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Spending that counts: Getting your RIA tech budget right

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Spending the right amount of money on a tech budget can be tricky. Getting employees to adopt expensive new software can be even harder.

That was a key lament from several top advisors who shared tips for budgeting and adopting new tools at an Investments & Wealth Institute conference in New York Feb. 13-14.

“I think everyone understands why you adopt new technology,” said advisor Andrew Altfest, who runs an eponymous RIA. “But when you mess with everybody’s day to day workflows, you have to get everyone involved from the get-go. You need to get buy in from everyone it touches.”

So, is there a right amount to spend on new technology?

“It’s relative to what your service model is,” said Sarah Mouser, director of financial planning at Cassaday & Co., a $2.4 billion RIA in McLean, Virginia.

What’s more important is getting bang for your buck, the speakers said. Without going into specifics, Mouser said Cassaday & Co. “spends a lot” on technology. To get a return on its investment, the firm has a dedicated business process team that runs audits and ensures company employees are following procedures.

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Altfest, who is developing proprietary technology for his $1.3 billion firm, told attendees that he doesn’t subscribe to the idea that RIA owners must allocate a specific percentage of their annual budget to digital tools.

“I look at each technology and ask, ‘Are we getting a return?’ If we are, then it makes sense to make the investment,” he said.

As an example, he pointed to HubSpot, a developer of software products for marketing and sales. It costs his firm about $15,000 per year and it’s helped improve marketing, Altfest said. “If we are attracting clients to our firm, if we are doing a better job of communicating with clients, then we are getting a good return on our investment.”

Altfest emphasized the need to get employees involved from the start.

“You need team commitment, a project manager, and a lot of work,” he said. If you do it the right way, then it can do wonders for your firm.

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