RIAs focus on clients and their investments, but that work is nearly impossible without software to support it. Great RIA software does everything from managing leads and clients to automating workflows, tracking investments and filing compliance reports. Getting that software starts with a crucial question: buy it from a third party or build it in-house?
While many RIAs believe that building a tech stack in-house will provide personalized technology at a fraction of the cost, that’s not always the case. Many additional costs can add up quickly, making an in-house build a costly (and time-consuming) option for potentially a sub-par product. Don’t be fooled by a seemingly lower upfront cost. Look beyond the initial estimates to consider the wealthtech ROI and these hidden costs of building in-house.
Costly Time Away From Other Tasks
One of the most significant hidden costs of building RIA technology in-house is the time it takes. At a minimum, an RIA will have to review and supervise the build, which can take valuable time away from meeting with clients and growing the firm. That’s not to mention the time (and cost) of finding and training developers.
Building a robust wealth management software platform comes with a steep learning curve. Knowledge gaps in the internal development team can be time-consuming or costly (or both), as developers either take time to find a solution or find an easy or quick fix that could lead to future issues.
Even a seemingly simple build is rarely ever simple. Most internal builds tend to exceed budget and fall behind schedule. Research shows that more than 30% of projects hit delays or budget overruns, which means spending more time away from clients. And the sacrifice might not even be worth the effort: one in five survey respondents indicated that these internal software development projects produce less than satisfactory outcomes most of the time.
Costly Continual Updates
Building a new RIA tech stack isn’t a one-and-done project. Platforms require continual maintenance to make adjustments, fix bugs and update workflows and technology. In fact, 65% of total software costs happen after the original deployment. This means that, in addition to the upfront cost of building the software, RIAs also have to invest valuable time and resources in keeping the system running smoothly. If you don’t, the software will likely not work efficiently and may introduce opportunities for errors, slowdowns or compliance issues.
Technology is changing rapidly, especially as AI becomes more prevalent in RIA firms. To be effective, firms need software that is relevant and current. They can’t afford to waste time tinkering on their own system and risk falling behind the competition. Building in-house takes time, especially when it’s done by employees who might not be able to dedicate all of their time to the project. By the time they have a usable product, the system will likely need an update, creating an expensive, never-ending cycle of updates to stay competitive with other advisors.
Cost of Staying Current on Security
A crucial part of every financial software is security. Cyber threats are continually changing and evolving, and it can require a full-time job to keep firm and client information secure. Some of the most important updates RIAs need to make to their software is to ensure it is protected from cyber attacks. But when the technology is built in-house, RIAs risk not having the most secure and updated technology, which opens the door to potential attacks.
Getting cybersecurity wrong can lead to significant fines, penalties and other consequences. RIAs also have new cybersecurity regulations, so staying current and compliant is more important than ever.
At first glance, building in-house can seem like a cost-efficient option. But upon further examination, it can quickly become a time and money pit that requires significant resources to even try to stay secure and relevant. The better option? Buying software from a trusted partner, like Docupace. Purchasing proven software provides instant access to a reliable product, backed by experts who can customize workflows and keep the product secure and up-to-date. No more tinkering on the backend or hoping the makeshift security is robust. Buying a product allows you to rest assured that you have the best product and can focus on what matters most: your clients.
For new account opening, surveillance, compensation and compliance in one place, Docupace delivers a full-service integrated platform. Click here to schedule a discovery call.
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