Some things can be deceptively easy. You think you know the definition of a word or phrase. But when you investigate, you suddenly discover there is more to it than you thought.

Consider ROI. It’s one of those terms that gets batted around a lot in the financial services industry. As a wealth manager, you certainly understand all about the return on investments for the capital assets in your clients’ portfolios.   

But when it comes to the technology you use daily at work, how much do you know about return on investment? Because just as is the case with capital ROIs, your software and technology should be generating a healthy and robust ROI as well.

In fact, do you know your technology ROI? Many advisors don’t. If you are one of them, don’t worry. There’s a simple process for determining this important metric. And you don’t have to be Einstein to calculate it, either. Believe it or not, it’s remarkably simple.

The first step in calculating your tech ROI is to identify the full range of possible benefits from your firm’s use of technology. Ask yourself these questions:

• Why is an investment in technology important to your firm?
• Have you set clear goals that your firm is striving toward? If you have, how will technology better enable you to achieve them?
• How will technology improve both the bottom line and our ability to increase it?

It’s important at this point to calculate the net gain created by your firm’s technology. Specifically, how many hours of time has your team recaptured by turning over routine tasks to your tech stack?  That time represents a net gain as those hours can be used to nurture existing client relationships, develop a Model Advisory Client, and otherwise enhance your business.

Remember, powerful, effective technology is more than a nice “extra;” it’s a key component in your firm’s success. 

Once you understand the number of additional hours your team is gaining you can then actually analyze your ROI. And there are two ways to do it.

1. You can calculate the hourly rate of each of the team members and, based on that rate and the number of hours technology is giving back, you can determine the value of that technology.
2. You can also examine the number of hours needed to serve clients per role. (For example, let’s say a CSA spends 10 hours a year per client, and an advisor spends 15 hours per year, etc.) Based on that, you can then determine how many more clients each team member can serve once you have adopted and are utilizing your new technology. In this case, the ROI will be how long you can delay making an additional hire because of your investment in that technology. 

Here’s another way to look at it: ROI = net gain/cost. 

It’s those intangible benefits that make all the difference to your firm. They include: 

• Greater efficiency. Do more for more clients without losing concierge-level service.
• Higher employee satisfaction. Inspire your team to do the work they desire instead of the drudgery of redundant menial tasks. 
• Elevate and enhance the client experience even more. Going digital won’t be the reason your clients are more satisfied their satisfaction will increase because your team will have more time to spend with them. 

In short, don’t think of updated technology and the newest software as a capital expense. Put it in its full context and instead view it as the portal through which your firm will expand and grow well into the 21st century. Because without it, your company might as well be doing business on paper tablets and an abacus. New technology is no longer a nice “extra;” it is a critical essential. The ROI to be gained from it is immense.

To summarize, conducting an accurate ROI on the technology your company uses involves much more than determining the dollar value on its price tag. It includes factoring in things that may be intangible, such as increased productivity, and measuring them against the possibility of growing the profit side of your firm’s ledger.

Incidentally, I’ve just produced a short video where I explain all this in more detail. Keep an eye on this blog; I’ll be sharing more about it a little later!  

For now, take a few minutes to make the calculations and determine your firm’s technology ROI. The results just may surprise you.