What’s the best way to select a new wealth management platform?

This is a question that I am asked constantly by clients. Everyone seems to have a horror story about the time they went through this process at some time in their career. The downside of living through this nightmare is that you rarely get a second chance to do it again so you can at least learn from your mistakes.

That’s where we come in.

At Ezra Group, the boutique FinTech consulting firm that I founded, we have assisted banks, broker-dealers and RIA’s in selecting a new wealth management platform many times.  Over the years, we have developed a database of best practices that we leverage in order to avoid the missteps and critical errors that plague most firms.

This article is not about which platform is the best.  Because there is no such thing.  Any website or consultant who tries to tell you that there is one best platform is selling you something.  Every firm is different and there is a different wealth management platform that is right for every firm.

Here are my four tips for choosing the right wealth management platform.

1. Assemble An “A” Team

Select a group of key individuals who will make up the core decision team.  If you are a sports fan, think of the ‘Dream Team’ of US Men’s Basketball from the 1992 Olympics.  If you are a geek, think Fellowship of the Ring from LOTR.   If you are a movie buff, think Ocean’s Eleven or The Magnificent Seven.

Anyway you picture it, you need a diverse team with different skill sets who represent each area of interest in your firm to ensure your best chance of success.

When choosing a new wealth management platform, your team should include people from business, technology and operations.  If you begin this process and you do not include a representative from each group of stakeholders, you can avoid a lot of problems down the road.

2. Document Your Pain Points

Nobody really likes their current wealth management platform.  It’s just a fact when you adopt any technology. Once you start using it, all of the idiosyncrasies, quirks and bugs that were carefully hidden during the demos slowly make themselves known.

At some point, these issues build up into a raging, Mongol horde and overrun your staff’s ability to do their jobs’ effectively.  This is when your search process usually begins.

What are the issues that are causing you the most pain?  Which ones are require manual workarounds?  Make sure to check with each group represented on your team to get their input.

Write down all of the pain points and rank them by priority: A, B or C.

• A – Critical.  Your business process cannot proceed unless this is resolved.
• B – Serious.  Results in serious delays or increases the potential for errors.
• C – Minor.  These are nice to have fixes that you could live without.

Do not just discuss the points.  It is important to write them down along with the priorities and circulate the list. Everyone on the team should review them and understand why they were prioritized this way.

Use these rankings when evaluating vendors on your short list.

3. Weigh Your Criteria

There are a number of key decision criteria that we use when assisting clients in selecting the right wealth management platform:

• Requirements – How well the platform meets your business requirements.
• Integration – How difficult is it to integrate the platform into your existing infrastructure?
• Value-Added – What additional features does the platform have that make it special?
• Flexibility – How customizable is the platform?  Can it be optimized to work the way you want?
• Maturity – How long has the product been around?
• Scalability – Can the platform support your account base plus growth over the life of the contract?
• Time to Market – Does the current production version have all of the features you need or are they in the development pipeline?
• User Experience – Look and feel of the user interface, how closely the workflow matches the way you do business.
• Risk – Vendor stability
• Total Cost of Ownership – Price plus annual maintenance costs over the life of the contract

After reviewing the criteria with the team, we assign each a percentage weight so that the total equals 100%.  This will act as your guide during the demos and product reviews to know which areas to focus on.

4. Create a Short List

One problem we see cropping up time and again is clients not creating a ‘short list’.  This is a list of no more than three vendors to take though the detailed evaluation process.  Many firms think more is better and try to review too many vendors.

Why only three?

There just is not enough time to perform a thorough check on more than three vendors, considering that everyone on your team has a full time job doing something else.  Also, if you do your groundwork before starting your search, by following the previous three steps, you should be able eliminate most of the players and be left with just the ones most likely to be your match.

Plus, the time required to evaluate each additional vendor would be better spent focusing on learning everything you can about the top three.  You don’t want to sign a multi-year contract and then discover something you missed that you could have found with a little more time and focus.

Choosing a Wealth Management Platform

Ezra Group has the breadth and depth of experience to help any sized firm to select the right wealth management platform. Contact us if you are considering a change in your platform, or if you would like an evaluation of your current vendor.

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