RIA software: How to select custodians and tech providers

RIA software: How to select custodians and tech providers Jan 17, 2025 1:30:39 PM See what software is most important to other financial advisors and get tips (and a free tool) to help your RIA firm navigate tech decisions. In 2024, Betterment Advisor Solutions wanted to explore trends we saw emerging in the RIA space from the next generation of advisors. We surveyed 500 independent RIAs, of which 72% were Millennials (Download the survey). Below are our key takeaways on RIA software, along with tips and tools to help your firm implement new tech strategies. Table of contents: The top-ranked RIA software features Common challenges RIAs face when buying software Three tips for minimizing RIA software buying challenges RIA software ranking tool The top-ranked RIA software features We found that advisors generally find all features at least somewhat important to their daily operations. This stresses the important role that technology plays in the success of independent RIAs. The Top 3 most important features that an RIA software provider could offer for advisors were billing (52%), financial planning software (51%), and performance reporting software (51%) In our RIA survey, we asked the question, “How important are each of the following types of technology/software to your daily operations?” Respondents ranked their selections on a five-point scale, from “Not important at all” to “Very important.” Billing Financial planning software RIA Performance reporting software Tax management tools Cash management solution CRM Model marketplace Risk analytics Digital account opening software Portfolio management software Common challenges RIAs face when buying software Many advisors know the value of technology but are unable to implement new tools effectively for various reasons. When asked about their biggest challenges in implementing technology at their firms, advisors highlighted poor customer service and time spent training their team on new tools. Three tips for minimizing RIA software buying challenges If your firm is in the market for new technology, keep the following tips in mind during your buying process. 1. Assess the strengths and weaknesses of your current tech stack Before you start implementing any new technology, it’s important to first make sure that you understand the ins and outs of your current system so that you know what to look for in the future. There are two important reasons for this: Setting expectations: Knowing details about your current tech stack will help you understand how easy (or difficult) system migrations could be. Depending on your current tech stack, certain tech vendors may be more challenging to migrate to or integrate with. Knowing this will help you map out realistic timelines and costs for your project. Finding unused features: A firm may think they need to migrate off of a certain piece of technology, but in reality, they simply are not aware of all the features that a tech platform offers. This could be the case if you have been using a tech vendor for years and have not explored their updated features. If you are considering changing tech providers because of feature limitations or issues, contact your current vendor and see if they have a solution. Once you have a solid understanding of your tech stack, you can map out a forward-looking strategy involving migrating to new vendors where needed. 2. Map out your firm’s tech strategy Before you start browsing new tech providers, you’ll want to document the strategy and goals you expect to achieve. Ask yourself questions like: Is a simple, easy-to-use interface most important to you? Or maybe, it’s having customizable features? Are you looking to consolidate vendors for ease of management or leverage multiple vendors for best-of-breed tech? Work backward from your strategy and goals to help understand what needs to be done and what type of tech provider you should partner with. There are usually tradeoffs with technology. For example, the easiest tech to implement and provide training on may not offer the most customizable solution. On the other hand, highly customizable tech may be more complex to manage and take longer to get up and running. 3. Create a change management plan Regardless of your tech strategy, having a change management plan will help your team transition to new technology. A strong change management plan will incorporate the following areas: Change management team: Establish a dedicated change management team, or at the very least one leader, who will oversee the implementation process and manage stakeholder engagement, communication, and training. Project plan: Develop a detailed project plan outlining key milestones, timelines, and resource allocations. This should include both technical and non-technical tasks, such as software installation, user testing, and change management activities. Risk assessment: Conduct a risk assessment to identify potential issues that may arise during the implementation process. Develop mitigation strategies to address these risks and ensure the successful adoption of the new technology. Stakeholder analysis: Identify key stakeholders who will be impacted by the new technology, such as employees, clients, and partners. Assess their interests, concerns, and potential resistance to the change. Communication plan: Develop a comprehensive communication strategy to inform and engage stakeholders throughout the implementation process. This may include emails, regular meetings, training sessions, and one-on-one discussions. Training and support: Provide training and support to employees (and clients if impacted) to ensure they understand the new technology and how touse it. This may include online tutorials, in-person training sessions, and ongoing support from technical experts. Monitoring and evaluation: Establish a system to monitor and evaluate the implementation process, including progress against milestones, stakeholder feedback, and performance metrics. Use this information to make adjustments and improvements as needed. RIA software ranking tool Creating a strategic plan of action for your tech stack doesn’t have to be complex. Using the ranking tool below, you can help guide your firm’s strategy in as little as 30 minutes. How to use the tool? As you think through your tech strategy, use the table below to rank each type of RIA software based on its importance to your firm’s goals and level of satisfaction with your current software. You can compare the level of importance to the level of satisfaction to help identify software that you may need to replace with an improved solution, or software that your firm wants to keep and invest in continuous improvements. Complete this ranking tool once or twice a year to help monitor your tech stack’s performance. Pro tip: Print out this chart to manually fill it out.