Fidelity jumps into the game of providing technology for picking RIA technology

Before RIAs rush out and spend tens of thousands of dollars on new technology, Fidelity Investments executives want them to look at its new tool for determining the economic impact of costly technology purchases.

Fidelity has seen demand from advisors who are eager to make their practice more efficient and who are eyeing big-time technology purchases. But before they shell out any money, advisors need an unbiased process to quantify how the technology purchase would help the advisor, the company says.

“We hear from advisors at least on a weekly basis that they’re looking to upgrade technology and need help navigating this decision,” says David E. Canter, executive vice president and head of practice management and consulting at Fidelity. “They want us to help them quantify the tradeoffs and the cost of the technology and that’s why we developed this tool.”

How it works

Fidelity spent six months designing Technology Investment Evaluator, which its consultants can use with advisors at their offices to evaluate workflow efficiencies and the short-term and long-term economic impact of a major technology purchase.

Consultants take their laptops with them when they visit advsiors and can plug in data during the meeting. Consultants feed the evaluator specific information about the advisor’s practice — including software and hardware expenses and staff resource allocations, and the number of investor accounts and the asset levels.

Then, Fidelity consultants review the information back at their office and use the tool to craft an in-depth report which recommends a technology plan that shows how the practice can be more efficient and details short- and long-term cost savings that can be achieved by deploying specific technology and operational changes.

Each report is customized based on the advisor’s answers, and the Fidelity consultant then works with the advisor to help him or her prioritize the plan and execute the initiatives in the plan.

Simpler solutions

Debbie Powell, special projects manager with GV Financial Advisors Inc., an Atlanta-based advisory firm, says she used the tool with a Fidelity consultant because her firm uses six different technology products and she was trying to make the office more efficient.

Based on the outcome and ideas from Fidelity consultants, her firm, which manages $800 million in assets, is in the process of re-evaluating its technology vendors and using products that can be integrated.

“The tool helped us with our goals and gave me ideas about how to make the changes we wanted to make,” she says. “The consultants also helped us look at ways we can make simple changes that won’t be so dramatic.”

Technology help is on the way

Fidelity, which officially launched the Technology Investment Evaluator last week, is not alone in its quest to create a tool aimed at helping advisors make decisions about technology, says Bill Winterberg, a technology consultant.

“Fidelity to their credit may be the first ones to have something so comprehensive,” he says. “Others have developed tools that deal with CRM.”

Fidelity’s tool helps advisors evaluate a wide range of technology purchases, including customer relationship management and portfolio management software, and any other type of technology purchase an advisor is considering, Canter says.

This summer, TD Ameritrade launched its own software assessment tool designed for the company’s consultants to help advisors choose the right CRM software for their practice.

TD Ameritrade launched its product by working with ActiFi Inc, a Plymouth, Minn.,technology consulting company that developed the ActiFi Road Map Platform and is selling licenses to financial firms that are adopting it for their own advisors.

One of the key differences between Fidelity’s tool and tools others such as ActiFi and TD Ameritrade have devised is that Fidelity’s tool doesn’t generate specific vendor or software product recommendations for advisors.

Give them the answers

TD and ActiFi’s tools actually give advisors a report listing the top three vendors which fit the advisor’s needs and requests.

“The core of this tool is that it spits out the top three best-suited vendors for advisors and that’s what advisors told us they wanted,” says ActiFi’s president, Spenser Segal. “But it also gives more detailed steps and follow-through for advisors.”

In TD and ActiFI’s analyses, advisors are asked a series of questions pertaining to the size of their practice, the amount they want to spend on CRM and how they envision using the product. Advisors are then given a personalized and detailed report which lists the top three CRM vendors that would be suited for them based on the advisor’s answers.

But Fidelity officials say they purposefully chose a different approach. Canter points out the firm is agnostic and suggests vendors based on what is in the best interests of specific advisors.

In addition, Fidelity’s tool doesn’t generate vendors because the company wants its consultants to coach advisors through the process carefully and thoughtfully. Even though Fidelity’s tool doesn’t recommend product, Fidelity consultants will likely give specific product recommendations.

“We feel like our advisors are looking for someone to help walk them through the process,” says Tricia Haskins, a technology consultant with Fidelity who has used this tool a handful of times with advisors. “We really focused on helping the clients understand why they’re making this decision. It’s a disciplined process, but at the end of the day they feel they’re able to make the right decision for their firm.”

Analysis always a good thing

Even though TD Ameritrade’s tool focuses on giving advisors specific vendors, there is also a great deal of consultation involved, says Richard Whitworth, senior manager for practice management at the company.

Richard Whitworth: We’re putting pieces together
so the advisor can make a
non-biased decision.

He points out that TD consultants also work with their advisors and ask them specific questions before generating a report.

For instance, with a consultant’s help, advisors answer questions about how much they want to spend on a CRM system, how many people will be using it, and how the advisor wants to integrate it into the workflow.

TD intends to expand the program and add document management system, financial planning software and portfolio management in the coming months.

“The goal of this tool is to help advisors determine the business inefficiencies while also helping them get names of technology vendors that would be best suited for them, “It’s a very dynamic tool that is done with a consultant,” Whitworth says. “We’re putting pieces together so the advisor can make a non-biased decision.”

Customization is the only way

For its part, Charles Schwab focuses on a customized approach that varies from advisor to advisor, Adam Moseley, managing director of Schwab’s Technology Consulting Group, wrote in an e-mail.

“Schwab’s team of technology and business consultants has worked with advisors to provide support and guidance in managing their technology and business needs,” he wrote. “We have found that focused, strategic programs that include active consultation drive meaningful, relevant results.”