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Technology integration is the Holy Grail for today’s top-performing financial advisors. When applications talk to each other, advisors can run their practices more efficiently, save money and reduce the size of their staff. That all sounds great, but I’m writing to offer a word of caution: I’ve seen many such efforts end in disaster.
Unfortunately, not all technology integrations are necessary or even desirable. All too often, technology vendors tout integration that doesn’t save time or reduce labor, costing advisors money that could be spent elsewhere. For advisors, an ill-advised upgrade typically stems from confusion about what technology integration actually means and the benefits that can realistically be gained from it.
I’ll offer some tips for avoiding common technology integration mistakes, but first let’s review what we’re dealing with when we talk about integrative technology.
What are we talking about?
Integrated technology solutions come in two forms. The first is a bundled solution, whereby applications that fulfill different functions get repackaged together. The second form is keeping separately purchased individual applications separate, but introducing the ability to communicate among them.
Let’s divide the actual functionality of the technology integration you might consider into three categories:
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Single sign-on: An advisor can open another software program from within the primary software program without having to type in a login and password; the two applications don’t necessarily talk to each other or share data, however.
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Manual sync: Two software programs share data, but you have to push a button to move the data back and forth.
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Auto sync: Two software programs are tightly linked, automatically sharing data without any human effort.
“When considering technology integration, the most important factor is to focus on what you need and what makes sense,” said Mary Ferguson, CEO at Concenter Services, LLC. “There is some integration that sounds good, but doesn’t make sense. It is all too easy for advisors to sign on for something that they really don’t need and won’t help them become more efficient.”
That said, no matter how well you understand what you’re being sold, it’s possible to make a wrong call. Here are six technology integration mistakes to avoid:
1. Integration for the sake of integration. Advisors are consistently seeking more integration these days. But that is not necessarily a good thing, according to Sheryl Rowling, a CPA who is also CEO of Total Rebalance Expert and Rowling Associates. Like any other technology innovation, integration needs to be worthwhile on its practical merits, not just its buzzword potential, she notes.
“In our financial advisory practice, for example, we use Assemblage, which automates the assembly of our quarterly client reports,” Rowling said. “That integrates with our portfolio accounting system so that we can pull the information into our reports and integrates with our CRM by automatically putting scanned copies of the statements. … That’s the kind of integration that is really useful.” This is an example of auto-sync integration, because the applications seamlessly share data without human intervention.
On the other hand, Ferguson said that integrating portfolio management data into a CRM can fail that test. “Advisors may want to integrate their portfolio management data – such as client holdings – into their CRM tool, instead of letting their perfectly functional portfolio management tool do the job that it was meant to do,” she notes. “Advisors are frequently marketed solutions like this that aren’t useful.”
Extensive due diligence is necessary before committing a specific course of action, said Bart Wisniowski, co-founder and director of Advisor Websites.com. “Once you have some ideas in mind about what might work for you, start calling vendors and looking at demos,” he said. “Get an idea of what each one offers.”
2. Integration that takes too much time. No matter what the promised return-on-investment of a specific technology integration might be, if the time involved in implementing it is too intensive, it is a deal breaker. Unfortunately, a time-commitment issue may be something that you don’t find out until it is too late, so question vendors closely about the time factor – then question even more vigorously anything that doesn’t make sense.
“When pursing integration, ask, first, will this software do what I want it to do, and, second, what kind of investment in time will it take for my staff to be able to use it?” Rowling said. Integration may be useful, but if the process for your staff to understand how to use the new combined technology and get comfortable with it involves a time-intensive learning curve, it isn’t worth it. Technology will get more sophisticated and improve over time, so wait if the promised payoff isn’t worthwhile today.
Any technology upgrade or integration can be disruptive to an office, and that’s the question to put to vendors. What potential for disruption will the integration have, how will it affect other systems that are being integrated and, ultimately, will access to client data be interrupted for any length of time? “If it’s too complicated for us to use, ultimately, no matter how good it seems, we aren’t going to use it,” Rowling said.
3. Integrations that compromise security. The more integration, the more potential for security breeches, depending on how data is communicated between applications, Ferguson said. “For example, if you use Salesforce as your CRM and Portfolio Center for managing client portfolios, those two applications are responsible for securing that data,” she said. “But in technology integration, in some cases, data are stored in an intermediate location in order to broker a conversation between the two applications. You need to be aware of where your client data is being stored and how secure it is there.”
Steven Ryder, president of True North Networks LLC, a New Hampshire-based network provider, agreed, saying, “A good question to ask is how do applications talk to each other securely. Is it done over the Internet or locally? Is it something that is downloaded securely and then integrates on the backend of a server?”
4. Integration data recovery. Sometimes integration requires application and vendor changes. When that‘s the case, you need to ask about data recovery in the event that you change vendors again in the future. Data recovery is also important in the event of a disaster, such Superstorm Sandy’s recent landfall on the East Coast.
“If you are in a hosted solution or in the cloud, how easy will it be to get your data?” Ryder asked. “Let’s say I want to go with a new vendor, how can I get that data back? How are the data being secured? What is the backup plan? What is the disaster-recovery plan? How often are data backed up? These issues are critically important, and all too often advisors blindly choose a solution without doing this kind of due diligence.”
5. Integration that doesn’t work seamlessly via the cloud. With advisors increasingly on the move, using tablets, phones and other mobile devices, it’s vitally important that whatever integration you’re considering work via the cloud. That’s not always a given, according to Ryder. If there are too many windows opening within other windows on your screen, applications can be painfully slow to access from the cloud. Applications that tend to run very slowly because they are built into others may fall under the category of integrations for the sake of integrations that don’t make sense for your business, especially if mobile access is very important.
“We’re seeing a lot of requests for cloud access, so it’s certainly an issue for advisors,” Ryder said. “So when you’re pursuing integration, ask if you can go to one place and get all your data without having to wait.”
6. Integrations that lack included support. The more integration you pursue, the more support you will need, and that can come with a painful price tag, Rowling noted. “Consider whether you really will be able to use a specific integration on an ongoing basis, whether it’s necessary, and whether you will have the support you need on an ongoing basis to troubleshoot any problems,” she explained. “To me, it is always a concern when we adopt a new application and there’s a charge of $100 or $150 an hour anytime there is a question.”
A final thought
Worthwhile integration will save you time, effort, and money, and it will help you cut out human error, so don’t let these concerns turn you off to integration all together. Instead, talk with your software providers, explaining to them how you operate and the other software you use to see if they can increase efficiency. Ask your custodian or broker/dealer for guidance or suggestions. And, finally, reach out to your peers and others outsourcers and ask them – which integration did they find useful, and which were a waste of time?
That, in the end, is what you really need to know.
Jennifer Goldman is president of My Virtual COO and co-founder of Virtual Solutions for Advisors.
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