Imagine this: you’re presenting a client proposal, and suddenly, your entire network crashes. Data disappears, clients panic, and your reputation crumbles. Sound like a nightmare? Unfortunately, for many registered investment advisors (RIAs) and financial advisors, this, and other unexpected IT problems area constant worry.
Balancing technology needs with budget constraints can leave your firm vulnerable, especially in the face of cybersecurity threats and constantly evolving technology. When faced with the choice between building an in-house IT team or outsourcing to a managed IT services provider (MSP), which option offers the best value for your firm?
The case for in-house IT teams
Having an in-house IT team means having dedicated staff who handle all technology needs and issues within your firm. They are familiar with your system, understand the specific needs of your firm, and can provide personalized support. Plus, having them on site sometimes makes it easier to address issues swiftly and efficiently.
However, maintaining an in-house IT team involves several direct costs that can quickly add up:
- Salary and benefits for IT staff – Hiring skilled IT professionals is expensive. According to industry standards, the average salary for an IT manager can range from $64,000 to $148,000 per year, excluding benefits.
- Office space and equipment – Providing your IT team with dedicated office space, computers, software, and other equipment is another significant expense.
- Training and professional development – IT is a constantly evolving field. To keep your team updated with the latest technology and security practices, investing in continuous training and professional development is crucial.
Beyond the obvious direct expenses, there are several hidden costs associated with maintaining an in-house IT department:
- Recruitment and retention challenges – Finding and retaining highly skilled IT professionals can be difficult, especially in today’s competitive job market. This means investing time and resources in recruitment efforts and potentially higher salaries to retain top talent.
- Lack of specialized expertise – It’s challenging for a small IT team to have expertise in all areas of technology, such as cybersecurity, cloud computing, and data analytics. This may result in them struggling with certain tasks or needing to outsource specialized work, adding to the overall cost.
- Technology obsolescence – With the rate at which technology advances, it’s easy for your in-house IT team to fall behind on updates and upgrades. This can result in obsolete technology, leading to compatibility issues and security vulnerabilities.
The case for MSPs
Outsourcing your IT needs to an MSP means partnering with a third-party provider that takes care of all your technology requirements. They offer a range of services for a predictable monthly fee, usually covering:
- Network management – ensures your network infrastructure is running efficiently and securely, covering tasks such as monitoring traffic, optimizing performance, and resolving connectivity issues
- Security monitoring – involves continuously tracking and analyzing your IT environment to detect and respond to potential security threats, helping to protect your firm from cyberattacks
- Software and hardware maintenance – includes the regular updating, troubleshooting, and repairing of your software applications and hardware components to ensure everything operates smoothly and remains up to date
- Help desk support – provides users with technical assistance and solutions for any IT-related problems they encounter, typically through a dedicated support team that’s available via phone, email, or chat
By offering all-inclusive pricing, an MSP allows you to budget more accurately and avoid any surprise costs. Additionally, you won’t be charged extra for every IT issue. This is a stark contrast to the hourly or break/fix models, where unforeseen problems can lead to skyrocketing costs.
Plus, by outsourcing your IT needs, you’ll benefit from:
- Access to specialized expertise – MSPs have dedicated teams of professionals with expertise in different areas of technology, giving you access to a broader range of skills and knowledge that may not be available within an in-house team.
- Scalability and flexibility – As your RIA or financial advisory firm grows or faces changes in technology needs, an MSP can quickly adjust their services to accommodate your requirements without the added cost or hassle of hiring new employees or retraining existing ones.
- Reduced risk and increased security – With the rising frequency and complexity of cyberthreats, outsourcing to an MSP can offer a higher level of security and compliance. They have the resources, tools, and expertise to implement robust security measures and protect your firm’s sensitive data.
Other important considerations
While cost is a major factor when choosing between in-house IT and an MSP, there are other crucial considerations to keep in mind:
Projects and unexpected costs
Building and maintaining your IT infrastructure involves more than just day-to-day operations. Special projects such as system upgrades, data migrations, or implementing new software can stretch your in-house IT team thin and lead to unexpected costs. Hiring additional temporary staff or outsourcing specialized tasks may be necessary, driving up your overall IT expenses.
MSPs, on the other hand, often have the capacity and expertise to handle such projects within their existing service package, offering a more predictable and cost-effective solution. They also have experience managing unexpected costs and can better anticipate them, helping you avoid any budget surprises.
A patchwork of tools vs. the all-in-one advantage
Many RIAs and financial advisors rely on multiple software tools and platforms to manage their operations, such as CRMs, portfolio management systems, and financial planning software. These tools are often from various vendors, which creates a “patchwork” tech stack that can be cumbersome to maintain, lead to compatibility issues, and require multiple licenses.
An MSP can provide a comprehensive solution that integrates and manages all your tools, simplifying your technology infrastructure and reducing costs. For instance, RIA WorkSpace’s Microsoft-powered platform offers a seamless, all-in-one solution for RIAs and financial advisors to manage their operations and technology needs. It comes with a range of tools and features, including email, document management, and secure file sharing, all for one predictable monthly fee.
By streamlining your technology and reducing the number of vendors you work with, an MSP can save you time and money while improving your overall efficiency.
The strategic choice for RIAs and financial advisors: In-house IT team or MSP?
Ultimately, deciding between an in-house IT team and an MSP comes down to your firm’s specific needs and preferences. While having an in-house team offers a sense of direct control and personalized support, it comes with significant financial and logistical challenges. On the other hand, partnering with an MSP provides specialized expertise, scalability, and comprehensive security at a predictable cost.
At RIA WorkSpace, we understand the critical role of IT in wealth management. Unlike local IT providers that treat you like any other business, we recognize the crucial importance of productivity, security, and IT compliance in your industry. Since 2007, we have specialized in serving RIAs and financial advisors, offering tailored IT solutions that enable you to focus on serving your clients and growing your business.
Our pricing is all-inclusive and ranges from $120 to $160 per user per month. For an exact quote or to learn more about how our all-in-one platform can support your RIA or financial advisory firm, schedule a free consultation with one of our experts today.