Page 41 - Investment Advisor July/August 2021

THE FAST TRACK

By Angie Herbers

Taking a Closer Look at Technology

With a well-thought-out strategy, tech can be a force multiplier when it
comes to raising a firm’s valuation.

dvisory firm valuations have what technology can gain them in rev-
risen sharply over the past year, enue, profits and ultimately valuation.
A driven in part by an abundance And sometimes, integrating not-so-
of funding and increased buyer compe- exciting technology can work miracles
tition. Technology firms that support in expanding revenue, profits and valu-
financial services have responded to this ations at the same time.
demand with technology innovation. Here’s how to break down the deci-
We are seeing tech firms consolidating sion to buy, implement or create new
and expanding their service offerings to technologies that can enhance your
meet the demand, and this is benefiting firm’s performance, using return on
financial advisory firms. investment as the guide.
With the abundance of technol- Driving productivity. Making your
ogy available to RIAs today, advisors team more efficient and increasing its
have many options available to them to capacity is often the best way to begin
enhance their revenue, profits and valu- to use technology. Adopting software to
Firms must look at ations. This is good news for expand- reduce operational costs is a clear-cut
ing advisor capacity, productivity, and
way to increase profitability, and it can
what technology service to clients. Technology can act modestly increase valuation.
The goal is to implement better client
can gain them in as a catalyst to increase a firm’s value relationship management software, data
by driving operating efficiencies and
revenue, profits and helping to create a superior and unique gathering software solutions, or both.
ultimately valuation. client experience. For many firms, the Much of an advisor’s time and capacity
question is not whether to invest in
is wasted on gathering data. If an advi-
And sometimes, additional technology, but to identify sor has incomplete data and spends a lot
of their time chasing down client data
which kinds of technology will yield the
integrating not-so- greatest improvements in efficiency to or having more meetings than necessary
exciting technology increase revenue and profits. to obtain it, it eats away at the business
Not all technologies are created equal,
profit margin.
can work miracles however. The primary goal of enhanced This problem can be solved by
in expanding technology is to expand client services equipping advisors with data gather-
and advisor capacity. But depending
ing solutions that save time. These can
revenue, profits and on the firm’s size, structure and client include, but are not limited to, risk
experience, some technologies can hurt
evaluation software, client intelligence
valuations at the a business by making operations more software, portfolio management soft-
same time. complex than they need to be. ware, data gathering and onboarding
software, and client portals. These soft-
MAKING INFORMED DECISIONS ware solutions can help advisors give
As industry technology expands, advi- more effective advice and help firms
sory firms must take more time in expand their capacity.
making informed decisions on what to When advisors have more data and
integrate and what to ignore. The goal information about a client, they can
with tech is not to get the bright, shiny guide the client faster and be more avail-
new thing. Instead, firms must look at able to help them with behavioral issues.

JULY/AUGUST 2021 INVESTMENT ADVISOR 39