Common IT mistakes new RIAs and financial advisor firms make and how to avoid them

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Starting a new registered investment advisor (RIA) or financial advisor firm is an exciting venture. As you focus on building client relationships and managing portfolios, it’s easy to overlook the critical role that a robust IT foundation plays in your success. In this guide, we’ll discuss some of the most common IT mistakes that new RIAs and financial advisors make, and how you can avoid them.

The importance of a strong IT foundation for new RIAs and financial advisors

As a new RIA or financial advisory firm, it’s crucial to recognize the significant role that technology plays in your business success and invest accordingly. A well-implemented IT system can streamline operations, enhance security, and improve client service. On the other hand, a weak IT foundation can lead to inefficiencies, compliance issues, and client dissatisfaction.

IT mistakes new RIA and financial advisory firms make

In the early stages of their business, new RIAs and financial advisors often make IT mistakes that hinder their growth and jeopardize their business. These mistakes generally fall into three main categories: productivity, security and compliance, and client service.


Using personal email and file storage for business purposes
Many new RIAs and financial advisors use their personal email accounts for business communication, and store sensitive client information on their personal devices or cloud storage accounts. This practice not only poses a security risk but also makes it challenging to separate personal and business activities.

How to avoid this: Implement a secure business email system and cloud-based file storage solution. Platforms such as Microsoft 365 or Google Workspace offer professional email services and cloud storage with advanced security features. This ensures that your communications are secure and easily accessible while maintaining a clear distinction between personal and professional data.
Using too many third-party tools
While third-party tools can be useful for specific tasks, relying on too many of them can lead to a fragmented and inefficient IT system. Additionally, managing multiple logins and subscriptions can become overwhelming and time-consuming.

How to avoid this: Prioritize investing in a comprehensive technology platform that integrates various functions such as document management, client communication, and more. For instance, if you’re already using Microsoft 365 for email and file storage, consider utilizing its other features such as Teams for video conferencing and SharePoint for secure document sharing.
Using outdated or incompatible software
Using outdated or incompatible software can make it hard to collaborate with clients and colleagues. As an example, some RIAs moved to virtual desktops because it was a new and promising technology.  However, we now know it’s not a great fit for most RIAs.  It can also put you at risk of security breaches and noncompliance.

How to avoid this: Keep your software up to date and ensure their compatibility with other systems used by your firm and clients. Consider using cloud-based solutions that offer regular updates and are accessible from any device, eliminating the need for manual installations or upgrades. Here’s a guide on how to choose the right software for your RIA tech stack.

Security and Compliance

Assuming your business is like every other small business in terms of security
Believing that your RIA or financial advisory firm only needs standard security measures can leave you dangerously exposed to cyberattacks. As part of a highly regulated and data-driven industry, RIA and financial advisory firms require specialized cybersecurity measures.

How to avoid this: Understand the unique security needs of your industry and invest in IT solutions tailored to meet those needs. You can also check your Microsoft Secure Score to assess your firm’s security posture and get recommendations for improvement. Work with your IT provider or consultant to implement any necessary changes.
Failing to properly back up and archive data
Data loss can be catastrophic for any business, but especially for RIAs and financial advisors who deal with sensitive client information. Failure to regularly back up and archive data can result in significant financial and reputational damage.

How to avoid this: Implement a regular data backup schedule and test your backups frequently to ensure they are working correctly. Consider using cloud-based backup solutions that offer automatic backups and secure off-site storage. Additionally, ensure you are archiving emails, instant messages, and other communications to safeguard critical information and maintain compliance.
Not understanding data security regulations
As an RIA or financial advisor, you deal with sensitive client data and must comply with various regulations such as the Gramm-Leach-Bliley Act and the Securities and Exchange Commission’s Rule 17a-4. Failing to understand and adhere to these regulations can lead to legal penalties and tarnish your business’s reputation.

How to avoid this: Educate yourself on relevant data security regulations and ensure that your IT systems are compliant. Consult with a cybersecurity expert or hire a managed IT services provider that specializes in compliance for RIAs and financial advisors to ensure your firm is meeting all the necessary requirements.

Client service

Having inconsistent communication methods with clients
Using a mix of personal emails, text messages, and phone calls to communicate with clients can lead to confusion and miscommunication. This can then result in delays, errors, and low client satisfaction.  It can also make it more difficult to backup and archive this data.

How to avoid this: Implement a unified communication system that allows for seamless communication across all channels. Many CRM systems offer integrated email, messaging, and calling features that can improve efficiency and client service.
Neglecting client data privacy
Clients are more concerned than ever about their data privacy. Failure to properly secure and protect their information can cause them to lose trust in your firm and seek services elsewhere.

How to avoid this: Implement robust security measures for all client data, such as email encryption, data loss prevention, and secure file storage. Communicate with your clients about the steps you are taking to protect their information and address any concerns they may have. This can help build trust and improve client retention.
Not leveraging technology to enhance client experience
Technology can be a powerful tool for RIAs and financial advisors to improve their client service. However, failing to use the appropriate technology can result in missed opportunities to provide a better client experience.

How to avoid this: Explore different technology solutions such as video conferencing, online document sharing, and virtual meeting platforms to enhance your interactions with clients. Also, regularly seek feedback from clients on how you can improve their experience using technology. This will not only help you tailor your services but also strengthen your relationship with your clients.

Get expert guidance

Running a successful RIA or financial advisory firm requires more than just financial expertise. It also involves effectively managing data, complying with regulations, and providing exceptional client service.

If you need help with any of these areas, reach out to RIA WorkSpace. Our team is dedicated to providing personalized, enterprise-level IT services tailored to the unique needs of RIAs and financial advisors. Let us help you navigate the complexities of IT so you can focus on what you do best: serving your clients and growing your business.