RIA Tech Stack Essentials

RIA Tech Stack Essentials

By Mark Bevington

Advisory firm tech stacks have come a long way in a short span of time. As recently as ten years ago, many RIA firms (and even some larger firms) could get away with a tech stack consisting of simply a portfolio reporting solution, financial planning tool, and a CRM. Combined with additional capabilities from their custodian, they had most of what they needed.

But the pace of change is constant. As complex client demands create increasingly complex financial plans and multi-faceted investing strategies, a more robust tech stack is necessary for today’s advisors.

Today’s blog will explore the evolution of the RIA tech stack and the critical role that API tech and trading tools now play to enhance an advisor’s value throughout all of their software solutions.

The Essentials of an RIA Tech Stack in 2023

Every advisory firm’s tech stack can look different. Depending on the specific firm’s value proposition and the client services they prioritize, their needs will vary.

However, we can assume that the majority of firms can be served well with a core set of five applications:

  1. Client Relationship Management (CRM) software
  2. Financial planning and analysis tools
  3. Portfolio management software (including performance reporting)
  4. Trading and rebalancing
  5. Data analytics

Let’s take a closer look at each category and how advisors leverage them to serve clients and grow their firms.

CRM

Summary:

The CRM is at the heart of the ongoing debate: What piece of technology or service provider should be at the hub for advisory firms?

For many firms, CRM is the answer. It’s an irreplaceable part of the tech stack that handles secure client information, meeting notes, automated service workflows, and much more.

As open APIs have become commonplace among advisor tech providers for sharing data, the CRM has become a central data resource where financial plans and account holdings go as well, truly putting a single source of truth within reach for RIA firms where they can find all the information they need for any given client or account.

Additionally, CRMs often offer powerful integrations with other WealthTech applications. The result is that advisors can quickly access information from their other apps, like portfolio management systems (such as Flyer Co-Pilot), or even launch order management tools right from their CRM.

Key Advisor Tech Solutions:

Financial Planning

Summary:

Financial planning isn’t new, but a focus on approaches like whole-life planning and behavioral finance are bringing a new shine to the process.

While there are hard and fast numbers tied to investment performance and portfolio returns, financial planning is often tied to the qualitative side of advising. A study by Schwab found a 25% gap in feeling “financially stable” between investors who have a written financial plan and those who don’t.

Financial planning software is currently experiencing an exciting time of innovation as even the established players in the field, like MoneyGuide, roll out one-page financial plans in an effort to help advisors improve their client experiences.

Key Advisor Tech Solutions:

Portfolio Management

Summary:

Much like CRM, portfolio management solutions offer a buffet of features that often position them in the “hub” status of an RIA tech stack.

Portfolio management systems offer a broad array of tools that allow firms to centralize their order generation and position management. Some of the most popular capabilities can include rebalancing, multi-strategy support and model management, portfolio trading, and integrated compliance and custodian synchronization.

Key Advisor Tech Solutions:

Co-Pilot by FlyerFT
Envestnet
Pershing X
Orion Advisor Solutions
Morningstar Office
SmartX

Trading

Summary:

Trading and rebalancing tools allow RIA firms to centralize and optimize portfolio management, order management, and post-trade processing.

Whether provided by a custodian or a third-party vendor specializing in trading, the ability to complete portfolio rebalancing and one-off investment decisions is a life-saver and an incredible value-add for firms.

And as a final benefit, a robust trading platform allows you to centralize your portfolio and order management processes. The resulting benefit? Less time swiveling between tools to accomplish just one part of a job, and more budget for other business activities if you can eliminate one part of a large tech stack.

Key Advisor Tech Solutions:

Data Analytics

Summary:

Analytics solutions give advisors the ability to perform investment due diligence through security research and screening.

Some also include the ability to build portfolios and manage asset allocation, though most do not commonly take advisors through the entire workflow of actually trading those assets.

Key Advisor Tech Solutions:

While all of these various technology solutions for advisors are different and provide unique functionality, there is one commonality: Most integrate with each other via open APIs, making it possible for advisors to enjoy connected experiences between applications.

Without an integrated tech stack, advisors are left with siloed solutions, risking security and efficiency within their firms. Software built with an open API foundation solves that problem – and those open APIs are especially critical for an advisory firm’s trading software.

Why Trading APIs are Critical for Every Advisor Tech Stack

While APIs are essential for any integrated technology stack, the role they play in increasing efficiency for advisory firms’ operations is especially important. When it comes to your trading technology, implementing a solution that offers an open API infrastructure can result in an enhanced advisor experience by allowing you to spend less time inefficiently switching between applications that each only complete parts of your process. And an improved client experience results as well, by giving advisors more time to invest in those relationships.

In the end, you can simplify and streamline even the most complex workflows with integrated processes enabled by the seamless data sharing that only APIs can provide, your advisory firm can adapt to any changing industry trend without overhauling your advisor tech stack.

Leverage the power of APIs in your tech stack with Flyer. Download our ebook to learn how you can automate the most time-consuming parts of your trading process.