Technology is definitely in the picture for the future of financial professionals. But the field is changing rapidly. According to a poll by CNBC recently 51% of investors describe themselves as actively involved in their portfolio, contrasted with 39% in 2010. This activity spanned different age groups: investors in their 30s and in their 70s showed similar usage rates. And yet, personal service is still the gold standard for client satisfaction.
An RIA is heavily dependent on good middle-office resources in order to provide satisfactory client service. Eventually, outsourcing IT functions will become the only realistic option:
- Outsourcing will eliminate large capital investments in technology. It will allow a third party evaluation of current resources and suggestions for remediation, if needed.
- It will broaden an individual or firm's capabilities with increased access to relevant information.
- It allows the firm to expand beyond its current operational comfort zone, responding to individual client desires.
- It can leverage tools created for similar organizations.
- It assigns network security issues to the experts.
Bigger firms are getting bigger and smaller firms need to work harder. Individuals may want to join others, and smaller firms may want to consolidate. In either case, personalized IT consulting will become the make-or-break difference. An advantage of a smaller operation over larger operations is that the smaller operation can, if needed, turn on a dime to accommodate customers. To counter the disadvantage of a smaller IT budget, the operation needs to make every dollar count.
To optimize client servicing using technology, the RIA can, for example, segment customers into different categories, and not just by the degree of wealth. Descriptors such as age, life stage, profession, or personal financial goals all elicit helpful information to utilize in advising.
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Financial Services Technology Strategist