New technology makes you money. For example, the new laptop you just bought your executive assistant is an investment in efficiency, which translates into increased productivity and, if everything else is lined up correctly, increased profitability.
If you’ve been in the financial industry for some time, you know better than anyone that every upgrade in technology makes you money. It increases your value in the marketplace, and in the financial world the value you can provide your clients determines your compensation.
But, just as new tech can make you money, outdated technology can cost you money in many tangible and intangible ways.
The cost of legacy technology
It’s indisputable – top line revenue growth is down. The bull has left the arena, and the bear has clamped its jaws down on your clients’ portfolios, which translates into your book of business shrinking – and your revenue along with it.
With that in mind, it may seem logical and prudent to hold off on investing in new hardware or software. But could your legacy tech actually be costing you more than modern technology would?
Though you couldn’t live without it, your old technology is costing you money in a variety of ways. Here are three of them:
1. Maintaining and updating your data.
Your firm is data-dependent. Legacy systems often lack a centralized data repository and processing capability, which can cost you a small fortune every time you upgrade and update your data infrastructure. And failure to upgrade and update properly will not only cost you hard dollars, but in the event of inaccurate or outdated client data, the damage to your firm’s brand reputation is inestimable.
2. Lost opportunity.
Up-to-date software powers growing practices. It provides new features that improve process optimization, increase the accuracy and speed of your data flow, provide superior analytics, and increase overall productivity.
With legacy technology, you’re missing out on the opportunities that top firms are taking advantage of. This poses compliance issues and security risks, and it limits the ability of your staff to respond when incidents occur, which they inevitably will.
3. Poor client experience.
Staff turnover hurts client experience. And the high-powered staff you’re looking for to provide superior client service is not going to be attracted to, or stick with a firm with old technology.
Appearance matters in the era of “The Great Resignation” and the intense competition for talent. Hiring second or third-tier employees willing to work with outdated technology may save you in payroll expenses, but it will cost you more than you saved with a lower client retention rate at your firm.
Cutting costs and saving money with new technology
Now that we’re explored some of the ways legacy technology may be holding your firm back, let’s balance the scales and look at three reasons waiting to upgrade is an unnecessary expense:
Compliance is necessary, and it’s increasing in complexity. Is your reporting compliant? Your client records? Your invoices?
New technology provided by a company that speaks your compliance officer’s language saves you time, and time is money. It also provides you with peace of mind knowing that you’re doing business the right way and your reputation will remain intact.
Whether you know it or not, your firm is a target for hackers. Financial firms make up an attractive portion of the 43% of small businesses that hackers targeted in 2021, which is due to the fact that only 14% of small companies are technologically prepared to defend themselves.
Considering that 60% of small companies go out of business within six months of falling victim to a cyber-attack or data breach, you can’t afford the risk that legacy technology poses.
New technology helps you scale your business. It affords you and your team the time to devote your efforts to activities that make you money, not in being bogged down by antiquated processes and procedures caused by being at the mercy of outdated software.
What would your bottom line look like if your staff had an extra eight hours to concentrate on revenue-producing activity, not tending to back-office tasks that are urgent but not profitable?
You’re in the people business.
Financial advice always has been, and always will be, a people business.
While legacy technology can handcuff you and keep you preoccupied with processes and problems, new technology gives you the freedom to spend your time where it matters most – advising and reassuring clients that they are in capable hands and their long-term dreams and goals are still intact.
Improved technology means better client communications, better service, and better retention.
When was the last time you evaluated your tech stack?
Time is money – and BridgeFT can save you both. If you’re looking for a way to reduce costs and increase your performance, BridgeFT offers modern technology solutions to power your firm’s operations. Book a demo today and see how we power wealth management infrastructure to create thriving advisor practices.