Breaking Away? Don’t Make These Mistakes When Building Your Tech Stack

by | Sep 23, 2021

By Alex Sauickie, President and CEO at CircleBlack

For advisors leaving the comforts of a wire house for the benefits of having an independent practice, a smooth and efficient transition is key to ensuring their client base stays intact. And nothing is more critical to client retention during that evolution than the tech stack, the infrastructure of data, software and services needed to build the applications for portfolio management, performance reporting and other vital investor functions.

If you’re on the path to independence, ensure you don’t make these critical mistakes when building your tech stack:

Mistake #1- Assuming ‘bigger platform’ means ‘better solutions’

Building a tech stack for a wealth manager today must consider everything from operational capacity and budget constraints to demographic change and macroeconomic events that drive mobile and digital adoption. When evaluating platforms, there are numerous potential hazards to avoid. One is overlooking the limitations of proprietary solutions.

While there are advantages to the in-house technology of larger, more established firms, the disadvantage is they often lock advisors into more costly, “all-or-nothing” plans. Without open architecture, advisors sometimes end up paying for a host of functions they never use.

With proprietary systems, advisors can’t choose which brand works best for their practice, whether for financial planning or customer relationship management (CRM). And if they need to switch brands to accommodate growth or a new demographic as their practice evolves, they’ll still be locked into the proprietary solutions. 

Platforms are capable of offering multiple brands, the option to retain selective in-house solutions, and the flexibility to switch brands. For example, technology that synchronizes data can immediately populate a new CRM with the data from an old CRM.

Mistake #2- Overlooking the liabilities of older technology 

As transitioning advisors know, accounts need to be repapered, with assets transferred and new accounts created within a limited window of time. It is essential that these critical asset transfer details don’t make the newly independent advisor particularly vulnerable to client loss.

Data needs to be transferred to the new platform, digested by the applications, and churned out for reporting and other functions, a process that should take two to four weeks from the time the advisor leaves the wire house.

Clients may tolerate a temporary blackout, but they may not be receptive to a one-to-two week delay if they can’t contact their advisor or access information on their assets. This is the period that causes the advisor at the mercy of the provider’s ability to execute a smooth changeover.

Larger firms are often saddled with significant tech debt and slower legacy systems that are difficult and costly to upgrade. Transition periods can take longer. Newer technology can quickly aggregate data from multiple custodians, including direct holdings and held-away accounts, all as part of a centralized hub. If needed, they can seamlessly integrate with existing CRM, trading, risk and financial planning tools. 

Mistake #3- Underestimating the risk of a poor investor experience

Good communication is critical during this time as both parties acclimate to the new channel. With an investor portal that allows secure, two-way communication, advisors can cultivate deeper bonds with clients as they help navigate the changes.

But once advisors have successfully retained clients, their relationship still hinges on an open connection. Clients—who demand increasingly more transparency from advisors—can also use the portal to gain an expanded view of performance metrics to make independent evaluations. That interface experience is best with a native investor app that syncs with their existing software and operating systems.

Many advisors learned the hard way throughout the COVID-19 pandemic that their 24/7 technology, particularly their mobile communication, was woefully inadequate. Clients who used mobile apps to communicate with advisors during the pandemic reported 40% higher overall satisfaction than those who did not, according to a J.D. Power study. 

While some platforms are scrambling to catch up, others are equipped with a range of remote working features, such as a document vault that allows secure transmission of documents. This trend will gain even more steam as younger, tech-dependent generations inherit their parents’ wealth. 

Wealth managers can no longer afford to deprioritize digital adoption. Mobile and digital capabilities aren’t simply needed to retain a competitive edge—they are required to remain relevant.

Today’s technology must be advanced enough to thrive in a competitive landscape, but also work harmoniously with the needs of individual practices. Poor communication, older systems and inflexible solutions can disrupt a transition and jeopardize a brand, setting a newly independent practice back before it begins. Ultimately, the best platforms accommodate the advisor, instead of expecting the advisor to accommodate them.


Alex Sauickie is the CEO of CircleBlack, unified best-of-breed wealth management platform that consolidates data from multiple custodians and allows advisors to choose the best solutions to fit their tech stack.