Report Provides Insight on How to Make Best Use of Technology Dollars
LAS VEGAS, Oct. 29 /PRNewswire-FirstCall/ -- The rapid expansion of the
independent financial advisory business in recent years has led many firms
to invest in technology to accommodate new business and manage growth.
According to a report just published by Schwab Institutional, the
best-managed advisory firms have clear and long-term strategies for their
technology investments, but many advisors are under-utilizing existing
systems and spending money on new solutions without gaining much
efficiency. The new report, Technology Best Practices: Making the Most of
Your Technology Investment, was announced at the IMPACT(R) 2007 conference
in Las Vegas, where Schwab is celebrating its 20th anniversary serving the
independent advisor industry.
Schwab Institutional developed the report based on information and data
gleaned from the more than 1,000 advisor appointments conducted by Schwab
Institutional's team of technology consultants each year. The report also
draws on studies conducted by or on behalf of Schwab Institutional in 2007,
including Schwab Institutional RIA Benchmarking: Growth Trends Study and
Best Managed Firms: It's About Time, and includes three real-life case
studies of advisory firms.
"Our research has shown that what's most important is not how much
money you spend on technology, but where you spend it and whether the
investment is part of a larger strategic business plan," said Dan Skiles,
vice president of technology for Schwab Institutional. "Top firms have
three- to five-year plans for their businesses, which include how
investments in technology contribute to meeting their objectives."
According to the report, top-performing advisory firms spend roughly
the same amount on technology as their peers, approximately two percent of
revenues annually. However, best-managed firms view technology as a key
asset in building their businesses and have plans for where and how it will
be used to achieve their established goals. Before purchase or
implementation, these firms ensure that new technologies are compatible
with, and can be integrated into, the firm's processes, people and existing
technology. A clear, effective training program for employees to learn the
new technologies is also a key differentiator for successful firms.
"We've seen great firms spend good money on systems that no one in the
firm is using to their full potential," said Skiles. "But best-managed
firms bring their employees in on technology investment decisions at the
onset and then ensure that the right people have the right training to
maximize their investment."
Top 10 Areas for Tech Investments
A previous Schwab Institutional study, Best Managed Firms: It's About
Time, showed that best-managed firms have median productivity ratios that
are, on average, 30 to 35 percent higher than other firms, with optimal
technology usage accounting for much of this difference. Making the Most of
Your Technology Investment explores 10 key areas where targeted spending in
technology can lead to sharp improvements in efficiency and a high
return on invested capital:
-- Quarter-end processing and related client reporting
-- Customer relationship management systems (CRM)
-- Electronic document management
-- Trading and rebalancing tools
-- Web presence
-- Business continuity
-- Security
-- Training
-- Outsourcing
-- Data aggregation
Deciding When and How to Make Investments in Technology
The report reveals that best-managed firms tend to invest in technology
when the scalability of the firm is in question. Top firms also think
long-term and develop a roadmap of the technology improvements that should
be made over the next three to five years. The report offers four steps to
help advisors select the appropriate technology solution:
-- Step 1: Understand how the new technology will be integrated with
existing systems.
-- Step 2: Make sure your employees are prepared to use the new
technology.
-- Step 3: Ensure that the investment considers potential changes to your
physical environment.
-- Step 4: Assess the risk if the investment does not ultimately meet your
needs.
This report is the latest in a series of Schwab Market Knowledge
Tools(TM) (MKT) reports, an ongoing program of industry research reports,
white papers and how-to guides from Schwab Institutional designed to keep
investment advisors on the forefront of trends and competitive challenges
facing the industry. Offered exclusively to Schwab Institutional clients,
the MKT program delivers relevant and timely information for future
business planning. The MKT reports are a part of Schwab Institutional's
GrowthPoint(TM), the company's integrated practice management program for
RIAs seeking proven ways to manage and evolve their businesses. GrowthPoint
comprises four offerings: Business Strategy and Planning, Human Capital,
Marketing and Business Development, and Transition Planning.
About Schwab Institutional
Schwab Institutional is a leading provider of custodial, operational
and trading support for independent investment advisors. Since 1987, Schwab
Institutional has supported independent investment advisors by offering
support and services to help grow their businesses and help their clients
reach their financial goals. As of September 30, 2007, client assets
custodied with Schwab Institutional stood at $581 billion. These assets,
managed by the approximately 5,500 independent advisor firms Schwab
Institutional currently serves, represent approximately one-third of total
client assets custodied with The Charles Schwab Corporation. Brokerage
products offered by Schwab Institutional are not FDIC insured, are not
guaranteed deposits, and are subject to investment risk, including the
possible loss of principal invested. Schwab Institutional is a division of
Charles Schwab & Co., Inc.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 306 offices and 6.9 million client
brokerage accounts, 1.2 million corporate retirement plan participants,
212,000 banking accounts, and $1.4 trillion in client assets. Through its
operating subsidiaries, the company provides a full range of securities
brokerage, banking, money management and financial advisory services to
individual investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com. (1007-1511)
SOURCE Charles Schwab
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Related links:
http://www.schwab.com
http://www.sipc.org
CONTACT:
Lindsay Tiles of Charles Schwab,
+1-415-667-3997, lindsay.tiles@schwab.com; or Gauri Mundkur of
Makovsky + Company, +1-212-508-9606, gmundkur@makovsky.com, for
Charles Schwab
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