With AI’s accelerated presence in wealthtech over the last few years, building a modern, effective and sustainable tech stack can feel overwhelming for advisory firms. But that doesn’t have to be the case if advisors can avoid getting caught up in the latest tech trends and instead make strategic decisions that support long-term business aims.
Here are four ways to approach the process while avoiding some common traps.
Focus on business goals
A typical advisory firm balances multiple strategic goals, including growth, client retention, decreasing costs and ensuring long-term succession. If growth is the primary focus, prioritize solutions that will drive client acquisition, improve client engagement or help scale operations.
One LPL Financial advisor who wanted to scale their practice invested in a lightweight, i.e., simple and easy to use, financial planning tool designed specifically for mass affluent clients. By automating data gathering, streamlining workflows and standardizing client interactions it allowed the advisor to serve more clients without adding headcount. Ultimately, the tool helped the practice grow client assets by 20% over 12 months by capturing held-away assets uncovered through the planning process.
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Applying the business goals lens to a tech stack also involves avoiding “familiarity bias.” For instance, financial advisors with deep know-how in investment management may select too many investment-centric tools but overlook solutions that can help deepen client relationships or drive operational efficiency. It’s wiser to focus on gaps in expertise and leverage the support services of firms that can complement your strengths.
Strive for seamless integration
Financial advisors counsel investors to increase portfolio efficacy with investments that serve complementary roles within their asset holdings. That’s also good counsel for advisors choosing technology tools. Before investing, make sure the tool integrates with existing core systems like CRM, performance reporting or planning software, and that they, in turn, are deeply connected to investment platforms and custodial processes.
By contrast, a siloed approach, in which each piece of technology operates independently, often wastes time and duplicates data. Using the guiding principle “never enter data twice,” look for systems designed to work together or that use middleware to connect different technologies.
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A well-integrated tech stack allows data to flow seamlessly between platforms, reducing the risk of errors. It also saves priceless time: One small RIA I work with cut proposal generation from 45 minutes to under 10 minutes by combining financial planning and proposal tools.
Look beyond AI razzle-dazzle
The emergence of agentic AI — systems designed to operate and make decisions autonomously — enhances the client experience and frees up advisors for high-value tasks. These benefits should be welcomed.
But not all AI tools are beneficial for all practices. I know of a midsize RIA that introduced an AI-based “life-event prediction” tool to anticipate client needs and potential milestones before they surfaced. While promising in theory, the predictions lacked credibility, and the advisors continued to gain insights from traditional data sources and client conversations. Ultimately, the RIA scrapped the tool.
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The moral: Even the most impressive sounding AI tools only create value if they’re credible, easy to use and fit into advisor workflows. Otherwise, they become more of a burden than a benefit.
Avoid tech debt
When advisors choose overly complex software or rely on multiple vendors to construct their stack they risk incurring tech debt — the long-term cost of choosing quick or suboptimal tech solutions. I know a large advisory firm set on assembling a best-in-class tech stack that licensed tools for planning, trading and CRM from different vendors in order to get the bells and whistles not available from any one vendor.
As it turned out, while the discrete capabilities of the tools were strong, the firm underestimated the cost and complexity of stitching them together. Months of development and data reconciliation issues followed. In hindsight, the firm could have accelerated ROI and avoided tech debt by choosing a pre-integrated platform, even if it meant sacrificing a few niche features.
One last piece of advice: When adding new tools, don’t go it alone. If your team lacks technical skills, collaborate with a firm that can help select, integrate and maintain your tech stack.
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