Many registered investment advisory (RIA) and financial advisory firms today leverage a medley of technology solutions and services to power their businesses. They may have separate systems for client management, financial planning, portfolio performance reporting, and other core functions. Some may even use multiple solutions in each category, such as having different software for front- and back-office operations.
Some RIAs and financial advisors mix and match a variety of service providers, software applications, and hardware solutions in an effort to find the best fit for their needs and budgets. While this patchwork approach can offer some flexibility and might seem like it has cost savings, it also presents a range of risks that can have far-reaching implications.
In this blog post, we’ll explore some of the dangers of having a patchwork tech stack and outline steps your firm can take to avoid these potential pitfalls.
Data integrity issues
Using an array of systems can create obstacles to data integrity and accuracy. Without a unified platform, it can be difficult to ensure that information is accurately captured and stored across multiple applications. As a result, you may struggle to produce reliable, actionable, and timely insights from your data.
It can also be hard to detect conflicts between data sets within your systems. This can lead to potentially costly mistakes, as well as reputational damage if you consistently cannot properly track and manage client accounts.
Inadequate security
Because RIAs and financial advisors like you operate in a highly regulated space, it’s crucial that your tech stack is up to the task of meeting or exceeding all applicable security and privacy requirements.
Unfortunately, with so many technologies in play, the chances of a data breach increase significantly. You may not have the same level of control over every solution or service, which can make it challenging to implement adequate security measures. When working with multiple providers, you may also need to ensure that their protocols and practices are up to date and in line with current industry standards.
Poor scalability
As your firm grows, the need for more scalable technology solutions often follows. When your tech stack is a mishmash of disparate items, it can be harder to adjust or add new tools as you need them. Additionally, upgrading or replacing components of your existing stack can be more costly and time-consuming when different systems don’t integrate with one another. This can cause bottlenecks that impede operational efficiency, slow down performance, and inhibit your ability to maximize profits.
Limited automation
Automation is one of the most powerful tools available to RIAs and financial advisors. However, it can be difficult to leverage automation when different systems don’t work together. Without interoperability, it can be hard to develop automated workflows that span multiple applications and services. As a result, much of your data processing may need to be done manually, eating up valuable time and resources.
Reduced efficiency
Having to work with multiple solutions can impact your team’s efficiency and productivity. When processes are siloed across multiple solutions, it can add complexity and cause delays. Employees may also find it harder to collaborate effectively when they have to switch between different tools and systems. This can lead to errors, longer turnaround times, and reduced customer satisfaction levels.
How can you mitigate the risks of a patchwork RIA tech stack?
To start, you can look for solutions that offer greater integration and interoperability. This will allow you to combine different components and services into a unified platform, reducing the complexity of your environment and allowing you to manage data between applications more easily.
For example, Microsoft 365 provides a highly integrated platform that can act as the backbone of your tech stack. It supports a range of applications for scheduling, communications, document management, data storage, and more. It also offers unparalleled security, as well as tools to automate key processes and help you keep track of compliance requirements.
Not only that, but Microsoft 365 offers broad integrations with many of the existing solutions RIAs and financial advisors use. This makes it easy to add more advanced tools and services as your business grows, ensuring that you’re well positioned to meet the challenges of the modern marketplace.
| Related reading: What should your RIA’s tech stack include? |
To fully maximize the benefits of an interoperable solution, it’s essential to work with a knowledgeable managed IT services provider. They can help you develop a comprehensive strategy and ensure that your tech stack is properly set up and configured.
An MSP partner with a wealth of experience in the financial services space can provide valuable guidance on navigating the complexities of IT compliance and security. They can also help you identify opportunities to streamline operations, unlock more value from your technology investments, and improve efficiencies across the board.
RIA WorkSpace can be that partner. We specialize in serving the IT needs of RIAs and financial advisors throughout the United States, providing a range of managed services that can be tailored to your specific needs and budget. Reach out to us today and let’s explore how we can help you design and manage the perfect tech stack.