It has become widely acknowledged and accepted that the technologies available in the RIA channel are more sophisticated and up-to-date than the technologies offered by the large wirehouses.  The RIA channel is known for its freedom to shop The Street for best-of-breed solutions, and work with a variety of industry experts to best leverage integrations and automatic workflows. In contrast, the wirehouse environment is known for making it extremely difficult, if not impossible, to upgrade technology, considering the wirehouses’ need to serve 15,000+ advisors and their support staff.  We have been told horror stories from wirehouse advisors that they can’t upgrade certain technologies or access others because they can’t update to the latest internet browser required to support their CRM or client portal.  It is clear that RIAs have more flexibility and freedom with the variety of choices and customizations, but it is not common knowledge just how restricted the wirehouse advisors’ technology actually is.

As the exodus to Independence has continued to gain momentum, the wirehouses are trying to do more to accommodate their advisors, and they have chosen to fight the notion of “the technology is better in the RIA space” head on by adopting many of the same technology vendors that have traditionally only supported RIAs.

When we meet with potential breakaway advisors, and they ask us how best to create performance reports as an RIA, we respond by making a recommendation based on their business, the investments used, and how they like to communicate with clients.  The advisor sits up straight and adamantly exclaims, “We have that same technology (or have used that same technology) at our current firm, and it is awful!  It can’t do what we need – let’s look at something else.”

We are always taken aback by these comments and scratch our heads because we know the recommended technology system can do exactly what the advisor is asking for, and more.

After some major persuasion and sweet-talking, we finally get the advisor to agree to a demo of the system, despite their repeated claims that “the system can’t do what we need!”  Within the first few minutes of reviewing the system’s capabilities, the advisor is in disbelief.  The focus of the advisor’s rage is at their branch manager and current employer, realizing that this system does exactly what they’ve been asking for, but they’ve only had access to a modified and simplified version.  The wirehouses need to standardize and streamline the various technologies to appeal to the masses – what we often refer to as “managing to the least common denominator.”

This problem goes back to the fact that the wirehouses are trying to cater to 15,000+ advisors, with varying levels of experience, servicing clients with a wide variety of sophistication, and lack thereof.  The banks and broker dealers are therefore forced to simplify and lock down the technology.  They can’t allow a junior advisor to have access to the same bells and whistles that a 20-year veteran advisor needs for his/her client base.  The wirehouses often restrict up to 70% of system capabilities to cover the wide range of advisors and clients they are serving.

Advisors are shocked, and oftentimes angry, to learn that the exact same system they are using today not only can do everything they’ve been asking their manager for, but it can do even more than they realized achievable.  One would assume if the logo of the technology is the same at both the wirehouse and at an RIA, the system capabilities would be the same, but nothing could be further from the truth!  For both compliance reasons and business/expense reasons, the technology offered to wirehouse advisors is very different than the technology offered to RIA advisors – even if it is being offered by the same technology vendor.  Don’t be fooled the next time you hear a wirehouse manager exclaim, “Yes, we have that same technology here!”  The same name does not imply the same functionality, and they may very well be lying, or holding back the full truth in their favor.


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