By Bryan Jaffe, Chief Technology Officer, Aspen Standard Wealth
For many RIAs, joining a larger platform unlocks a technology toolkit that was previously out of reach. So, it should come as no surprise that many RIA leaders focus heavily on the tech capabilities of potential acquirers they are considering partnering with. As they should. Having a robust, flexible, and client-centric tech stack is essential to scale a firm and serve clients how they want to be served, today and in the future.
And there is much to be excited about in the process. Integrating an RIA’s tech stack with a larger firm presents an opportunity to “professionalize” IT within the business and gain back valuable time. Similar to a client who may have used tools such as Empower, Monarch Money, or Mint to manage their finances before receiving professional wealth management services, the advanced tech capabilities of many acquirers represent an opportunity to level up an RIA’s tech stack maturity and capabilities.
However, I’ve seen an interesting phenomenon taking shape among many RIA leaders when it comes to exploring the technology of potential suitors. They aren’t asking the right questions. The questions they ask are often fear-based (“How much will the change impact my team?”) Sometimes they are ego based (“I was diligent in choosing a platform, but if my buyer chose a different one, does that mean my choice was bad?”) Sometimes it’s a need to demonstrate “fit” (“I chose this technology because I know it will do what I need it to. Will another tool deliver what I need?) Sometimes it’s rooted in a desire to maintain existing relationships (“Will I have to tell my long-time vendor that I have to cancel?”)
The bottom line is this: a tech strategy should align with the needs of the business and enable it to scale. Tech doesn’t exist for tech’s sake; it exists to service your team and clients. The questions to ask of acquirers (and yourself) should directly align with that. If you don’t hear that alignment come through loud and clear from potential buyers, that is a reason to take a pause.
Below are five common tech questions RIA leaders ask when evaluating potential buyers … and the questions they should be asking instead:
1. What RIA leaders typically ask: “Will I have to change my technology?”
The motivation behind this usually isn’t the technology itself. It’s more about navigating change management and wondering if the advisor, client service associate, or client experience will have to change.
What to ask instead: “How will my potential buyer help my team navigate the transition and be successful? Does the potential buyer’s approach to technology clearly align with the business strategy associated with their pitch?”
Think about how much time and resources you spend evaluating the capabilities of various tech tools and platforms (demos, trials, setup and configuration, contracting and relationship management, etc.) Ask how the acquirer’s systems and processes will give you that time back, allowing your advisors to focus on client service, business development, and core operations.
2. What RIA leaders typically ask: “Do your systems integrate with our custodians and tools?”
The root of this question is typically anxiety about assuring uninterrupted continuity of operations after a merger or acquisition.
What to ask instead: “How will the potential buyer help my team navigate the transition and be successful? How will the buyer’s tech strategy and/or technology platforms align with our operational needs, such as process automations and alternatives integrations?”
The potential partner’s integration approach and team should instill confidence that your operations will avoid disruptions – and that the advisor, service operations, and client experiences will be cared for during the transition.
3 . What RIA leaders typically ask: “Will our technology costs go up or down?”
Most RIA leaders want clarity about the economics of tech integration versus headline license savings.
What to ask instead: “How transparent will technology costs be post-acquisition? What is charged to my P&L or provided as a service? How does partnering provide economic advantage in tech costs?”
Understanding the potential partner’s allocation of technology-related spend, overhead or bundled costs, and what technology spend you will still manage within your practice is essential to get a full picture of post-integration technology economics.
4. What RIA leaders typically ask: “Is your cybersecurity strong?”
At first glance, this seems an appropriate question to pose, given that RIA leaders must prioritize the safeguarding of reputational and regulatory risk, as well as maintaining client trust. The goal isn’t to know every cybersecurity question to ask, but to walk away confident that your future partner brings a level of professionalism and protection you couldn’t realistically build as a standalone firm.
What to ask instead: “Will my team be able to securely access our systems from anywhere? How does your cybersecurity approach protect sensitive client data in ways that go beyond what we were able to do as a standalone firm? How do you make strong security – like multi-factor authentication or device security – easy for my team to use on a daily basis? What safeguards ensure business continuity if something goes wrong?”
Just as enterprise platforms provide advisors with business systems for reporting and CRM tools, they also professionalize cybersecurity.
5. What RIA leaders typically ask: “Can we keep using our favorite tools?”
This question is about a desire for control over workflows and speed of innovation. Reframe this as an opportunity to shift your time and energy from managing multiple vendor relationships to working with a team of professionals who spend their careers bringing an integrated, highly capable suite of tools to market for their advisors.
What to ask instead: “How do you balance centralization versus decentralization in terms of use of technology? If we move to standard systems, do we lose control of our workflows and customizations?”
There is value in centralized technology that is aligned to your potential partner’s services – whether that’s in HR, compliance, technology, growth, or operations. Clarity in service value should translate to clarity in technology footprint.
The questions above are not meant to assume that a potential acquirer is some sort of threat or likely to pass judgement on the tech stack you’ve built. Quite the opposite. The point is to gain confidence that the acquirer will level up your tech capabilities and better position your team for long-term growth, giving you and your team the time back to focus on what matters most. That all starts with asking the right questions.
