Do you know how much you will spend on technology in 2018? It is a simple question, but often the specific dollar amount can be elusive for advisory firms. You probably know what you spent last year, and maybe that is your quick answer for 2018.
However, it requires more thought and evaluation to better answer the question. This is especially true considering that technology is certainly not "stagnant" in our profession, with constant changes in the players, the product offerings, and the pricing.
The first area where we should begin entails understanding what dictates the overall amount of your 2018 technology budget? Is it a certain percentage of revenue, or maybe it is based on your firm's assets and number of clients, or perhaps you have an efficiency metric or goal, or a combination of all the above and other factors.
Sometimes the size of your firm's technology budget is more about an overall mission or objective rather than any other metric or factor. The key point is to understand what items matter for your firm and then spend on technology accordingly.
A common misconception is that you need to reach certain revenue milestones before considering certain technology solutions. That might have been the case years ago, but not today with many technology solutions available at a variety of price points.
In fact, now it is not uncommon for newer/smaller firms to have more "cutting edge" technology than older/larger firms "stuck" with legacy technology products purchased years ago. For example, contact management systems and document imaging systems that used to require major outlays for database servers are now managed with cloud-based servers with much lower start-up costs for newer firms.
As you review your 2018 technology spending list, make sure that you also include products or services that may not be part of standard application categories, such as your website, CRM, reporting, financial planning, etc. This list could include solutions like client meeting tools, risk-analysis products, research providers and even technology infrastructure items like computers, smartphones, internet communication providers and more.
