The Massive Gap in Most Wealth Management Technology

The History of Starbucks, a Compendium of RIA Growth Strategy & Why You Should Do Asset Location

Happy official start to summer.

For my family, this week is still a bit of a calm before the storm of all sorts of travel and camps over the next four weeks.

For our team at Milemarker, we are launching our latest version of our software and are so excited about how it will increase our impact.

Wealth management suffers from disconnection when it comes to streamlining your firm’s technology. Our latest release is designed to make a meaningful dent in this problem.

Elsewhere, the world of technology keeps doing really incredible things that ultimately unlocks so much more in terms of ways to serve people. This week I’ll break down one of the major gaps that I often see in our industry.

Summer morning here in Charleston

Here’s the full rundown.

  1. The Massive Gap in Most Wealth Management Technology
  2. James Bogart, Sammy Azzouz, Melissa Bouchillon, & Justin Steitz on the Pod
  3. Starbucks (with Howard Schultz)
  4. Asset Location as a Secret Weapon for RIAs
  5. Milemarker On the Road 

Let’s load the cassette tape and press play. 

The Massive Gap in Most Wealth Management Technology

I’m sure all of us are familiar with the KISS principle - keep it simple, stupid.

Most of the time, this principle generally serves us well, but there aren't always simple solutions for those of us who are building businesses that solve complex problems.

We can easily create a complex web of solutions that are designed to meet the needs of unique workflow timings, client expectations, back office needs and regulatory requirements. In the race to balance all of these competing needs, we may wind up with a mess.

It makes sense, of course, that software companies are tackling one problem. Every start up company out there knows that solving one simple part of a problem is the easiest and quickest way to get funding and scale. If most of the software companies are solving one problem at a time, it’s easy to see why your firm has so many vendors. Specific work requires specific tools.

The trouble is that when I talk to firms over $1B in AUM and above, they have expanded far beyond the initial problem they were solving - CPAs turned into financial advisors, baking-in or hiving off insurance, advisors moving into concierge models, contract negotiators, travel agencies, and so much more. The number of business entities that grow out of one initial business are seemingly endless.

It’s increasingly rare to find an advisory firm over $500M that exists as a single LLC. In fact, it's nearly inevitable that you will begin to form other entities that require you to have unique dedicated systems, accounting, and processes.

Reflecting Our Clients

Some of the most transformative firms I know are often uniquely structured.

They don’t look like the average advisory firm.

Instead, they are wholly dedicated to the world around their clients. Whenever necessary, they are setting up new businesses to further serve the unique needs of their niche or community.

Some of their team members may have more of a background in a niche field than financial advice.

As firms start reflecting the needs of their clients, they run up against the limitations of their technology.

Compounding Focus

Businesses that get hyper-focused on their clients generally wind up either deeply partnering with other companies or ultimately creating new companies to serve the needs of their clients.

This may include insurance, contract negotiation, private fund management, specific advice, legal or tax. I’ve seen niche firms get into teaching seminars with the leading experts of their niche, creating bespoke companies with all sorts of unique approaches.

Deep knowledge and deep care are going the extra mile to deliver exceptional client value.

The only downsides are about how to get all the work done. The different solutions usually create a myriad of different logins for your advisors and clients to manage. Work gets done across many platforms without a single pane of glass to see it all in one spot.

Synthesizing What Makes You, You.

The future is going to be about how we synthesize what matters. This means that firms will no longer be limited to industry-specific silos.

Many firms have taken operational strides to synthesize their business and focus.

EOS and the Traction operating system is a good example. This system helps firms focus on top-level KPIs and goals that unify the organization with a common mission.

But like anything, this is just the beginning. Once you start looking at this information, you need it to come alive in a way that gives you real-time insight across your business and can also turn around and serve as a central guidepost for your clients.

As good as the best software is in wealth management, its generally only a portion of the story when it comes to firms that are really working to build transformational value.

Fixing the Gap

To fix the gap in most firms, you need to identify the information that tells both your clients and your advisors the whole story. What key measures represent progress, success, or traction as you manage multiple factors and businesses?

For example, suppose you have an RIA that launches or buys a CPA practice. How do you know which business actions are most important to grow both sides to leverage the power of the combination?

Many multiple-business companies experience a long period of confusion and stagnation while figuring it out.

Setting up your data to be able to understand which actions lead to the best outcomes requires you to research, monitor, and draw key learnings from fluctuations in your bottom line. Your team’s capacity to understand and adjust to those metrics will impact how you invest in growing your business.

Organizations and leaders providing life-changing solutions built around their clients are a special breed. Here’s to making that impact and continue to deliver day after day.

How about you?

How many companies are you building to build one key experience or impact for your clients?

Related: How to Find a 10X Strategic Partner