There’s a story going back several years that the California Department of Motor Vehicles (DMV) was operating on 1980s technology. Imagine that. The state that’s home to Apple, Google and a slew of other hardware and software companies running its DMV on four-decade-old tech.
It’s not urban lore, either. In early 2019, Gov. Gavin Newsom created the DMV Reinvention Strike Team, an acknowledgment that the DMV in the largest, most tech-centric state needed to do better. Yes, there’s a lesson in here for advisors and it’s a simple one: don’t be the California DMV.
Government has the luxury of extending the lifespan of old tech. Advisors don’t. The wealth management industry is increasingly tech-driven and clients are more tech-savvy than ever – a trend that will only grow over time. Prospects want to know that advisors are on the cutting edge of technology. They don’t want to see green screens and Commodore 64s.
Jokes aside and for as superficial as a practice’s tech offerings may appear to be, technology is a credible client acquisition and retention. Additionally, there are myriad applications of technology within a practice that aren’t client-facing, but are beneficial to advisors in terms of realizing new efficiencies, both of the financial and time variety.
Tips for Getting Tech Right
An easy place to start when it comes to advisor tech is realizing that devices aren’t effective forever. Gone are the days when people slept outside of the Apple store the night before the new iPhone came out, but advisors should remember that the average half-life of computers, smartphones and tablets is about two years. That doesn’t mean you need to upgrade your personal tech that frequently, but a practice’s computers and tablets need to be fresh.
Speaking of upgrades, that’s important with software as is committing as little time and effort to the task as possible. Translation: favor automatic upgrades.
“Software that offers automatic updates (like subscription-based tools) is generally straightforward. Always use these, because they ensure you‘re staying current with minimal effort,” notes Sheryl Rowling of Morningstar.
Rowling points out there are telltale signs of when it’s time to upgrade programs such as Microsoft Windows, Microsoft Office and others, including old versions not meshing well with new software or “other programs you use are no longer supported by your current version.” Point is don’t wait for tech to become obsolete because that creates headaches that overrule any perceived cost savings.
“Proactive adoption is better than reactive replacement,” adds Rowling. “Don’t wait for your technology to become obsolete. Stay informed about new tools, and don’t be afraid to experiment. The right technology can elevate your practice, improve your client relationships, and make your team more efficient.”
Examining the Cost/Benefit of Tech Upgrades
Obviously, there are costs associated with enhancing a practice’s tech capabilities and while tech is one of those things where it doesn’t pay to be cheap, advisors need to run a cost/benefit analysis when it comes to tech upgrades.
Credible reasons to make the financial investment in new technology include long-term benefits outweighing short-term headaches caused by new learning curves, rivals are embracing new tech or too much time spent on mundane tasks that could be automated with the right tech. Bottom line: when it comes to tech, be agile, nimble and proactive because it the right tech and proper deployment of it can lead to better outcomes for advisors and clients.
“Don’t shy away from adopting new tools. For example, tools like customer relationship management, rebalancing software, Voice over Internet Protocol, financial planning software, tax planning software, and even Bluetooth have radically transformed the way most of us work,” concludes Rowling.