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Companies Mentioned
- Docupace [11:00]
- Envestnet [30:30]
- FIS [19:00]
- Kestra Financial [01:38]
Topics Mentioned
- How to Know It’s Time to Replace Major Software Applications?
- Evaluation Criteria for Software Vendor Selection
- Why You Need a Technology Governance Committee
- Gathering Advisor Feedback
- Tips for Vetting Software Vendors
- Upgrade Versus Replace Software
- Vendor Horror Stories
Episode Transcript
Come on in, sit back, relax and listen to episode 157 of the WealthTech Today podcast. This podcast features interviews, news and analysis on the trends and best practices in wealth management technology.
Our topic for this month is buying enterprise software and we will be speaking to executives from broker dealers, asset managers and other large firms on how they make buying decisions for enterprise software, when they know it’s time for new software, and they also share some lessons learned around implementations.
We chose this topic because at Ezra Group we work with a lot of wealth management firms who come to us to evaluate their current software platforms, give them advice on how to optimize them, manage RFPs to replace them, and support the implementation of new software across the organization. We thought bringing in some executives to share some of their stories and tips would be helpful.
Now let’s kick this thing off.
Craig: I’m happy to introduce our next guest on the program, it is Jason Albino, Chief Compliance officer for Grove Point Financial broker dealer and RIA. Jason, welcome.
Jason: Thanks Craig, appreciate you having me.
Craig: I’m glad you could be here, where are you calling in from?
Jason: I am calling in from in-office, my office is in Rockville, MD, our headquarters here for Grove Point.
Craig: Excellent, and I’m in New Jersey. Hot and steamy New Jersey. Thanks for being on the program today, could you give us your 30-second introduction?
Jason: Sure. As you mentioned, I am the Chief Compliance Officer for the two financial services entities within Grove Point Financial, their broker dealer, Grove Point Investments and their investment advisory firm Grove Point Advisors. In total, we have about 500 investment advisor and registered representatives. And I’ve been in this world, this business for about a little over 20 years or so, with a lot of time spent in the independent broker dealer space with some larger firms like Advisor Group and Securities America and also currently in a much smaller world now with with Grove Point Though we are owned by Kestra Financial, like I said, we’ve got about 500 reps. So it’s been a new and really interesting and very exciting experience to be with Grove Point in the smaller broker dealer for sure.
Jason: But in addition to the independent broker dealer world I’ve been the CCO insurance company, Penn Mutual so I’m been kicking around in various different roles in different areas of the industry and very frequently involved in sort of technology decision making and figuring out when to upgrade and or bring in new technologies.
How to Know It’s Time to Replace Major Software Applications?
Craig: And that is exactly why we were excited to get you on the program because that’s what we’re talking about. We’re talking about decision making at a broker dealer when it comes to software. So we have a lot of vendors who listen to the program, and we work with a lot of vendors so we’re always helping them understand the decision making process. And how you work with broker dealers and how your software should be designed but also how your sales process and your support process should work. Because you don’t want those to fail. So can you give us your opinion, when do you see in your experience with 20 years working with RegTech, when do you it’s time to replace a major software application? What are the warning signs?
Jason: I mean, talking about warning signs, the first thing I’d say is the time to replace is definitely before you really, really, really need to. If you’re at that place, I think when you’re in a situation where you’re replacing software when it’s already broken, or where it’s become an impediment to you doing business, then generally that’s going to end up leading to bad outcomes. Because at that point, you’re making decisions based on expediency or trying to plug holes in the dam, rather than probably what’s best for your business from a long term sort of viewpoint. So when I know here at Grove Point when we talk about new technology opportunities, we do it as part of our annual business planning process right at the end of the year. We are looking forward to what strategic goals and what strategic initiatives that we’re going to be looking to pursue in the upcoming year and technology is obviously a part of that either as its own strategic initiative or in supporting the strategic initiatives that we decide are what we’re going to be going after. We might be looking at our infrastructure also right to figure out whether or not we need new or updated technology, just to keep the foundation strong or to keep the trains running on time for that upcoming year to make sure that we’re growing in the way that we want to.
Evaluation Criteria for Software Vendor Selection
Craig: Those are all good points that we hear a lot from our clients and that’s a great recommendation making it part of the annual planning process looking at your applications looking at your especially your key applications in different areas. And is are they still meeting your needs? And you said don’t wait for it to become an impediment to your business before you try to replace it. So thinking of that, the once you’ve decided to make to make a change, so you’ve got an issue, you’ve got an application you think is going to become an impediment, or you think it doesn’t support your strategic initiatives well, what are some of the criteria that you use when making buying decisions?
Jason: I think the decision making process and having some structure to that is important. Right. So you mentioned sort of starting with the decision to implement a new technology. I think that’s just the beginning of a broader decision making process. I know that I’m fortunate here Grove Point that we’ve got a relatively small and tight knit executive team were pulling all in the same direction we deal with each other on a daily basis. There’s no silos in different states and different sort of areas of the company that we don’t deal with. But I look I have been in some larger organizations like I mentioned previously, where the ability to navigate politics or red tape ends up becoming the most important criteria for whether or not you buy a particular technology. So I’m thankful that that’s not really the skill set that’s needed here in order to determine what technologies we’re going to buy or not. But look, even with a strong team like we have it’s human nature to have a bias towards, you know, your team and your slice of the organization and your people.
Jason: So to combat that a little bit, we’ve set up a technology governance committee here where the the committee has us as the executives on it. It’s got functional area leaders on it, it’s got the project team on it, and obviously technology members on it too. So we get together on a regular basis Jen generally monthly so that we can sit in a room and figure out so we can just sort of zone in on the three big areas. What is going to help us make our technology decisions, which, again, one is Is it a strategic need or does it fit in with the strategic needs? of our organization? Do we have the available human and time resources that we need in order to pursue a particular project? And what’s it going to cost? Right because all of those things are finite and if you can get in a room and honestly discuss the goals of the organization, and what you’re working with it. It’ll lead to a better outcome, particularly if you’re honest with each other and you feel that sense of if one area succeeds and if it’s tied into our strategic initiatives, then we’re all going to succeed.
Jason: The nice thing is about that project also, we actually use that committee. We found that to be helpful in just keeping tabs on the effectiveness and the ROI on our current technology also. So that communication and that structure around it is really good with assessing any technology needs that we have either current and whether or not we need to replace them. And then also if we do decide to replace which technologies it is that we’re going to use to do that.
Why You Need a Technology Governance Committee
Craig: So the committee has a lot of power. I think it’s important to have that squared recommendation. I know a lot of firms we work with don’t have that they there’s not a permanent committees word ad hoc and when they think they have a problem, then they get a committee together, but that committee isn’t used to meeting, they have to sort of get up to speed. They’ve been at work together so well. So having a standing Technology Governance Committee to both make decisions and monitor what you’ve got sounds like a great recommendation.
Jason: And like I said, there’s nothing wrong with larger organizations, and certainly there’s some wonderful things to technology, but a lot of times the loudest voice in the room ends up winning out. And sometimes that’s what’s best for the company and sometimes it’s not. This way with that transparency and with that sort of open discussion I think there’s there’s more clarity and more sense of buy in at the end of that process to have everyone sort of involved and aware of what’s going on.
Craig: Can you give us a little insight into how you the Grove Point Tech Governance Committee, how do you monitor ROI of your current tech, what are some of the statistics or metrics you use? When it around ROI for free current infrastructure?
Jason: Well particularly for infrastructure, right, in the independent broker dealer world, our registered representatives and our investment advisor reps are our clients. So our need to service their businesses and make sure that we are processing their business and doing so in a timely and effective way, those are thankfully things that lend themselves pretty nicely to metrics. So we’ll just take a look at our software and figure out how long are items sitting in queue? The phone records, if they’re calling in how long are they on hold? If they’re submitting pieces of business, what are the workflows that we’ve got established for piece of business working its way through the organization, are we paperless? Do we have functionality that allows us to be e-signature? All of those things we can take a look at to see how effective we are and whether or not there are opportunities to become more effective in those systems.
Jason: We just implemented, it’s been a couple of years now actually where we were working with the vendor Docupace. We we really built a front end that our financial professionals can engage with in the submission of new business that that tries to streamline that business submission process and includes workflows. And we saw such an increase in our efficiencies and we can do that through tracking and taking a look at queues and pulling these reports out of there. So those are the things that we’re discussing.
Jason: Obviously when we implement the Docupace, there was plenty of discussion around project around the project, how was the project going? What sort of enhancements would we be pursuing? But now that it’s more entrenched in our business for the last couple of years, the conversation is has shifted slightly in those governance meetings to how is it performing and are there additional enhancements we need to make to sort of take it to the next level? What is the feedback that we’re hearing from the fee from the field so that we can discuss those in those governance meetings and again, use that as the basis for decision making in the next quarter in the next year and over the next five years.
Gathering Advisor Feedback
Craig: Other firms I know have an advisor committee, gathering feedback from the field. One firm that we work with hesitant they call it the advisor of the future committee. It’s basically not a grievance committee, but it’s their highest producing advisors. Or the advisors were most engaged with the technology, they’re looking for their feedback to see where they want to go. Do you have something similar?
Jason: We do we actually have a few committees like that some are a little more formally established and some may be a little more informally but we do have a Field Advisory Council, what we call the FAC, and we, as an executive team make a real concerted effort to actually try to get a lot of breadth from that Field Advisory Council. So we don’t want that to be a homogenous type of council where we’re going to hear one voice so one of the things that we do take care to make sure to include on that committee are technology oriented financial professionals, people that have a business model that integrates technology into into their process. That’s not the only voice that we want to have on there because it’s not a one size fits all approach, that’s not our business, but we do want to make sure that we’re hearing and sort of pinging ideas of folks that might be more technology oriented.
Jason: The other thing that we’ve got, though, an assistant counsel, because at the end of the day, you can talk to dozens of financial advisors and certainly they’re a great resource of information and meeting the needs because they are our clients but at the same time, they are not necessarily the biggest users of our technology. So when we go directly to the assistants and say, particularly in planning or particularly in identifying sore spots or areas that will will help make business easier to do for someone in an office. The people to go through in an office is are the assistants and the ones that are using the technology. So we solicited thoughts and feedback from from that counsel as well to make sure that we’re solving problems that are actually problems instead of ones that were just perceiving to be
Tips for Vetting Software Vendors
Craig: In many firms, the assistants use the technology much more than the advisors do when it’s more important that it works for them than for the advisors. So, finishing up this topic of criteria for buying decisions. Can you talk about doing your homework and vetting how much of that do you do and how important is it?
Jason: It’s critically important, right. So, again, it’s not a committee approach. It’s not death by committee. But we do have a part of the process is sort of getting that committee, getting everything out on the table. So in that committee is where all of that vetting happens, you gather information on what vendors are out there and whether or not there are two vendors out there or a hundred vendors out there that may have a solution for you. You obviously have to start somewhere, so you get down to your few vendors and then you figure out well is is what functionality do we really need? Again, keeping your eyes on the ball of what is our actual goal that we’re trying to achieve with this technology. And then once you identify that and what your resources are both human and financially, then you can really get into the decision making part of it. And at that point, generally we’ll take that back with the executive team and figure out depending on what area it might be, might want sitting on a few demos or whatever it is, but then we start to bring that back to the executive team and come to final decision making on on what the right course of action is.
Craig: Excellent. So moving to the next topic when we’re when you’re picking software, you could break it down into two different categories. One is upgrading an existing platform or application and just replacing it, another one is new. So you’re bringing in a new application in an area you may have never had before. Can you talk about the difference between those two categories?
Jason: I tend to be a buy versus build type of person. So we are frequently approached by current vendors to sort of take a look at their latest release. Maybe they’ve got three releases a year, maybe they’ve got more maybe they’ve got annual releases, but you really have to work into your process just a way to to assess whether or not in any given quarter or any given semi annual basis. Are you going to sort of accept or pursue an upgrade through a system. You can go broke if you take every new fancy bell and whistle that a vendor sends your way onto an existing system. So we’ve got to have some rationality to that but you have to balance that with really the first thing I said and this is you don’t want to wait until it’s too late.
Jason: When a new release comes out we work that through our Technology Governance Committee and really assess whether or not it’s a) even worth bringing to it but if we do, whether or not we have the budget, the staff and the strategic sort of will to implement that. When it comes to really implementing a brand new technology that tends to be a bit more impactful. There are training needs that come out of that sort of thing because no one’s familiar with the system. There may be large upfront costs where even though there may be a lot of work and an upgrade generally they’re not going to be as expensive to do as it will be to really just install a system from scratch.
Jason: A new system is an unknown entity. You might decide that this is the best thing since sliced bread and then when it comes to actual you know, getting it in the door and getting it launched doesn’t do all the things that you want. And so you have to ask all the right questions with new technology questions that a lot of times with existing technology or upgrades are generally already answered. And I think it’s really riskier to implement new technology. Because again, it’s an unknown quantity and there were some surprises that can come out of it that generally you’re not going to see with an upgrade.
Jason: We’ve upgraded we have a system through a vendor called FIS, our our sort of supervision system and we do a lot of compliance work using that system as well. It’s very data intensive. We asked them to do some pretty big lifts and there’s a lot of work that goes into it. But we just are in the middle of an enhancement right now technically, it’s just an enhancement, but we hadn’t upgraded it for five or six years. And so it’s a major enhancement. That’s a six to nine month project. So there still may be a lot of work with an enhancement but there’s I still generally see it as a little less risk because at least you know what you’re dealing with as opposed to really bringing on a completely new technology.
Upgrade Versus Replace Software
Craig: I think what I meant when I talked about new versus upgrade, I mean new, bringing in a new vendor, or making a decision on a new vendor versus replacing a vendor. So replacing existing software. Well, how does the buying decision differ?
Jason: It’s got to get to a pretty ugly point to replace an existing software with a new vendor.
Craig: Why is that?
Jason: For a lot of the same reasons that I was just sort of talking about. The devil you know sometimes, honestly, is the preferable choice, unless you get to a point where service or the technology or their ability to keep up with in my world is generally regulatory types of needs. And concerns and risk management. We all know that it’s tougher to pull a company away from a particular vendor than it is to introduce a new technology that serves the new function. So I’ve had a couple of instances in my life where I had to walk away from a company that we already had in house and they were still doing their job, but they just weren’t doing it good enough. It’s a lot more difficult to do that and start off with somebody new than just bringing in a new technology with a new function that you just haven’t filled yet.
Craig: One of my favorite phrases is inertia is a powerful force in software. And there are some vendors who shall remain nameless who are only in business because of inertia because it’s just too difficult to get their software out.
Jason: Well, look I find a lot of times vendors are shocked, shocked, I tell you. They’re very surprised that they could lose business and the reason is because it is tough to lose business. Once you have an established multi year relationship. You can become very entrenched and sort of married to particular systems but that doesn’t mean it can’t happen. And it certainly has happened in my career and the couple or few times that has happened, I can tell you that, despite always doing everything that I could to engage with a particular vendor and to let them know, either explicitly or implicitly and almost always, by the time it’s all over explicitly, that things were not where they needed to be that they still seem to always be shocked. And it always surprises me that they wouldn’t be but there you go.
Craig: Okay, so this was my favorite part of these interviews. Can you talk about lessons learned and what advice would you give to other broker dealer executives about buying buying software?
Jason: I really hate to sound like a glass half empty person because I’m not. But I would say I’ve learned to be jaded. Or maybe sort of realistic is is a better word for that. It’s really, really easy to get seduced by new toys, particularly if you’re into technology like I am. And also part of my job is to make sure that things run smoothly and more effectively within my organization. It’s really easy to see the fancy new tool on the block and say, Hello, I want to bring that in.
Jason: I joke that I’ve never seen a tech demo in my career that didn’t solve every single problem that I have. And at the same time, I’ve never bought a technology that solved every problem that I did have. That’s just not the way that it works. That doesn’t mean that I don’t love new technology that I don’t embrace new technology that I don’t think that just about everything we do is driven off of technology, I think, in particular being a compliance officer in today’s day and age, you have to be half a regulatory and rules guy, and half a technology guy. And then in the independent space, they say and then the third half is being a relationship guy. We can’t do what we do the sheer volume of data and the data analysis that we’ve got to do and the amount of business that we have to process as an organization, can’t do it without the technology.
Jason: But it does sort of remind you that with with the flood of choices that you’ve got and sales people sort of constantly coming at you with the next best thing is it does remind you that you have to take a moment to define the core need or maybe a couple of needs that a technology is meant to address and judge it really against those needs. Anything on the periphery of that is either a nice to have, bells and whistles sort of thing, which is great that goes into the equation, or it’s one of those things where look, it would be nice to have that but they don’t have that and I could live without it.
Jason: When you get overly involved in sort of what ticks every single box in your perfect world, or over estimating the negative impact of something that one thing doesn’t have you lose sight of that core couple of things that the technology is meant to address within your organization, then you’re going to turn yourself in circles and potentially not end up where you need to actually be with a solution that that gets you to where you need to be with this with the proper expense, sort of profile and the proper resources and capital that you need to spend to get it up and running.
Craig: One thing we do with our clients when they bring us in to help with new technology is we have a process for working with them facilitating a meeting of their technology governance committee or whatever committee they put together to understand what their priorities are and weight them. So you mentioned don’t overweight the bells and whistles versus the core functionality, that happens a lot like you mentioned. They get overwhelmed or they get seduced by the bells and whistles. Oh, we need that. Well that doesn’t really affect you very much and that’s not as important as this other functionality, which is core to your applications and being able to build out understand what your functionality is understand what your workflows are your key workflows that this application has to support becomes the core and has to get a higher weight when you’re scoring applications after demos and a certain bells and whistles so that’s an excellent point.
Craig: When you’re talking about an exec needs to be half a regulatory rules and a half tech and you said you’ve never seen a software demo that didn’t claim to solve every problem. What other areas of recommendations would you have about evaluating software and knowing and the whole buying process for other executives?
Jason: I think to some extent, as an executive speaking just from the executive standpoint, a little away from the organizational aspect as a whole is you have to sort of simultaneously be open and closed. You need to be open to feedback and input from your staff, from other leaders in the organization. You need to define again what it is that a particular technology is looking to solve. But at the end of the day, if it’s your area, if it’s something that is meant to solve a problem within your organization, you can’t get overwhelmed trying to make everybody happy. So you need to make people feel heard you need to have transparent processes like tech governance committees. But at the same time, if it’s your decision to make you there are going to be compromises and sacrifices that need to be made. And so that means either at the end of the day cutting functionality because of resources or choosing a tool that really targets that particular need and doesn’t isn’t sort of a sprawling, one size fits all tool that’s going to make everyone in the organization’s like better you need to keep that scope and that scale within mind in order to make a good choice that doesn’t end up spiraling out of control.
Vendor Horror Stories
Craig: Excellent advice. Alright, so we’re gonna wrap up here, only have a couple minutes left. I want to squeeze in one more question. Another one of my favorite questions, can you share a horror story that you had with either a buying decision or replacing software or implementation in your career?
Jason: I find I’m generally pretty risk averse. When it comes to introducing new vendors, talked about a lot of different factors to evaluate when it comes to vendors like size and experience and their support models. So I’m very risk averse. I’m not generally inclined to try out sort of startup companies or to try out new technologies that aren’t proven or at least within my particular space. Because I think there’s there’s a lot of risks of that. And look, there can be a lot of benefits to it too, don’t get me wrong. You can have a startup company that is going to be much more affordable. That might be much an offer much more personalized service that you’re not going to be kind of a number against sort of these massive firms and you can be considered a more important client so I get the benefits of that. But generally, I’m pretty risk averse look for sort of best in class type of tools. Like I mentioned, sort of Docupace, or our advisory platform is Envestnet. We go with kind of known quantities when it comes to our technology tools. So I haven’t really, at least from an implementation standpoint, run into any true nightmares. I will say that I have really made some bad decisions that have led to some problems. I mean, I’ve implemented technologies or at least pieces, techniques, technologies in large scale projects that we bought, paid for, implemented and never used. That hurts you, digs a hole in my heart and for the entirety of a contract.
Craig: Well, Jason, we weren’t supposed to mention any names. And you mentioned yourself. Don’t do that. An executive you heard of made that decision. It wasn’t you. Yeah. But why did it happen? What was the thing that you could have done better to to know to fix that?
Jason: I think I think some of the mistakes that I mentioned are part of it. In my sort of younger days, seeing the bells and whistles and being like, Oh, we can do that. Oh, we could do this with that. No. And it just ends up being more than really you need or that your organization can sort of handle. But other mistakes are just I would say that a good BA is your friend, right? So just a few mistakes that I’ve made and how kind of I’ve resolved them a good BA will help you from the very, very beginning. Someone that’s going to establish good project requirements.
Craig: That’s a good business analyst, BA right, business analyst.
Jason: That’s right. Business analyst is going to help cut out so many other mistakes that you can make down the line. Scope creep, losing sight of the actual core mission of a project, losing that focus. When you got to get better business analysts that can go around to different business areas that are impacted by a particular project and really get agreement and consensus on this is something that we’re going to need to accomplish as part of this project. And this is something that we are not going to be doing on this project and then having that with a strong project manager that can then sort of execute on keeping a project on task to meet those needs. And you know what, if you want to try to add something to it, then that’s got to go through technology governance, and there’s a whole bunch of people that have to agree to add something like that. So you can’t just have someone with a strong personality on a project saying yeah, actually, we should do that. Also, please put that in the project plan. Having that business analyst, that project management that structure, will will head off a lot of mistakes before they even happen.
Jason: I also think keeping timelines realistic is important. I think as an executive I know I fall into this trap. I have a tendency to push forward, push things forward, get things done. I think that’s a trait that a lot of executives have is to try to continuously move that ball forward, but we have to keep realistic in setting those expectations. I’ve had projects that I against speaking to sort of my own personal mistakes have had projects that literally were wrapping up around the end of the initial contract period, because they just other business needs gotten away and things were not prioritized correctly. And at that point, we just continue to make compromises along the way and you’ll either have to sacrifice quality to meet deadlines, if you don’t set deadlines realistically, or you have to continuously push back deadlines to actually make happen when you you need to make happen. And that’s no good for anybody. That’s not good for business owners. That’s not good for your business. If you’ve got clients, if it’s field facing technology, and you’ve gone out there and promised that this new technology will be there and it’s not, that sort of damages or credibility. And if it’s an infrastructure need and delayed long enough, you might get into that again, very first thing I said where now you’re in a situation where you have to get it good in order for your business to function properly. As opposed to it being in a nice order, sort of logically timed out way. You start ending up compromising on quality because you’re trying to hit an unrealistic deadline, or you’ve gotten so far that it’s just you have to get the project done. It can’t go on any longer.
Craig: Jason, we are now out of time. I told you half an hour goes by fast man, you were worried we wouldn’t have enough to talk about. So if anyone’s listening, if you’re an advisor and you’re interested in working with Grove Point Financial, you can go to GrovePointfinancial.com Jason, thanks so much for being here I really appreciate your time, man.
Jason: Thanks for having me, Craig.
