How RIAs can embrace technology to enhance personal touch

The evidence is pretty clear that use of technology is a major differentiator between the most successful registered investment advisors (RIAs) and everyone else.’s recent annual survey of nearly 1,600 RIAs, fee-based advisors and individual investors around the nation shows successful advisors separate themselves from the pack by using technology. The survey showed that high AUM advisors who manage $250 million or more and high-earning advisors who make over $500,000 in yearly income from their practices spend more on technology and use more than other advisors.

But just what are heavy-hitting RIAs using technology for? And what software components go into the technology stack for the most successful advisors?

The answers to the first question are straightforward.


Focusing on your core competencies

Top advisors use technology for everything from mundane tasks such as keeping the books and managing payroll to sophisticated data analysis and artificial intelligence. According to FinancialPlanning:

“Over the next 12 months, successful advisors are far more likely to leverage artificial intelligence and data analytics to understand client behavior and preferences. They are also more likely to leverage risk management and tax-optimization tools, with real time market data and greater computing power, to build customized client portfolios using sophisticated investing strategies and specialized techniques. And this year, successful advisors are nearly twice as likely to add robo advisors as an efficient way to manage a portion of assets for their clients, from the entry level investor up to the ultra-high-net-worth.”

The idea behind all that technology isn’t to replace the advisor. Instead, it’s about removing or streamlining routine tasks, so RIAs can focus on serving clients with expert advice.



The best technology is designed for advisors and the way they do business – ultimately freeing up time and resources so they can focus more attention on their core competencies. This means technology needs to be flexible and agile enough to support highly specific needs without getting in the way.



Alan Markarian, an RIA-focused senior vice president of U.S. Bank, put it this way: “The best technology is designed for advisors and the way they do business – ultimately freeing up time and resources so they can focus more attention on their core competencies. This means technology needs to be flexible and agile enough to support highly specific needs without getting in the way.”


Enhancing technology with the right custodian

That focus is enhanced when RIAs choose the right custodians. As technology grows in importance for advisors, its importance as part of their relationship with RIA custodians also comes into focus. According to RIA in a Box, “An RIA firm should evaluate the technology options within the particular platform they will utilize and evaluate any particular support available in selecting and properly integrating systems.”

According to Markarian, key features to look for include:

  • Intuitive web tools
  • 24/7 online account access
  • Ability to exchange complex data files
  • Prebuilt interface connectivity to common industry systems
  • Ability for clients to set their own account numbers
  • Data privacy, information security and fraud prevention measures
  • Sophisticated system recovery and backup functionality


Establishing differentiation through value-add services

Michael Lovett, head of Vanguard’s FAS RIA Group and a member of Vanguard’s executive team, agrees. He wrote in a recent blog post that the rise of robo advisors has turned up the heat on RIAs to leverage their own tech to compete.

“The pressure advisors are feeling is the pressure to increase their range of services (e.g., estate planning, insurance, retirement income expertise),” he writes. “They realize that competing with robos purely on investment solutions is going to be difficult.”

And, he adds, technology is key for RIAs looking to build that differentiation.

“Technology allows you to focus more on such value-add services as business development and behavioral coaching,” according to Lovett. “Every day, a new, interesting technology provider enters our industry. You have the opportunity to leverage the best technology to enhance your client service and improve your practice while keeping costs in check.”


The increasing importance of CRM

That customer focus may be why the most important piece of software for advisors is not financial planning software. According to a recent survey conducted by T3, 42.65 percent of advisors rate customer relationship management (CRM) software as their most important piece of software. Financial planning software came in second, with 26.7 percent of respondents rating it at the top of their stack.

In general, according to the survey, younger planners preferred financial planning software, while those with more experience skewed in favor of customer relationship tools.

“We hypothesize that more experienced advisors already have a relationship with their clients and are looking to maintain it or increase it,” write the survey’s authors. “On the other hand, the shorter your time in the business, the more you value financial planning software, because financial planning software is absolutely crucial to the initial client experience and onboarding process.”


Whether you’re just starting out as an RIA, or you have years of experience, you need to be ready to work with the best technology – and with a custodian, like U.S. Bank, who can support you with customized and integrated solutions. For more information on our custody solutions and services for registered investment advisors, click here.


©2018 U.S. Bank 071218. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness.