Eight out of 10 wealth management executives regard technology as a significant factor in gaining market share, according to Deloitte. But financial advisory firms embarking on a project to select and implement a new software solution face many risks.
A wrongly matched solution can create opportunity costs in the form of continued inefficiencies and inability to meet client demands. Annual or multi-year contracts bound the firm to accept less than ideal workflows until a more suitable solution may be found. On top of that, switching platforms within a relatively short timeframe drains valuable time and resources from day-to-day activities and strategic initiatives, while creating disruption, adoption and morale issues, and productivity challenges across the firm.
Here are five key questions and best practices to guide you along your journey of selecting the right wealth technology provider for your firm.
1. Do They Understand You?
Discovery and Asking the Right Questions
This first discovery phase is crucial to validating that, together, you have accurately assessed your firm’s challenges and needs. You should find this exercise to be insightful and it should reveal early on whether or not the vendor is a good fit.
The right technology vendor should take the time to understand your firm’s goals and needs according to your firm’s use cases, and be willing to dig deeper to uncover the root cause of your pain. You will know you are speaking with a true partner when they’re clearly interested in getting an accurate view of your unique business operations, beyond just addressing one specific issue or need.
2. Can You See It to Believe It?
Proof of Concept Using YOUR Data, Models and Scenarios
If you are seeking a software solution to fill gaps in desired workflows, or looking to integrate trading, order management and rebalancing, how will you know if the solution will meet your requirements? Asking the vendor to do a proof of concept (POC) is one key way to ensure that the solution will work for you before committing to it, and eliminate the risk of surprises or disappointments later on. POCs can also uncover many other efficiencies and opportunities to improve workflows.
However, not all POCs are created equal. Rather than use “dummy” data in the POC, the vendor should use a sample of your firm’s own account data to create your trading models and workflows with your strategies applied. This will enable you and your team to visualize the actual case scenarios you have in place today, and how they would be handled in the system. All the while, the software provider should be showing you before and after scenarios, capturing your feedback, and highlighting additional opportunities to improve workflows through customization.
3. Will the POC Translate to Implementation?
Ensuring a Smooth Transition and Onboarding Process
Many firms find that even though they received a POC from the vendor, the implementation process still was unwieldy. Ask the vendor to describe its onboarding process. The vendor should have a plan in place to smoothly transition the POC to onboarding, taking into account all the aggregate use cases, assessment details, POC data and feedback, properly handed off to the vendor’s onboarding or support team. You should not have to explain everything you need all over again.
4. Will They Do a Trial Period?
Checking Under the Vendor’s Hood
Trial periods provide an excellent opportunity to get a deeper look into the vendor’s user training and onboarding capabilities while also giving you the ability to opt out. To get the full flavor of the system and the vendor organization, a trial period should last about 90 days, provide the full set of capabilities to which your firm would subscribe, and give you 100% access to their onboarding and support teams.
5. Did You Tell Them Everything?
Being Thorough and Transparent
If a software provider has done all of the above, then you’ve got yourself a true partnership. But at the end of the day, both have a responsibility to remain transparent and thorough in providing the all the details to assess fit and deliver a POC. If the vendor truly understands your business, then it will work hard to help you improve your processes and workflows.
Getting It Right the First Time
At RedBlack, we’ve worked with many firms that made past solution choices that were inconsistent with their needs. Many chose our rebalancing and trading solution after weeks, months or a year after another platform failed to deliver. In most cases, they selected a vendor too quickly or overemphasized price in their decision.
Avoid taking shortcuts on properly assessing your own needs. Accept the vendor’s offer to dig deep into your pain points, scenarios and objectives, as well as provide a POC and a trial period. Instead of looking at just one pain or price point, take a holistic approach to evaluating functionality and scale, team acumen, transition and onboarding processes, ongoing support, and of course, price.
The right technology decision for your firm should result in a long-term partnership. Making another change within one to two years will cause significant disruption to your business. Finding the right fit is crucial to your firm’s ability to acquire and delight clients, operate cost-effectively and efficiently, and scale to growth. It deserves the time and attention from the vendor, and from you, to help your firm reach its goals.