When a registered investment advisor decides that it is time to start automating some compliance functions, setting out to determine which technology best fits the firm can be daunting.
It is a crowded market replete with vendors offering whiz-bang tech options, but there are a few tips that can make the shopping process a little easier.
“Out in the universe, you’re going to see a lot of shiny objects,” says Josh Pace, president and chief executive of Trust Company of America in Centennial, Colorado, who calls on advisors to conduct due diligence when evaluating a potential tech vendor.
“It’s really pressure-testing the technology to make sure that it can deliver all that you're buying, and what happens when it goes wrong,” he asks. “Who do you call?”
As a starting point, Pace recommends that advisors take a pragmatic approach when considering new compliance technology and evaluate how the application will fit into the firm's operations and existing systems.
“When we talk to advisors, we talk a lot about workflow,” he says. “If you're an advisor, generally speaking, you’re going to have multiple applications going, and workflow matters.”
That means both ensuring that various applications such as customer relationship management systems, financial planning software, performance reporting, and documentation all communicate with one another, as well as with the advisor’s custodial system, what Pace calls the “center console” of a firm’s tech apparatus.
Lisa Graham, product manager at eMoney in Radnor, Pennsylvania, recommends that advisors put those interoperability issues at the top of their lists when evaluating vendors, drilling down on whether the new systems will talk to existing ones, and if the firm’s staff would have to manually move information or spend time building customized integrations between applications.
“Integration is going to be huge for me, knowing that I don't have to set up any integrations myself,” she says. “By automating and integrating those systems, you really alleviate a lot of that manual burden.”
Beyond integration, Graham cites cost and security as key considerations in selecting a compliance app.
But she also points out that compliance technology isn’t a one-size-fits-all proposition, and firms are right to expect that any system they purchase will be able to scale as their firm grows.
Graham also notes the inherent friction that many firms face when weighing new technologies, which offer the great benefit of delivering consistency across the firm but at the same time need to accommodate advisors’ distinctive client groups and varied methods of operating.
“Firms’ compliance teams, they struggle with allowing the individuality of the advisor while maintaining consistency across the organization,” Graham says.
From a compliance perspective, that issue also keys into how systems are set up to allow for tiered access to various applications. That way, firms can ensure that employees are only able to access the tools that they need in their positions.
So, for instance, back-office personnel might be blocked out from planning software, which could also be configured to offer certain tools only to employees with the appropriate licenses.
“They don't necessarily want ... every advisor having access to our advanced planning tools,” Graham says. “The level of configuration is probably the next thing we spend a lot of time on in these conversations.”
This story is part of a 30-30 series on how technology is changing your practice.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access