The financial planning sector is experiencing a growing need to integrate advanced technology solutions, like AI, to remain competitive and efficient. But choosing the right technology for a firm and integrating it properly starts with hiring the right tech leader.
This can be particularly challenging for traditional advisory firms that have to compete with hundreds of tech development firms also looking for innovators.
"They're not just competing against other firms that are performing similar business functions, they're competing against Apple and Google and every other tech firm in every other industry," said Scott Lamont, the managing director at the industry consulting firm F2 Strategy. "It's competitive. Finding good technology talent is a challenge for these firms."
Firms are becoming increasingly aware of this challenge as they look for leaders to help them decide on the types of AI technologies to integrate and how to get widespread adoption.
Gartner's 2024
Yet another 53% said they were concerned about lack of awareness and training, risk of security vulnerabilities (40%) and risk of hallucination (35%). Part of the issue is most traditional advisors are not tech developers, and vice versa.
"Because it's so new, I think it is a challenge right now to find those folks" with both a tech and advisory background, said Greg Williams, KPMG U.S. Sector leader for asset management. "So I think if you find the technology talent, and then maybe you have to marry that with the advisor expertise."
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Advisory firms, especially smaller ones, can outsource a majority of their tech needs to a vendor, but there is a stage in which firms need an internal tech leader to help direct the company's tech stack and integration, whether that be a chief technology or information officer or another leadership role.
"More firms are thinking about having that thought leadership at the executive level, in the form of a CTO, or a head of innovation or strategy, or head of digital," Lamont said.
Tech innovators are more attracted to a leadership role with a direct line to the CEO, where they can "be a voice in the overall business strategy" rather than simply being told to build a tool, he said. "Allow the technology to be a driver of the engagement model and the business strategy, and how you can differentiate with technology as a starting point, as opposed to being a follower to just solve the problems."
Participating in tech conferences and award ceremonies, and hosting forward-thinking webinars can also help firms establish themselves as thought leaders in the tech community. A 2023 report by Gartner also found that companies that actively engage in industry events and thought leadership activities are more likely to attract top tech talent.
Many advisors who are at the forefront of tech innovation will be speaking at Financial Planning's first conference solely dedicated to AI, called
Devon Drew, founder and CEO of AssetLink, an AI-powered advisor platform, said he often gets calls from RIAs asking about how to hire their first CTO. He said that a firm might not be ready to attract an experienced CTO in the industry, but they could focus on hiring a tech developer who can build customizable tools for that firm.
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"A traditional CTO is pretty expensive. So maybe start with somebody that has the persona of being a head of engineering and try to groom them into what the firm is doing," he said. "Because the last thing you want to do is . . . be paying a traditional CTO $350,000 a year, plus equity, if they're not a builder."
Part of that builder role should involve about 40% to 60% of actual building technology, Drew noted, and the remaining time spent building and leading an engineering team.
"They've got to be your eyes and ears," he said. "And they have to be, at least during the project, your right-hand man or woman."
Beyond hiring a tech expert,
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"These leaders, they have to loosen the reins and understand that it is imperative for them to embrace technology," said Dorsainvil, who will also be speaking at ADVISE AI. "Not only from a client perspective, but also an advisor retention perspective and for their succession plan."
