Although the industry often tends to gauge the success of a firm’s technology platform by how much money is spent on it, a study from Charles Schwab Advisor Services finds that independent registered investment advisors who actively manage their tech services generate more income, while also spending considerably less money on it.


The study, Integrating Technology into Your Practice: Keys to Improving Productivity, reveals that advisors who take a strategic approach to technology spend half as much on technology and are twice as profitable compared to the biggest technology spenders from firms that take a passive approach to managing technology. The study also finds that RIAs that embed technology into their business and operations realize greater productivity and profitability gains, in addition to lower client acquisition costs.

Schwab, which used results from its 2010 RIA Benchmarking Study and additional interviews with advisors, says that 95% of advisors are looking to technology to increase efficiency, and that 88% of them have already purchased technology. However, even if an RIA has interest in effectively utilizing technology, many are unsure about the best way to implement new services. The 2010 benchmarking study found that the top three technology challenges facing advisors are integration, selecting the right vendors or solutions and implementing changes into workflows or processes.

In a report called Schwab Integrating Technology into Your Practice, part of the Schwab Market Knowledge Tools Series, the firm recommends that RIAs should focus on integrating process workflows into a Customer Relationship Management system and integrating key systems such as CRM, portfolio accounting and document management. More than 40% of firms with high levels of CRM integration report time and productivity savings of more than 20%, according to Schwab’s research.