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Game-Changing Technology Is Here

Are you ready for the transformation?

Helen Modly, CFP, CPWA, 06/12/2014

A portfolio management system that seamlessly connects to a rebalancing program that you access through your CRM after your daily downloads and reconciliation have been done for you. Too good to be true? Not if you are willing to invest the time, money, and effort to create true scalability in your firm.

Does this sound familiar?: "We have been using the same portfolio management software for over 10 years. It maintains data well, but the reporting is inflexible, unappealing, and it doesn't really share data across my systems. However, converting 10 years of transactional data would be a nightmare that we just can't face right now."

Here's a newsflash for you, it is only going to get harder and more expensive the longer you wait. As software providers retire older versions by no longer providing support, advisors will be forced into adopting new programs under a time constraint.

As a small, independent RIA with just over $200 million in AUM and 145 families, we finally bit the bullet last fall and implemented the first leg of our new technology platform. We elected to transition to the full cloud-based Advisor Xi suite offered by Envestnet | Tamarac. There are three pieces: Account Rebalancer, Portfolio Management (Advisor View), and a fully integrated CRM that uses Outlook as the daily dashboard.

The decision as to which software bundle is right for your firm is very individualized. The implementation plan and the challenges you will face are strangely similar among firms, and it all begins with a realistic assessment of where you are, what you have, what you need, and what you want.

Where You Are/What You Have
A CRM (client relationship management) system is how you keep track of your clients and what you do for them. Some popular examples are Redtail, Junxure, and Salesforce. Portfolio accounting software is how you keep track of their money--both transactional and performance reporting--as well as how you track the growth of your firm in terms of client assets.

Almost all RIA firms have both of these types of systems in place, so transitioning to new software will involve data conversion, data reconciliation, and data clean-up. Most firms also have a trading platform from their custodian, and knowing what level of integration you have with your custodial firm is important. Some custodians have limited vendors they integrate with, and others build out their own proprietary systems, which will limit your choices.

What You Need/What You Want
We needed a more robust and customizable performance reporting package. We were manually customizing reports for some of our largest clients, and the time and talent involved was becoming unsustainable. We were also calculating our billing from an Excel spreadsheet and needed it to be more automated. We also needed a higher level of integration with our custodian for daily, monthly, and quarterly account reconciliation.

Helen Modly, CFP, CPWA, is executive vice president of Focus Wealth Management, a fee-only registered investment advisor in Middleburg, Va. Modly has more than 25 years of experience providing wealth-management services. She is a member of NAPFA and president-elect for the National Capital Area chapter of FPA. She can be reached at info@focus-wealth.com.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

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