When RIAs Start Building Tech, Priorities Shift

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RIAs Building Tech

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“Advisors who join Farther go from spending 65% of their time on administrative activities to about 90% on client-facing work.”
Taylor Matthews, CEO, Farther

Technology has become a powerful force in driving efficiency and growth in the wealth management industry. More and more, RIAs are turning to technology in an effort to scale their businesses to the next level, to better serve their clients, and to boost their bottom lines. Technology has arguably become the asset-of-the-moment for the wealth management industry, with an Advisor 360 report showing that nearly 92% of advisors surveyed stating that they would switch firms because of a poor technology setup, and 44% claiming they already had done so. Clearly, a firm without adequate – or better – technology will struggle to attract both talented advisors and new clients. In the same study, 58% of advisors said they had lost new business over lackluster tech offerings, while 93% of advisors who rated their technology “state-of-the-art” said they gained new customers because their competition’s technology was inadequate.

The right tools are proving to be indispensable to an RIAs business, and many firms are turning to creating their own proprietary systems to gain an competitive edge. In many ways, the demands of modern wealth management are necessitating advisory businesses to double as tech firms. Correctly implemented technology can help advisors automatically rebalance their clients’ portfolios, mitigate risk exposures, and scale their businesses cost effectively. Many of the largest wealth managers and RIAs have already created winning software/technology that others can purchase and fold into their existing businesses. Others, like New York-based RIA Farther, have turned to creating their own in-house proprietary platforms to achieve success in a data-driven way. Institutional Investor sat down with Farther’s CEO, Taylor Matthews, to discuss how the best technology platforms are now essential for building and expanding a successful wealth management business.

Institutional Investor: It seems the right technology is no longer something that’s “nice-to-have” for RIAs, but rather a necessity if they want a successful, scalable business. Can you tell us how Farther uses technology to achieve success?

Taylor Matthews: We’re a bit different from most RIAs in that we build a lot of our own custom software. We have a team of developers, product managers, and designers – the whole nine yards. We develop technology where we find existing alternatives somewhat deficient.

II: It sounds like RIAs in 2024 are being forced, in some ways, to become technology firms when they don’t find what they need on the open market.

TM: That’s very true in many ways. The premise of how we got started was to extend existing technology deeper into how we work with custodians to create operational efficiencies for both advisors and their support staff. We started with that idea back in 2019. We spent the first year coding, and that’s pretty much all we did. I was the first advisor on the platform, and I was successful in growing a book of business myself. We then hired a couple of folks to sit in the seat to prove that it wasn’t just me, and they were successful as well. From there on, we’ve been doing it at greater and greater scale. And now we bring advisors onto our platform, usually as employees, to build their own books of business. We also build technology to support the asset management side of the business, ensuring that client funds are invested in a way that is more capable than existing solutions.

II: What are some of the deficient alternatives you mentioned?

TM: There are lots of different options for nearly any technology vertical you can think of. But one of the biggest challenges is that while any one system might be fantastic, they do not talk to each other. Having one coherent system that integrates all functions rather than a bunch of different logins and systems that are supposed to talk to each other, but don’t, is just a fundamentally better experience.

II: What do you mean when you say the technological systems don’t talk to each other?

TM: Rather than having your performance data disconnected from your task management engine, and having task management disconnected from financial planning, and financial planning isolated from how assets are actually invested, we have shown that it’s better when everything is in one place under one login, providing a single coherent experience.

II: How does this kind of technology help advisors scale their businesses?

TM: The most important thing is that it gives advisors a lot of their time back. According to Kitces research, the typical advisor spends more than two hours on behind-the-scenes tasks like operations, administration, paperwork, rebalancing, and managing a tech stack for every one hour they spend in client-facing meetings. By reducing this administrative burden, advisors can spend more time serving clients and prospecting for new ones, which builds the foundation for a much stronger business.

II: Where have you seen the most success with this platform? Do advisors prefer to use it for financial planning, documentation, or something else?

TM: It’s hard to pinpoint one particular thing because our advisors work within the Farther environment for everything that touches their clients. Whether it’s investments, paperwork, account opening, or money movement, it all happens within our system. If there’s something they don’t want to do themselves, they can easily create a task and delegate it to our operations team. This empowers advisors to focus on their highest value activities.

II: We’ve seen advisors express their frustration with platforms that are clunky or time-consuming to integrate. How does Farther’s technology integrate with its users’ current systems?

TM: To be clear, right now we don’t let anyone else use our technology; it’s just for Farther advisors. When we started Farther, we had a choice to either sell technology to other advisors or build a vertically integrated RIA with our own technology function. We chose the latter to ensure we were building the right tools by getting direct feedback from our advisors. This approach has allowed us to continually improve over the past five and a half years.

II: Why not use someone else’s platform? Why build your own?

TM: When RIAs start, they often lift and shift from other firms, picking a custodian, performance analytics engine, CRM, and other tools that don’t always integrate well. This results in a tech stack that looks like every other RIA. We decided to build the firm and technology from the ground up to differentiate ourselves and provide a unique value proposition. Time is the most important thing. Most of what an advisor wants to do is spend time with his or her clients. At the end of the day, that’s why people get into the business. So, anything we can do to help our advisors spend their time on their current clients and finding new ones – that’s how we think about technology. It should be in the background, not the foreground.

II: What’s the biggest difference your advisors have reported in their businesses since integrating the software?

TM: Advisors who join Farther go from spending 65% of their time on administrative activities to about 90% on client-facing work. This shift shows up in their growth rates; our advisors grow dramatically faster than the industry average. The proof is in the pudding.

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