Are You Starting a New RIA? What’s the Best Tech Stack for a Five-Person Team? RIA Tech Talk Episode #17

David Kakish:

Hello and welcome to the RIA Tech Talk podcast, brought to you by RIA Workspace. My name is David Kish and I’m here with Todd Darroca. Together we’re on a mission to simplify the complex world of technology for RIAs just like yours, the title of today’s session. Are you starting a new RIA? What’s the best tech stack for a five person team? And I’m excited to have a special guest with us today. His name is Christopher Johnson, and Chris is the founder of Byte Technologies just outside of the Minneapolis St. Paul area. He’s been in the financial services world for over 30 years. He looks a lot younger than that. He started when he was five years old. Anyways, he’s got a boutique tech consulting firm where he also focuses on working with RIAs just like us. And so we compliment each other really well. We actually, ironically, we don’t compete at all, but we compliment each other really well.

We focus on managed IT, cybersecurity, IT compliance, and the help desk and the tech side of things. And then Chris really focuses on the operations and best practices and things like that. So Chris, why don’t you go ahead and introduce yourself, share with the listener a little bit about you, your company, and then Yeah, I’m really excited to talk about the best tech stack for a new RIA firm because we’re agnostic, right? We don’t care what vendor or what partner to choose. So we don’t represent Redtail or wealthbox or e-money or any of that right there. So we can really talk to what’s best for that team and share some nuances in depth. But Chris, introduce yourself, talk a little bit about yourself, your company, and then we’ll get right down the business.

Chris Johnson:

Absolutely. Thanks David, and thanks Todd. I appreciate the opportunity to be here. As David said, Chris Johnson with Trigger Byte Technologies, been in the industry for over 30 years. Really grew up in the operations, technology and compliance side of the business. Most notably was a chief operations officer and chief compliance officer of a large RIA broker dealer that managed about 3 billion in assets and had almost a hundred people in the shop. So really know a lot about the infrastructure, how things work, what technology you use. After that role, actually ran a wealth management practice for about six years. So really got the client side experience. So when you look at my background and history, I’ve done almost every job in the industry or at least have a good knowledge base of what happens with anything that really goes on within a practice. So from there started Tri By Technologies, really looking to focus on RIAs and their practice and how they do things, why they do things, what they do, and the tools that they use it because there’s a real need in the industry for advisors to have someone to consult with that can help them with that.

There are so many options out there and it really comes down to what fits you best. And advisors have a difficult time figuring out really what is going to be the best tool for them. So that’s where the value of my background comes into play. I can really help them in determining what is going to best suit them and then how to implement and get it working.

David Kakish:

Pleasure to

Chris Johnson:

Be here.

David Kakish:

Yeah, great to have you on. And Chris and I, we were joking before we recorded. We’re like, man, we’re so happy to be able to geek out together and talk and go into this not too many people in this world that want to geek out about the tech stack for RIA. So we’re really excited. Absolutely. And I’ve used the analogy where we’re kind like we’re the peanut butter and then Chris and Bite is the jelly and that we’re so much better together as a peanut butter and jelly. I mean we’re great separate, but together it’s even that much better. And before we get to business, I’ll share a funny story and then we’ll get down to business, but when I was in college, I used to paint houses and so I had to take my food with me and outdoor, it had to kind of sit well anyways, for an entire summer when I was working, the only thing that I took with me was a peanut butter and jelly sandwich every day. I knew how to make that right by the end of the summer, I did not want to touch a peanut butter and jelly sandwich for many years. Even now I’m like every once in a blue moon, I want a peanut butter and jelly, but that one summer ruined it for me. So anyways, a little side story for a PTSD TD

Chris Johnson:

From the PB and J, huh? Exactly.

David Kakish:

Yes. Yes. So alright, so I think Chris, let’s maybe start out with a problem. So a new RIA, whether you’re a breakaway or whatever, it doesn’t really matter to me at all. I think the big challenge is all this stuff was provided for you as an advisor when you’re working at a larger firm. And so when you go out on your own, it’s kind of overwhelming and you’re like, oh my goodness, what’s the right tech stack? Or what do you use? Maybe Salesforce where you worked, but hey, if you’re starting out, is that the best thing for you to use starting out as an example? So I think the challenge is all this stuff was provided for you and you were able to focus on the core competency of what you did. But once you go independent or once you start a new RIA, you’ve got to solve these problems. You’ve got to come up with what’s the tech stack that we’re going to use?

Chris Johnson:

Absolutely. Your back to figure it out. That’s a problem I see.

David Kakish:

Yeah, and I don’t know if you’ve seen other things when people first start out.

Chris Johnson:

No, I mean that’s the big question and really why people come to me it’s like, well what do I even use? Do I just stick with what I know or is there something better? And the answer is, it depends because it really comes back to what you do, how you do it and why you do it. You could have one RIA shop that does investment management through Ts where another one builds their own models and does everything in-house where they’re not outsourcing stuff. So it really, the question is, well what do you want to control? What don’t you want to control? How much control do you want to have? What’s your budget look like? So there’s a lot of questions that go into a needs analysis to help an advisor determine what tools even will work for me or what should I even be looking at? Right,

David Kakish:

Exactly. And this is a pretty common scenario where people reach out to us and they’re like, Hey listen, we’re starting a new RIA seven people, whatever the case might be. We’re going to say, look, new RIA five people. One of the big foundational questions is, do I go on the Microsoft Suite or do I do Google Workspace or do I do something else? This comes up a lot, I’ll talk about that. And then we’re going to talk about CRM and portfolio management. I’ll give you the opportunity to talk there and it’s going to be, what we’re going to talk about is very practical, not we’re not professors at some university talking about things. In theory, this is going to be really hands-on and real practical. So the Microsoft versus the Google suite, this really comes up a lot. I’m going to say in this space, just to be very blunt, the Microsoft Suite is much more dominant than the Google workspace.

And I say this, my brother works for Google, and I think Google is great, but I think what’s different here for RIAs is a lot of people are already familiar with the Microsoft Suite and then B, Microsoft has a lot more IT compliance and security safeguards that are sort of built in or you could easily implement them without third party tools. Whereas with Google Workspace, it’s a great platform, but you have to get a lot of third party tools to archive to be compliant, to do many, many other things. And what happens is, and it’s kind of funny because last week I was talking to somebody where they had to go with what their broker dealer forced them to go with and it was the Google suite and he was complaining to me about all the different things that third party tools that they had to do.

And when I sort of showed him how it works inside of the Microsoft ecosystem, it’s sort of all consolidated in one place. It’s like, yeah, it’s exactly what we want because they don’t want to have Citrix login, they don’t want to have this and that. So I’ll make it easy for the listener unless there’s a good reason for you to go with Google Workspace. Microsoft is the dominant player and frankly we’ve made the business decision that we will only be working with RIAs that are on the Microsoft platform if they want to be on Google, great. That’s not something that we’re supporting. So that’s a business decision we’ve made. Doesn’t mean the other one is bad, it just means that we’re an RIA with five people. You’re going to end up buying a whole bunch of third party tools to achieve the IT compliance and what I would call the enterprise security where with Microsoft is out of the box. So Chris, that’s kind of my assessment of that. I don’t know if you have other thoughts or even if you see the things differently from your perspective.

Chris Johnson:

Yeah, no, I a hundred percent agree. Generally, if a client is using the Google workspace as a platform, I will probably not work with them because there are so many different components that even when you’re looking at the rest of the tech stack that come into play with where you put your documents, what are you doing with them? And as you know with Microsoft, you’ve got SharePoint and all of those things that come into play that have the security built in and the things that the client needs to keep things safe. And I grew up with Microsoft, I’ve dabbled in Google and looked at it and I agree it’s there’s so many different components that you then have to wrap in to make things work that the Microsoft one-stop shop from a infrastructure standpoint for me makes a hundred percent sense.

David Kakish:

And did I catch that right? If somebody’s on the Google workspace, you typically won’t work

Chris Johnson:

With ’em. I try not to. Yeah, I try not to. It’s just very challenging to work with. Well I want to now save all my DocuSign documents into my Google workspace, and it’s like I don’t even know really how to help them with that. So yeah, I tend to shy away from it. Not that I won’t take it, I’ll help do assessments and stuff and do things like that, but a lot of the implementation that comes into play, the operating system and your infrastructure impacts that. And I just don’t know enough about it to really be able to help someone that’s in that space.

David Kakish:

And from our perspective, we know a lot about it and we think it’s really good, but there’s just so many third party tools to get to where Microsoft is. And that’s fine because Google was built that way and Microsoft was built differently. So anyway, absolutely in our space. So alright, so winner is Microsoft Suite, but Todd, you wanted to say something? Yeah.

Todd Darroca:

What about cost? Again, if I’m just starting out, is Microsoft more expensive or is Google the same once you start adding in the third parties? What kind of budget am I looking at for both of these?

David Kakish:

Yeah, I mean Chris, you want me to take that or you want

Chris Johnson:

Take? Yeah, I’ll let you take that. Okay. No, that’s more your space on the licensing and all of that. I mean I know it, but that’s your

Yeah, no, but this is why we partner together because the expert in that and the things that I do you don’t deal with. So I have knowledge in it just from working with you and clients that have it. But yeah, I mean you’re the expert on it. So

David Kakish:

Take it. So Todd, I think I’ll set the pricing aside for a second. Kind of like what I talked about in the Google world is to accomplish what we’re doing in the Microsoft world, you have to go get these third party tools, right? I’ll give you a really simple example, right? Archiving to meet SEC compliance, I can do the email archiving inside a Microsoft platform. I can do something called data loss prevention or DLP in the Microsoft email where if I send out an email with a social security number or account number, it’ll automatically detect it encrypted and send it out. I could do encryption inside of the Microsoft ecosystem. I gave you just three specific examples where in the Google world can you do it? Of course you’ve got to go and you’ve got to find that third party tool that’ll do it for you.

And where we see people using the Google platform is if they’re really much larger organizations and they want to have all these platforms and even then the value proposition isn’t there. So I think what happens is the pricing is kind of hard to compare apples to apples because Microsoft’s got a lot of different suites. There’s the enterprise and there’s a business premium, and that’s my one criticism of Microsoft. They make it really hard to know what licensing package you want. But once you figure that out, by the time you start adding not just the cost of the third party tools, but the cost of the integration and the cost of learning, it just doesn’t make sense. Microsoft becomes the clear winner. And then even setting aside these third party tools, the integration and having to learn them, when you look at the cost, it doesn’t add up. You actually end out coming out ahead in the Microsoft world then in the Google world, that’s kind, it works.

Chris Johnson:

And if those integrations change, right David? I mean if an integration changes and now you’ve got to adjust and adapt, that could be a lot of work for someone.

David Kakish:

And I’ll say this, a lot of the financial applications do a really good job of integrating with Microsoft all the criticism that Microsoft get. Microsoft is pretty partner centric and they work really well with partners with integrations and stuff like that. So at a really high level, without getting into the details, that’s kind of what that is. Now, if we’re talking about a different vertical, like maybe education or healthcare, it would be totally different. But here we’re focused on specifically an RIA that’s starting out that’s got five employees, so Got it. Cool. Alright. Yeah. And again, we don’t get any money from Microsoft or Google, we’re just kind of talking what’s on our mind. And I should put the disclaimer, nobody is paying us not Red Tail, not Orion, not e-money, not Microsoft. We’re not getting anybody, we’re just having fun and we’re chitchatting. So alright. Absolutely. The second category, Chris, that we want to talk about is the CRM because that’s one of the core things for a financial advisor.

Chris Johnson:

Absolutely.

David Kakish:

Why don’t you talk a little bit about that and what are you seeing and what would you recommend for a new RIA with a five person team?

Chris Johnson:

Yeah, so I mean the CRM as you said, it’s kind of the core of your day-to-day operations and where you live and where your assistants and people live every day, that’s where client information is. That’s where you maintain stuff, that’s where you put notes, that’s where you have meetings. So that’s really the core from a small RAA, it depends. There isn’t a perfect one that I can say is this is the go-to for sure because it really depends on what you do, how you do it, why you do it. Those are the key components that I really get deep into with my clients in order to determine what is going to be their best solution. Now there’s a lot of people that use Redtail, have used Redtail for a long time, they love it. A lot of my clients use Redtail great tool, but there’s limitations with it.

There’s only so many dropdown lists you can create in there and ways to organize your data. They have it kind of built a certain way, whereas something like Salesforce, you can customize a hundred percent on your end or you can have a firm come in and build an overlay that overlays onto Salesforce that really has very unique and specific ways of integrating your data, using your data, integrating with other systems that may be do. So there isn’t a perfect silver bullet. We’ve talked about that. If you shoot and say this is what we’re aiming for, it’s really about the needs of the firm and how you get to that.

David Kakish:

Yeah, and we should let the listener know that our previous podcast we did record was just taking a deep dive and just CRMs and we covered the six main ones. But I think the two that come up in a new RIA lot, for me at least is Redtail and Wealthbox Wealth.

Chris Johnson:

Absolute. Those are the two

David Kakish:

Big ones that kind of come up. Redtail probably by far number one. And then Wealth Box. So again, we’re not talking about a team of 20, 30 people, we’re not talking about an established team, we’re talking about a new team. What would you say maybe are the primary ones where we want to kind of keep it simple, right? Hey, if they grow and their A UM and their people grow later on, that’s cool. But in the beginning, what are you seeing out there? And if it was your RIA, what would you run with and why?

Chris Johnson:

Yeah, I mean Red Tail is definitely the dominant one with wealthbox in a very close second. You’ve got between the two Red Tail’s very simple to use. It was built by financial planners. For financial planners. It really has the tools that a small team can utilize. The workflows are pretty easy to build, but they can clunky as you get bigger. So that’s why a small team, you can build very simple, straightforward workflows that a user can learn and use to help automate and create a flow where they don’t forget different steps in a process. Wealthbox has similar tools. I like Redtail a little more just because I think it’s a little more common. So there’s a lot of people that have maybe already used it in their prior firm and now this new firm, it might be easy for them to just step into. But Redtail has over a hundred integrations where I think Wealthbox doesn’t have quite as many.

So some of the integrations, how they link with custodians, it’s pretty straightforward. So I think it’s really Red Tail’s really easy to use. It’s not complicated, it’s not really crazy. Salesforce can get very complicated and sophisticated in how things work. So I like Redtail, but I like Wealthbox too. So again, it really comes back to what are the needs. There may be a firm that says, well, I need this. And so Red Tail’s not an option where Wealthbox is because of something. Or you look at Redtail and they go, well, we use it at a prior firm and it’s really easy, so I like it. And then you dig into, well, why do you like it? What about that do you like and how it really help your new firm in practice?

David Kakish:

From what we see, and again, our view is very limited, I think we see Red Tail quite a bit. And then distant second is Wealth Box, and then occasionally we’ll see advise on and then Advisor Engine, which I think used to be Juncture,

Chris Johnson:

Right? Juncture. Yeah, I see that in bigger firms because bigger firms are what had juncture in the past because that was an in-house, you had to have a separate server before and a desktop application before they had to get into the cloud and built out their cloud application.

David Kakish:

Do you see many, I’m seeing some, but a distant third advise on are you seeing that too? I

Chris Johnson:

Personally haven’t come across that one really that often. It’s really Red Tail Wealthbox, Salesforce a lot with some of the bigger firms that I work with. But yeah, in the smaller space, everybody that I come across, it’s usually Redtail, Wealthbox and sometimes Tamarack or their whole product, the Microsoft Dynamic product, their CRM that’s kind of integrated with their trading stuff.

David Kakish:

Well, it’s kind of funny. Red Tail seems to be sort of a safe one, right? It’s safe. There’s

Chris Johnson:

Cost effective. Yeah,

David Kakish:

There’s a great quote. I think it used to be for in the tech space that nobody ever got fired for hiring IBM, right? And so their competitors would say, well, nobody ever got promoted for hiring IBM either.

Chris Johnson:

So yes,

David Kakish:

True. I feel like Redtail is that safe one, right? Dominant one,

Chris Johnson:

Absolutely well known. When you’re at conferences, there’s a lot of people that you can network with that use and you can have conversations, well, what do you do for this? And that was something that back when I was running the RIA at conferences, we had best sharing practice groups that we would get together and talk about these things. And back then I was using Juncture at that point, it was the desktop app and all of the big firms that we met with were also using Juncture. So it was a great way to network and talk about, Hey, what challenges do you have? And

David Kakish:

Speaking

Chris Johnson:

Common, that’s what happens at conferences.

David Kakish:

Yeah. Well, and Juncture was the very dominant one when it was a server

Chris Johnson:

World. Absolutely. And

David Kakish:

I think they missed the boat on the cloud and I think Redtail,

Chris Johnson:

They were late to that game for sure, very late to that game, I think. But to their credit, they had built a product that really, for larger firms, even though it was very deep into your infrastructure, its own server desktop application, a lot of that kind of stuff, it worked really well with workflows and how advisor, big advisor teams needed to function every day. Yeah, exactly. So yeah,

David Kakish:

So cool. All right, so we talked about CRM. Thank you, Chris. We’re going to talk about portfolio management software and there’s a lot of them out there. There

Chris Johnson:

Is,

David Kakish:

And I’ll let you, I’m out of my area of expertise, so I

Chris Johnson:

Hand the

David Kakish:

Mic over to you.

Chris Johnson:

Yeah, so portfolio management, an ever-changing landscape. Orion, and let’s see, Orion and Riskalyze have announced just here in August that they are decoupling their whole one-stop shop and going to be offering slices of the pie for their different services because they found that if the one stop shop for everything is limiting their growth ability, Kitsis, actually Michael Kitsis actually wrote a lot about this in his August article about how they’re going to start offering, you can buy just the trading piece, you can buy just this slice. So that’s going to change the landscape a little bit for options for advisors, small advisors that just need portfolio management, they don’t want the trading, they don’t need all these other tools that come together with an Orion. Whereas a black diamond, most people know Black Diamond Advent, the old advent combined a few years ago, and Black Diamond’s one of the big go-tos.

Well, some people don’t realize they have a rebalance also where you can do your trading through that, not just portfolio management in the, when I say portfolio management, I’m talking about performance reporting, the billing aspect. So black diamond’s a big, I think the really the other dominant one has, I mean in investnet is huge, right? But it costs a lot because you’ve got, again, all of the components that are built into it. Orion again was expensive because you had all of these other components. We’ll see what they do with their pricing as they start separating things out. It might become much more cost effective to do something like Orion in the near future. And then there’s other ones that people probably have heard of but aren’t as prevalent. Adipar Digit, westmark advisor, arc, I mean there’s a lot of different portfolio management, TRE investment, they’ve got their product. So a lot to choose from. Again, it comes back to the needs of the client and really what they want to do with it. Are they doing just billing? Are they just doing portfolio accounting and performance? Do they need trading? Do they want it to integrate with their CRM? So there’s a lot of questions that you have to ask to drill down to what’s really going to be the best solution for em. Yeah.

David Kakish:

So I’m going to jump in. I think you kind of touched upon this that there’s two approaches to this, which is hey, best in class and then sort of level one and you have to think about that and that’s sort of a philosophical decision that, hey, no, we want to keep it simple and we kind of want to have an all-in-one and

Chris Johnson:

Absolutely,

David Kakish:

Hey, that’s great and that makes a lot of sense. Or no, we want to have the best of class in this category and stuff like that. And what I see, what I see, but take what I say with a grain of salt. When we talk about best in class, I see Black Diamond Advent quite a bit, then one sort of all in one. I see Orion,

Chris Johnson:

Orion,

David Kakish:

Those are kind of the two that I see. But let’s sort of talk about best in class first and then sort of an all-in-one. So from your perspective, best in class portfolio management, again, we’re not talking about the bigger RIAs team, five people. What are you seeing and what do you think would be, because trying to be very practical too. I’m like somebody is clueless

Chris Johnson:

Or

David Kakish:

We use this at this big firm and now I want to figure it out myself. So best in class, what are your top choices? I’m curious.

Chris Johnson:

Yeah, so between Black Diamond Tre’s a good one, but again, cut very expensive. Those are the most common that, I mean people use Morningstar office. I see that once in a while. I’m trying to think. Tamarack, Orion, Morningstar office, black Diamond, those are the most common that I come on advise on now as they continue to gain a little market share. They’ve got a portfolio management piece that also is integrated with their CRM, so that’s something to look at and watch. Redtail, however doesn’t, right? So Redtail have portfolio accounting built in. You can link your accounts so that you can see them all together in Redtail, but it doesn’t do your performance reporting or your billing or any of that stuff. So that’s one question that I get a lot. Well, if I have a CRM that doesn’t integrate, how does that work? And so the best in class stuff comes into play when you start talking about that.

David Kakish:

Sure. Okay. And now the flip side of that is sort of an all-in-one. I’m like, I don’t want to have the complexity. Yes, I know I might pay more, but we’re starting out where five people, maybe when we grow or when we’re more established after a couple of years I’ll start looking at best in class and sort of get this piece and this piece and this piece. But for now we’re starting out. I want to get an all in one for a new RIA with five people. What are you seeing and what would you recommend?

Chris Johnson:

Yeah, that really, Investnet is probably the biggest between in Investnet and Orion are the two top that are considered an all-in-one. And Riskalyze is in there too, but they’re an interesting thing. They’ve dabbled in a lot of different places and I don’t, in my opinion, have never really been able to pull it fully together like Orion has, Orion’s been a long for a long time. And I mean now you have all of your other held away assets too that you have to consider, right? And ER has really come into play with 401k. And so I think really Orion and TAC are the two kind of all in one that I see most office or most often in that space.

David Kakish:

Yeah, it’s kind of interesting. And for me, what I see a lot, and this is what we see, but it doesn’t mean what’s best or why I actually see Black Diamond quite a bit. And then I see Tamarack and Orion, those are kind of the two big ones that I see and it’s, it’s almost like the choice is like, Hey, here’s what you’re going to do and here’s why. Or maybe these are the safe ones. I don’t know where the dominant players, but that’s what I see from our perspective. But because we don’t get into the level of what you do, we never get into the nuances. And I’m so glad that you’re sharing the nuances because that’s what matters

Chris Johnson:

For the listener. Absolutely. Well, and the part about when you start thinking portfolio management, a lot of it does come back to, well, what do you do? Are you managing the assets yourself or are you farming it out to a third party? And if you’re farming it out, let’s say you have, I’ll just use in investnet as an example, there are so many separate account managers that you can get on the in Investnet platform. Same with Orion. But so if that’s how you do business, that’s probably what you’re going to be looking for, especially if you’re using an asset marker and SEI, right? All of those managers are out there and available through in investnet and you’ve got that whole new account opening, you’ve got billing, you’ve got portfolio accounting, so performance reporting and trading and all of that built into one component. But it’s expensive. And so if you’re a small five person shop, you have choices to make as you build out your tech stack on, well, where can I really afford to spend and how much can I afford to spend and does that fit within my budget? Whereas a black diamond less expensive, not as quite extensive is what you can do. They don’t have separate account managers connected to it the way or the way investment Tamarack does.

Todd Darroca:

Yeah, interesting. Okay, cool. Are you seeing a lot of, in the space, a lot of the tools are being either acquired or they’re consolidating it into one company and it sounds like the one you were talking about, they did consolidate, now they’re splitting back up. Are you seeing more consolidation and that’s just an outlier or are you seeing these guys stay separate from each other?

Chris Johnson:

Well, I think there’s a lot of consolidation and in Investnet, I think here just announced they’re actually going private. They’ve got a big investor that came in and Investnet now is going private, which is interesting because they’ve been public for a long time and a big player. And so I was surprised to see Orion say that they are now allowing or offering separate services. You don’t have to buy the whole thing in one, but it makes sense because market share, there’s so many advisors out there and everybody’s trying to gain market share. Well, if you’re an all-in-one solution and you’re expensive, these smaller firms and there’s a lot of firms breaking away or starting up their own RIAs because they want that revenue that they’re paying another firm to be in-house. And so if they can’t afford you, you’re not even an option right out of the gate.

Well, if you start allowing or offering separate pieces of your solution as an offering, you can gain more market share. And I think the idea maybe is well, if they get in on this piece, they’ll see that we can go all in one and maybe eventually they become an all-in-one client because now they know us and they’ve used us and they like our service and all of that. But it was interesting that both Orion and Riskalyze are separating and starting to offer individualized services. Yeah, great question though. I mean, it’s been a consolidation game for a long time. I mean, look at what investment has done the places they bought in Orion. I mean Orion owns Redtail. What’s going to happen there? They bought them out, what was it, a year and a half ago or so. So we will see what sort of integration they come along with their all in one solution with Redtail as the core CRM, we haven’t seen a lot yet, but I would guess that’s on the horizon

David Kakish:

When you think about it. It’s a smart business decision to say, Hey, yes, use this tool because now, oh, we have this other tool and it’s a lot easier to cross sell than not to, and I think that’s part of what’s happening in the market. So alright, so financial planning tools, and this kind of plays into what we talked about before, maybe let you talk a little bit about that and then yeah, there’s a couple of other things that we will quickly talk about, but yeah, financial planning tools from your perspective, Chris.

Chris Johnson:

Sure. I mean the ones I come across most often and Money Guide Pro, those are the two FC Coke. Yeah, you got it. And then NMA plan running in third usually. I’m

David Kakish:

Sorry, what was the third one you said?

Chris Johnson:

NaviPlan. Oh, okay. Yeah, yeah. So those are the three that have been around from what I know for a long time. But when you look at financial planning, the other pieces that are out there now that has really grown, and I don’t come across a lot of them because many of the clients that I work with have been in business for a long time and already have been using E-Money or Money Guide Pro or NaviPlan to convert off of a planning tool to another planning tool is very, very painstaking. And why do it unless there’s something that you have to have in another tool that your current tool doesn’t have.

David Kakish:

So I’m going to use an analogy here and Chris, you’re going to laugh because you’re going to know this because you’re from Minnesota Ney and Money Guide Pro is the Pepsi and the Coke and NaviPlan and the others are Chasta Cola and the other very distant third. But yes, e-money and Money Guide Pro is what I hear all the time. Those are the big ones. So

Chris Johnson:

NaviPlan was there, they were kind like juncture. They were an in-house desktop app for a long time and they were slow to getting to that web-based solution where e-money really almost has always been a web-based offering. And Nava plan is very complicated. You can get very sophisticated if you have very extremely high net worth clients that need the real sophisticated planning stuff. NaviPlan is really your go-to because they have that depth E-money is getting there, but E-money is more of like a cash flow. They’re all about cashflow. And when you’ve got big estate things that these very large high net worth people have, maybe NaviPlan is better option for you.

David Kakish:

Okay, cool. And then custodian, I think you and I were big fans of Schwab. There are others,

Chris Johnson:

Schwab, there are others. So in my experience, I’ve been on Schwab NFS or Fidelity, Pershing Prime Vest, which was a small self clearing firm. And so I’ve touched a lot of different TD Ameritrade, all of those. Now Schwab, Schwab’s my favorite. I know a lot of people there. I’ve used them for a long time. They do a great job. They had some challenges with the merger with TD and their service levels, but I think they’re kind of through that and getting that, but they really understand our business. They started their RIA channel a long time way back in the nineties. So they’ve really been a part of their market for a long time.

David Kakish:

Well, and what I am really impressed about Schwab that I haven’t seen the others do is that they really help the new RIAs get up and running. Yes, absolutely. And it’s very white glove service and they go above and beyond. And even though technically they’re just the custodian, there are so many other things that they provide for them or at least introduce them to people like you and me and absolutely others and things like that. I think I have not seen that with other custodians. I think there’s just so much value add in the beginning that they provide. So again, there are many others, but if I were starting my RIA, I would definitely go with Schwab over anybody else.

Chris Johnson:

Yeah, that’s my top choice for sure. Again, depending on needs too, you still have to look at the needs of the firm and maybe Fidelity’s because have a certain niche and maybe alternative investments or something like that where you’re really big on I’ve got to have this as part of my offering where maybe Schwab doesn’t have it. That would be the reason to look elsewhere. But actually a lot of the, my larger clients, they’re multi custodian. They don’t just have one that’s pretty common. The small one, usually

David Kakish:

There’s a primary, but they have a couple of clients that are with

Chris Johnson:

Somebody they do or something like that. Absolutely.

David Kakish:

Which is very common. Okay, cool. Alright. Communication archiving. So I’ll talk a little bit about that and then I’ll turn it over to you if you want to add to that or not. But the idea there is, hey, from a compliance perspective, you need to archive your email. You need to archive your instant message on teams and maybe social media, maybe text. You definitely need to talk to your outsource compliance company, whoever your compliance officer is and say, Hey, if we’re using texting with clients, do we need to archive that or not? Right? So I’m not going to answer whether or not you need to archive that, but the companies that do the communication archiving, again, because you’re on the Microsoft platform, Microsoft has the ability to archive and it drives me crazy because not a lot of people know this. You can archive your email and you can archive teams inside of Microsoft and it’s SEC and FINRA compliant, but so many RIAs do not know that. So many consultants do not know that. And that’s something we just set up for our clients by default. Now when it comes to archiving social media, text messages and stuff like that, really, I mean again going back to the Pepsi and the Coke, right? It’s Marsha Global Relay. Absolutely. And then the RC Cola or the Chasta or whatever, there’s a company called Message Watcher that’s pretty good. I like those guys a lot. But those are kind of, Smarsh is kind of the premium one, a premium platform and a premium price.

Chris Johnson:

Global Relay is not cheap either.

David Kakish:

Yeah, exactly. We’ve had a lot of people pretty happy with Message Watcher by the way. So those are the ones that would be there. So I don’t know if there’s more you wanted to add to that or

Chris Johnson:

I have a client that uses pre results, which has been decent, but they had a couple of their senior people leave recently and start another firm. And so the new firm, I’m looking at that to see what they look like. But yeah, I mean Smarsh Global Relay pre results message, and if you really look, there’s another one, let me think. Hold on. I can’t remember the name that I’m seeing a little more with. Oh, smart. RIA is a compliance, well that’s not really archiving, I guess they’re more infrastructure

David Kakish:

That leads us into the next topic when it comes to compliance. We don’t want to get too much to do it, but from a compliance perspective, you want to have an in-house chief Compliance Officer, a CO, but you still want to work with an outsourced compliance companies and there’s just so many of them out there are, man, I guess let me ask you that question. I didn’t even think about that, but because so many out there, I personally don’t have a preference. Do you have a preference for a new RIA with five employees?

Chris Johnson:

No, I mean Advisor Assist is good for small, small, they use Advisor Cloud 360 and the tool is decent. It’s just very, it’s a little clunky and it doesn’t really integrate that well with much, but it’s very reasonable from a cost standpoint point. So I mean, I like them. You’ve got Red Oak, you’ve got SMART RIA, there’s so many different providers out there that can do that for you. Yeah,

David Kakish:

And it’s interesting, what I find here is many new RIAs already have a relationship with some kind of a compliance company and they generally bring ’em on. And I feel like there’s just so many, many out there. And this is not a scenario where it’s a Pepsi and a Coke. I feel like this is more like, there’s literally probably hundreds of them out there

Chris Johnson:

Are.

David Kakish:

And generally speaking, they’re pretty good. But it’s difficult for me to go in and say, oh yeah, here’s one or here’s two. We’re happy to refer people when they ask, but it’s

Chris Johnson:

Absolutely,

David Kakish:

It’s very rare that they ask because they already typically have these established relationships

Chris Johnson:

Because you need that. Usually you need that right from the onset to even form the SEC registrant. You need a compliance consultant or someone to help you with that because form A DV in filing, that is not a simple thing to fill out. And if you do it wrong, you might not get approved. So yeah, you’ve got someone that’s behind the scenes helping you with that and you’ve met them through your custodial relationships or other relationships in the industry. I mean, I’ve got someone that I’ve worked with for years that’s fantastic. Smart guy attorney knows compliance back of his hand and I’ve referred clients to him when they want to break away and start their own shop. The challenge with that is he doesn’t have a tool. He does the legal work and that piece of it and your infrastructure, but now how do you do the management and monitoring of all your quarterly transactions for your people that need to be supervised and all of that. You need a tool that can help you with that. And that’s where those other players come into focus on, I need a software that can do this work for me.

David Kakish:

And then I want to talk about a managed service provider, but I want to say that last, is there anything else we need to talk about? Maybe performance reporting, trading, rebalancing, or maybe any other category that maybe we didn’t touch upon that you would say, yeah, hey, from a tech stack perspective, let’s talk about these things.

Chris Johnson:

Yeah, I mean one of the things and why Schwab is they’ve got ibel now as part of the TD merger, and I rebel from a trading and it’s a trading platform, portfolio management trading platform. I really like what Ibel offers in the integration with Schwab. Whereas some of the other ones, they have integrations. Of course all trading has to be as automated as possible. But I’m really beginning to what I rebel that offering has because of its connection with Schwab. We didn’t talk a lot about trade management tools, but you’ve got Tamarack in Black Diamond has their own. So there’s a lot of options out there. And again, it comes back to what your needs are. But yeah, I’m really liking I rebell with Schwab.

David Kakish:

Okay, cool. And then maybe the last thing, and then what I want to do is recap and say if this was my RIA, this is who I would hire for each category, but I want to talk about managed service provider, which is the space we play in RIA workspace. Absolutely. I think our number one competitor is a local IT provider. And generally what we see a lot of new RIAs do is because they’re comfortable, they hire a local IT provider, there are five people, there’re seven people starting out. And then within a year, if not sooner, they realize, oh my goodness, this local IT provider can’t service us. Because the fundamental problem is you’re small from a headcount perspective, you’ve got five people, seven people, employees, but you need what I would call an enterprise platform and enterprise security. And that local IT provider just doesn’t get that because to him you’re just a small business, you’re a small company, he wants to work with clients that have 30 plus employees.

We see this challenge all the time. So when they reach out to us, I always tell ’em, you’ve saved one to two years of your life because you reached directly to us rather than having to wait going through a local IT provider. Now outside of that, there’s two people that we come across. So we’re RIA workspace, just to be transparent outside of that, there’s Ven, which used to be OS 33. They used to be a pretty big player in providing outsourced IT services or managed services for the RIA vertical. But since then they’ve kind of moved into becoming more of a software platform and they just don’t focus on RIAs anymore. And then there’s a company called Advisory, which is owned by a private equity firm. This they bought out true North Networks, they bought out size solutions and those were really great companies. And now people come to us leaving Visor like customer service is terrible, just like nightmare stories.

And that’s what happens when you get owned by a private equity firm that also focuses on RIAs and accounting firms and construction because at the surface of it, an accounting firm in an RIA looks the same in practice. They’re so fundamentally different. And so absolutely that’s one of the big problems that’s happening there. And then there was a company called Itegria that got bought out by RIA in A box and then buy Comply. And they had a really good, what I would call an Amazon cloud workspace solution or a cloud computer, but that technology is way past due. And so a lot of people are leaving that because Comply really focuses on compliance and not tech and Ms P and stuff like that. So that’s kind of like if I were starting being objective and it’s hard for you to be objective. If I were starting out, I would choose RIA workspace as my MSP. But again, I’m a

Chris Johnson:

Little bit biased. No, I would too. I’m a little biased too, but I would too.

David Kakish:

Yeah, so cool. So what I want to do, so we covered a lot. We covered a lot, and I’m going to pretend I am starting a new RIA with a team of five people. I would choose the Microsoft Office suite as a platform, and I could use, by the way, windows computers or MacBook computers, it doesn’t really matter, but I would definitely use the Microsoft Suite instead of the Google Suite. Personally, if you were to ask me what CRMI would use, I would probably start out with Redtail in terms of portfolio management and software. If I wanted the best in class, I would probably choose Black Diamond. If it was an all-in-one, I’d have to really vet out Tamarack and Orion, and that’s sort of a tough one.

Chris Johnson:

Absolutely.

David Kakish:

I would probably do Tamarack since they own Redtail, right?

Chris Johnson:

Orion owns Redtail,

David Kakish:

I’m sorry, I’m sorry I got that wrong. I’d probably do Alliance since they own is what I would do for financial planning, custodian, definitely Schwab communication archiving. I would maximize Microsoft. I would probably get message watcher. I want to be budget friendly. And then an MSP, like I said, RIA workspace, and then what am I missing? What am I missing? So I just went through a tech stack of my RIA, what am I missing, Chris?

Chris Johnson:

Well, so really, so you’ve got the CRM component with Black Diamond, you’ve got portfolio accounting, billing and trading if you want trading, they have a rebalance your product that’s part of that on the compliance side. So the compliance side, you’ve got all of your employee monitoring that you have to do, not just their social media accounts, but you have to capture all of their account activity if they’re required to be supervised. So all of your advisors have to be supervised and you have to monitor their trading activities so they’re not doing front running and all these other things that advisors can do. So the compliance tool, I think is where there’s an open space there, whether it’s advisor assist or some of the other tools out there, that’s a plug that needs to be filled in how you manage and oversee all of your, because you’ve got your cybersecurity certifications, you’ve got your procedure certifications, you’ve got all of those pieces that every year or every quarter that you have to have people recertify. I haven’t done any trading in our list of securities that you can’t trade in and all of that. Sure, some of that’s dependent on the type of activity that the advisor does too, and what requirements you have to follow, but you need a system in a way to capture and manage and monitor all of that.

David Kakish:

Yeah, I missed that one as I went through the summary. Thank you for bringing that up. And I’m kind of pretending like this is a figment RIA, right? I kind of quickly listed like, Hey, here’s the tools that I would use, and hopefully the listener can look at that and get a sense of what makes a lot of sense. Todd, I know I’ve been asking a lot of the questions because geeking out with Chris. Anything on your end that you wanted to ask or you wanted to add?

Todd Darroca:

No, no, I think that’s great. It’s just you two best friends at recess who gossip up and I just kind of like watching, so No, it’s good. No, I got no other questions for Chris. Yeah,

Chris Johnson:

I think I’d actually add one more piece to this that I think maybe is more perceived, or maybe it’s when you talk CRM document management, Redtail has imaging, but there are other management systems in Microsoft. You’ve got SharePoint and OneDrive and that kind of stuff, but where are you maintaining your books and records, client files? And that really comes back to your document management tool. And if you’re using Redtail, of course you should use Redtail Imaging, but there are other solutions out there. You’ve got got docu Pace laser app, which is form filling. You’ve got quick forms. There’s other things that can help you automate stuff from an operation standpoint. And that’s one of the other components that I don’t think advisors think about when they are setting up their own firm is how do you automate some of the work that gets done every day? And one of the big things is in auto-populating your forms, and we didn’t really touch on that at all, but Schwab has integrations with DocuSign, docu pace, laser app, all of those pieces. But that’s a component that I think you need to also remember when you’re looking at this,

David Kakish:

Well, there’s document management, there’s document management automation, right? Yes, absolutely. What we generally see is when we talk about Red Tail Imaging and Laser Fe and some of the other ones, these are sort of at advanced stages and is, once people sort of understand the power of SharePoint, they end up doing a lot of things inside of SharePoint. But the document management automation, that could be just a separate podcast in and of itself.

Chris Johnson:

Absolutely.

David Kakish:

That could save a ton of time for RIAs and

Chris Johnson:

Definitely.

David Kakish:

Yeah,

Chris Johnson:

And I think one other piece too, sorry David is No, no, go for it. Client facing client portal, that’s another piece that we didn’t talk about at all. We were talking more internal, what does the advisor do, but how do they present to their clients? And client portals a big part of that in how you deliver your quarterly performance reports. E-money has a portal for uploading documents from an estate planning standpoint. So there’s different tools and ways that you also need to interact with your client. And a client portal is a big part of that.

David Kakish:

Yeah. Well, since you brought it up, I mean, what are your favorite ones? What are the ones that you

Chris Johnson:

Yeah, black Diamond has a great portal, and again, if you’re doing portfolio management where you’re producing quarterly performance reports, most of your tools are going to have a client portal. E-money has a client portal, investnet has a client portal, Tamarack, they all have client portals, but I don’t think that advisors think that much about it when they’re starting to set up their own shop. And it’s something that the question needs to be asked as you’re vetting out these solutions is, Hey, do you have a client portal where it’s going to be easy for me to push out my reports to so I don’t have to email them, or I don’t have to print and mail, which hopefully advisors aren’t printing and mailing things today, but some still do because there are clients that don’t even have email addresses.

David Kakish:

Yeah. And by the way, I’m glad you brought it up because it’s a subset of many of the other tools, but if it were you, what is your favorite client portal? And I know I ask interesting questions, I’ll call ’em interesting to put you on the spot, but what’s your favorite or why? Favorite client portals?

Chris Johnson:

Yeah, I like both. I mean, I like emos and I like Black Diamonds. Those are the two that are very, they’ve really spent a lot of time and energy building them out to work well for the advisor. Okay,

David Kakish:

Cool. Well, I’m glad that was part of my tech stack that I chose for my new RIA. That’s good. So cool. Well, listen, Chris, I’ve been asking a lot of questions. We’ve been going back and forth before we wrap up this call. Anything else you wanted to add? Again, new RIA, the best tech stack for a five person team. Anything else you want to add?

Chris Johnson:

No, I think we’ve covered a lot of different places that advisors need to think about what do they even need to have their own firm and yeah, great conversation. I mean, we could get into a lot of other stuff, digital marketing and sales enablement and scheduling client meetings and all. I mean, that’s one, right? Calendly, onehub, all of those. So there’s a whole realm of other things that as I work with my clients in helping develop out what does their tech stack look like, what are their needs? It all comes back to the needs of the advisor. And that’s really how you get into, well, what should you even choose? And do we even look at a calendar schedule or if 90% of your clients are 70 plus and they don’t use computers, well, no, you don’t need a calendar scheduler because why pay for it if nobody’s going to use it? So yeah, that’s that whole needs analysis, that’s really important.

David Kakish:

Yeah, I think what we tried to accomplish here is, I know there’s a lot more to this, but at least kind of cover, Hey, what are the primary things that we want to cover that maybe people don’t even think about or that they have a lot of questions around. I think generally people say, yeah, we want to use Zoom versus teams. They have a sense of that maybe we prefer Calendly over booking. And you’re right, there’s other components. But I think what, listen, if you’re a new RIA, you’re starting out or you’re going to start out, or you’re thinking to go on your own, you definitely want to listen to this and then take notes and say, yeah, hey, here are the different components, and then I would strongly encourage you to reach out to Chris and reach out to us too. But Chris is probably your first point of contact because Chris knows this and knows this really well, and kind of guide you through based on your requirements. And Chris, what’s best way for people to get in touch with you?

Chris Johnson:

Yeah, really best way is either email or phone. And email. It’s chris@tech.com. So sounds like gigabyte, but gigabyte. And then phone is eight one seven seven seven six seven.

David Kakish:

Okay, perfect. And we’ll include that in the show notes so you guys can see that. And if it’s a new RIA thinking about starting out or they just started out, what’s your process? Do you initial schedule like a discovery call or just walk through the process a little bit?

Chris Johnson:

Yep. Yeah, yeah. Initial, I do basically a discovery call to see how I can help them, what they’re really looking for. And the initial call is free, it’s just I spend whatever time is needed to get to know and understand what they’re looking for and how I can help. And then from there it’s engagement, putting together that engagement letter and coming up with what pieces I’m going to be involved in. And we go from there. Usually the beginning is the needs analysis really, and talking through what they do, how they do it, why they do it. And that starts helping fill in the gaps of, well here’s the components that you need and if you want to go best of breed, the ones that we should look at.

David Kakish:

Yep. Perfect. Yeah, I would strongly encourage you to reach out to Chris if you are going on your, after you listen to this, reach out to Chris. We are definitely happy to help on the MSP side or the IT consulting IT services side. And our process is usually there’s a discovery call and then 30 minute discovery call and then we take it from there. So now with that being said, Todd is our dj, so I will turn it over to our DJ to do the outro and the music mixing and all that fun stuff. So Todd.

Todd Darroca:

Alright, well thank you Allall for listening to the RIA Tech Talk podcast, brought to you by RIA Workspace. For more podcasts and resources, go to www.riaworkspace.com and check out the learning center. Feel free to reach out to us with any questions or topics you’d like us to cover. And stay tuned for more RIA Tech Insights and our next episode. See you later.