Cutting Technology Costs Can Strengthen Your Business

The technology that supports your investment advisory and financial planning business is an important factor in your success. But for many advisory firms, the cost of doing business in a digital industry introduces more challenges to the long-term prospects of their firm than adding value.  Finding a solution that allows you to spend less time managing and more time advising, while decreasing costs, will put your firm in a stronger position to succeed and serve your clients better.


To be clear, I’m not making a case for advisors to necessarily use less technology; I’m making a case for advisors to be more mindful of the range of technology solutions they use, and to know what they’re paying to access them all.

If you want to effectively communicate with clients, you need a good email program. If you want to keep track of communication, client preferences, and prospects, a CRM could be a good investment. In all likelihood, though, right now you’re spending too much for portfolio accounting and investment management.

Advisory firms are unique in that more often than not, their revenues are tied to the assets they manage, which are further tied to how well (or how poorly) the market performs. If the market goes up, revenues go up. If the market goes down, like we are seeing right now, revenues go down (sometimes, very far down).

But what doesn’t go down when your revenues go down? Your technology spend. As such, your tech choices can often be a major detriment to your firm’s profit margins – and subsequently, your ability to build a healthy business during challenging times. And as revenues shrink, that cost takes up more of the balance sheet.


The sheer number of technology solutions an independent financial advisor has to implement can be a problem. In talking with hundreds of advisors over the past 13 years, a majority report that they struggle to integrate (source: InvestmentNews) systems that meet the needs of their firms.

When integration comes into the picture, the “cost” is about more than money – it’s also about time – and time may be tighter than ever right now. Advisory firms looking to cut back on their technology spend, while also cutting back on the time they spend trying to fix their technology, would do well to look at streamlined, comprehensive solutions.

When implementing multiple tech systems, unnecessary redundancy can be a concern as well. If a firm adds a portfolio management platform and also a trading system, it’s likely these days that the portfolio management system includes some trading tools. And now, whether that system wasn’t robust or user friendly enough, the advisor is paying for solutions they don’t need and aren’t using. It is much like the “bloatware” PC manufacturers would load onto new computers – pre-installed programs that people rarely wanted or used. Advisory firms are still dealing with software bloat.

Unnecessary tech spending is a problem in the industry, and it’s one that needs to be fixed. But high costs go beyond purely technology-focused spending.


Outsourcing investment management is nothing new, but its popularity has been steadily increasing. A majority of CFP professionals (source: outsource their asset management, and at least 20% of RIA (source: RIA In A Box) firms use a third-party money manager.

As with technology spend, however, outsourced money management also comes with a cost. And as costs pile up, the advisor’s clients are often the ones who end up losing. Either the cost gets passed to them by way of higher fees, or the advisor’s profit margins shrink and they weaken their business’ ability to withstand volatile markets and other unforeseen issues. And when an advisory firm owner is worried about their firm’s longevity, they aren’t providing the best client service possible.

With the advancement of model marketplaces (source: Yahoo! Finance), however, advisors can outsource their money management at a fraction of the cost of working with a TAMP. Often, they can subscribe to models for no cost.

It’s an approach that prioritizes the health of an advisor’s business and their relationships with clients.


All advisors that I know want the same thing: To spend less time managing their business and spend more time engaging with and advising their clients.

As advisors add more and more technology in hopes of creating efficiency, what typically happens is that they end up spending more time troubleshooting, implementing, and making sure the technology works right.

As we navigate unprecedented volatility, every RIA firm owner should look at his or her technology choices and ask, “How is this technology helping me to serve my clients better?”

If the technology itself, or the cost incurred, does not strengthen the advisory firm’s ability to efficiently serve clients, then it’s time to evaluate new options that can provide comprehensive services without an accompanying price tag that puts a firm’s business health at risk.

David Lyon
David Lyon
David Lyon is founder and CEO of Oranj (, a wealth management platform that gives financial professionals everything they need to run an efficient practice and provide investors with an interactive and engaging experience. Lyon launched Oranj after spending nearly 10 years growing his own financial advisory firm in Chicago.

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