$75,000 Savings: Tech Stack Audit Reduces Redundant Software Costs
Executive Summary
New Horizons Financial, an RIA managing over $250 million in assets, struggled with overlapping software subscriptions and inefficient workflows. Golden Door Asset consultant Rebecca Hayes conducted a comprehensive tech stack audit, identifying redundancies and underutilized features. By consolidating tools and implementing strategic integrations, New Horizons Financial reduced annual software costs by $75,000 and increased team productivity by 10%.
The Challenge
New Horizons Financial, like many growing RIAs, had accumulated a collection of software subscriptions over the years. Initially, these tools were implemented to address specific needs, such as CRM, portfolio management, financial planning, and compliance. However, as the firm expanded, the software ecosystem became fragmented and inefficient.
The primary challenge was the significant overlap in functionality across different applications. For example, both their CRM system and financial planning software offered basic reporting features, leading to duplicated data entry and conflicting reports. The firm was paying approximately $12,000 annually for CRM reporting that was largely unused because the financial planning software offered a similar capability.
Furthermore, the lack of seamless integration between these tools hampered productivity. Advisors were spending an estimated 8 hours per week manually transferring data between systems, costing the firm approximately $20,000 in lost productivity annually (based on an average advisor salary of $150,000). For instance, client contact information updated in the CRM didn't automatically synchronize with the portfolio management system, leading to errors and inconsistencies.
Compliance was another concern. The firm was using separate tools for risk assessment and document management, making it difficult to maintain a consistent audit trail. This increased the risk of non-compliance and required additional time for manual reconciliation. They estimated that compliance-related tasks took an extra 4 hours per week for their compliance officer.
In total, New Horizons Financial was spending upwards of $150,000 annually on software subscriptions, with a significant portion going towards redundant or underutilized features. The inefficient workflows were not only costly but also frustrating for the advisors, hindering their ability to focus on client relationships and grow the business. They needed a strategic overhaul to optimize their technology stack and unlock its full potential.
The Approach
Rebecca Hayes from Golden Door Asset initiated the project with a comprehensive discovery phase. This involved interviewing key stakeholders, including advisors, support staff, and the compliance officer, to understand their individual needs and pain points. She then meticulously documented all software subscriptions, including their costs, functionalities, and usage patterns.
A detailed spreadsheet was created to analyze the overlap in functionality between different applications. This involved categorizing each software feature and identifying redundancies. For example, she identified that both the CRM and the portfolio management system offered client communication features, but the portfolio management system's features were more robust and integrated with their reporting capabilities.
Next, Rebecca evaluated the potential for integrating existing tools through APIs or third-party connectors. She prioritized integrations that would streamline workflows and reduce manual data entry. This included integrating the CRM with the portfolio management system to automatically synchronize client contact information and account updates.
Based on the analysis, Rebecca developed a prioritized list of recommendations for consolidating software subscriptions and implementing integrations. The recommendations were presented to the management team at New Horizons Financial, along with a detailed cost-benefit analysis for each proposed change.
The key decision framework involved balancing the cost savings from eliminating redundant software with the potential disruption to existing workflows. The goal was to identify solutions that would not only reduce expenses but also improve efficiency and enhance the overall advisor experience. This included phasing in changes to minimize disruption and providing adequate training on the new workflows.
Rebecca’s approach also factored in future scalability. Rather than simply trimming the existing tech stack, she considered tools that could grow with New Horizons Financial as their AUM increased, and that offered functionalities to handle additional services such as estate planning or tax optimization in the future.
Technical Implementation
The technical implementation involved a phased approach to minimize disruption and ensure a smooth transition.
- Software Inventory and Analysis: A comprehensive spreadsheet was created detailing each software subscription, its annual cost, key features, and average user engagement (measured by login frequency and feature usage). This analysis revealed that three applications (a CRM reporting module, a separate email marketing platform, and a seldom-used project management tool) could be eliminated.
- API Integration: The core of the technical solution was the integration of the CRM (Salesforce Financial Services Cloud) with the portfolio management system (Black Diamond). This was achieved through the use of Salesforce’s API and Black Diamond’s Open API, enabling bi-directional data synchronization. Specifically, client contact information, account details, and investment objectives were automatically synchronized between the two systems. The integration also allowed advisors to access portfolio performance data directly from within the CRM, eliminating the need to switch between applications. This process involved mapping data fields between the two systems and creating custom workflows to automate data updates. Custom code was required to ensure data integrity during the synchronization process.
- Data Migration and Consolidation: Data from the deprecated email marketing platform was migrated to the client communication module within the portfolio management system. This involved exporting client lists, email templates, and campaign history from the old platform and importing them into the new system.
- Workflow Automation: Custom workflows were created within the integrated CRM and portfolio management system to automate common tasks, such as generating client reports and scheduling review meetings. These workflows were designed to streamline the advisor's daily routine and reduce the amount of time spent on administrative tasks.
- Security and Compliance: All integrations and data migrations were conducted in accordance with industry best practices for data security and privacy. This included encrypting data in transit and at rest, implementing access controls, and conducting regular security audits. Compliance reporting was consolidated within the portfolio management system to maintain a single audit trail.
- Training and Support: Comprehensive training was provided to all users on the new integrated systems and workflows. This included hands-on workshops and online training modules. Ongoing support was provided to address any questions or issues that arose during the transition. The internal IT team took the lead in supporting advisors post-implementation.
Results & ROI
The tech stack audit and subsequent implementation yielded significant financial and operational benefits for New Horizons Financial.
- Cost Savings: By eliminating redundant software subscriptions, New Horizons Financial reduced its annual software costs by $75,000. This included savings of $12,000 from eliminating the redundant CRM reporting module, $8,000 from eliminating the separate email marketing platform, and $5,000 from discontinuing the project management tool. An additional $50,000 in savings came from renegotiating contracts for the remaining core software packages by leveraging the consolidated view of their needs and usage.
- Productivity Gains: The integration of the CRM and portfolio management system resulted in a 10% increase in team productivity. This was achieved by eliminating manual data entry, streamlining workflows, and providing advisors with a unified view of client information. Advisors estimated they were saving an average of 4 hours per week, per advisor, which translated to significant time savings across the entire team.
- Improved Data Accuracy: The automated data synchronization between systems significantly reduced the risk of errors and inconsistencies. This improved the accuracy of client reports and enhanced the overall quality of service. The error rate in quarterly reports decreased from 3% to less than 0.5% after the implementation.
- Enhanced Compliance: The consolidation of compliance reporting within the portfolio management system simplified the compliance process and improved the firm's ability to maintain a consistent audit trail. This reduced the risk of non-compliance and saved the compliance officer an estimated 2 hours per week.
- Increased Advisor Satisfaction: Advisors reported increased satisfaction with the improved technology stack. They appreciated the streamlined workflows, the unified view of client information, and the reduced administrative burden. This contributed to improved morale and reduced turnover.
Overall, the tech stack optimization project delivered a strong return on investment for New Horizons Financial. The cost savings and productivity gains significantly improved the firm's bottom line, while the enhanced data accuracy and compliance capabilities reduced risk and improved the quality of service.
Key Takeaways
- Regular Tech Stack Audits are Essential: RIAs should conduct regular audits of their technology stack to identify redundant software and underutilized features. Aim to review at least annually.
- Integration is Key: Prioritize integrating your core software systems to streamline workflows and improve data accuracy. Look for API-driven solutions.
- Focus on User Experience: Choose software solutions that are user-friendly and intuitive. Provide adequate training to ensure that users can effectively leverage the tools.
- Negotiate with Vendors: Don't be afraid to negotiate with software vendors to get the best possible pricing. Leverage the size of your firm and the potential for future growth.
- Compliance Should Be Central: Ensure that your technology stack supports your compliance requirements and helps you maintain a consistent audit trail.
About Golden Door Asset
Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors gain a comprehensive understanding of their clients’ financial needs and preferences, leading to more personalized and effective financial plans. Visit our tools to see how we can help your practice.