practice, what are the critical pieces of technology that all financial planning firms need to have?

Joel:                       Well, clearly CRM financial planning, portfolio management, sophisticated tax-sensitive, location-sensitive rebalancing software, most likely some sort of digital enterprise content management system. You may want a computerized phone system either software or hardware-based. You’re going to need a good website. You’re going to need a good client portal. You may need video capabilities. There’s a lot of other things that you may or may not need depending on the type of firm you are. You’re going to need hardware, right? You’re going to need printers, you may need a scanner, and the list goes on.

Hannah:               Yeah. I was just thinking about all the robo technology, that they’re not really affecting … I mean, they’re just replacing that rebalancing portion of it. They’re not really offering any other tech support for advisors right now.

Joel:                       Well, they may or they may not. See, that depends. I think of it as under the umbrella of portfolio management, portfolio construction, rebalancing. If you wanted to put everybody on a digital platform like AdvisorEngine or a RobustWealth, for example, or Orion’s Eclipse, certainly you could do that. If you’re a newer practice, I think that makes a lot of sense. If you’re an existing practice and you’re worried about cannibalizing your existing business, you may want to have that as a separate product line or a separate level of service offering, so that’s a business decision you have to make more than a technology decision, and once you make the business decision, I can tell you what technology to use.

Hannah:               For the firms who are middle of road, technology is just good enough, what is the one step that they can take to improve or to start improving to become one of the better firms related to technology?

Joel:                       Okay. Well, I think the first thing you have to do is take a step back and evaluate where you are. If you’re middle of the road, why are you middle of the road? What is it that’s holding you back? Is it that you’re not using CRMs effectively but you already have a good CRM? Do you have crappy CRM? Are you doing financial planning? Are you automating the data gather as much as you can for account aggregation or are you typing in everything individually? There’s no one thing that applies to all firms. I think some of the commonalities we see where advisors fall short is either they haven’t built workflows, or they built them and they’re not using them. They’re not enforcing policies and procedures. They’re not thinking holistically about planning, but I always say advisors are like snowflakes. I’ve never walked into two firms that are exactly the same, so prescribing a solution for such advisor diverse group of advisors is almost impossible.

                                You really have to look at exactly what the dynamics of that particular firm are. Who are their clients, right? I’m going to give you a different answer based on what your client base looks like, what kind of portfolio you should build for clients, who your custodian is. I mean, those are just some factors that most people don’t even think about as influencing technology greatly, but to me that’s where you start. You know, what’s your vision? What’s your goal as a firm? Who’s your ideal client? What’s your ideal client experience? Then you build around that.

Hannah:               Yeah. All that target marketing. It applies that whole … we talk about visions for your firm and it’s just, technology just should be integrated into that is what I’m hearing you say.

Joel:                       Well, it’s like, look, you’re doing financial planning. Somebody walks in and says, “Well, I’m middle of the road in my financial planning capabilities. What should I do?” What are you going to tell them? You’re not going to tell them anything because you don’t know enough to give an answer, right? It’s the same with this. There are no generalities. I mean, there are a lot of generalities out there. Many of them are just that. They’re a guideline. They’re a place to start. There’s something that other firms have dealt with, but your firm may be totally different, so unless you get some professional help or you educate yourself through going to conferences and reading up on this and talking to folks who have been through it successfully, it is challenging.

Hannah:               If a firm wanted to bring in a technology consultant like you, do you help them build out their workflows, or what does that relationship look like?

Joel:                       I’m not going to build the workflows for them. I’m going to refer that out to somebody else, but what I’ll do is I’ll look at their technology stack. I’ll try and evaluate where they are. Depending on the size of the firm, I will talk to pretty much everybody in the firm to try to understand how they’re using technology, where the gaps are, where the inefficiencies are, whether what they have is the right technologies for them or not, and give them a plan about, “Here are the providers you should be using,” based on what they tell me their goals and objectives are, help them interface with the proper firms because I deal with probably 100 technology firms in the industry, so I pretty much somebody everywhere, and leave them with a plan, but I don’t do much implementation. I’ll help them find the right people. I know people who do implementation, but that’s not what I do specifically, nor do I want to.

Hannah:               I understand that. So, we’re talking to young planners here. What would be your advice to them as they’re starting out in this profession?

Joel:                       Specifically with regard to young planners, make your first decision a good one. It’s funny, I was sitting on a panel about six months ago at an A.P.F.A. conference and they were all relatively young planners. Surprisingly, I think two of the three on the panel or three of the four had come out of the technology industry before, so they knew tech, and every single one of them was penny wise and pound foolish. Instead of buying the technology that they knew was the right technology for their firm, they tried to buy the cheapest technology and all of them have now been in business for a few years, and almost to a man or a woman, they all said, “You know, now I’m replacing everything. I wish I had bought the right technology the first time and spent a little more rather than trying to identify the cheapest technology that I’m now outgrowing three years into my business and having to replace it with something that’s more robust.”

                                I understand that people are on a budget and not everybody can afford top of the line. I don’t think you need to spend tens of thousands of dollars to outfit a solo practitioner firm, but by the same token, don’t buy the cheapest thing out there just because it’s the cheapest thing out there. There may be something that’s a little more expensive that’ll serve you well for 10 or 20 years, as opposed to cheapest thing where you’re lucky if it lasts three years.