It takes a while for two people to build a trustworthy relationship – whether that’s between friends or vendors. And sometimes it takes seconds for that relationship to completely erode. After doing your research and carefully setting yourself up for what you hope will be a fruitful relationship, there is invariably a person or company on the other side who has to hold up their end of the bargain. So, let’s bring this to our own industry and what it means as you evaluate your next outsourced technology operations partner. Here are some key questions you should ask yourself:
1. Will They Become an Extension of My Company?
It’s one thing to have someone available to provide services and support during normal business hours. But then the company can’t seem to be found when you really need them. A vendor needs to be as invested in your company’s results as you are. If you succeed, they succeed, after all.
One way to ensure that you are getting what you need from your vendor is to guarantee you have solid Service Level Agreements (SLAs). In fact, I would suggest that you need an SLA that can be evolved as your business needs inevitably will change. It’s important that as your firm grows, the technology and service grows with you. So having a technology vendor that can adapt both its service and software and can effectively guide you through the process to select the best tailored service and software solution is essential for success.
Some key questions you’ll want to ask your potential tech-ops partner are:
- When is your reconciliation completed and available to the firms you serve?
- When is your performance calculated and finalized?
- What number of hours can you provide coverage and how will that be accomplished?
There are multiple ways to provide 24/5 coverage, pay someone in the U.S. to work overnight to accomplish this goal or truly provide global coverage with an international-based team. When factoring this in, it’s beneficial to have one global team with strong connectivity that works together side by side. That makes all the difference.
When you are reviewing your SLA, make sure that you are cross-referencing it with a list of deliverables or a scope of work that has already been agreed upon.
Your vendor’s credibility is crucial to your success. You have to be able to trust that firm enough to put them in front of one of your clients. Look for service providers who represent your values as well as who have the expertise you need. You could have the smartest engineer or the greatest operations person but if they have poor values, they’re not the best fit for you and your firm. You want a team player and to ensure you have that, you need someone who meshes well with your team.
2. Have They Ever Walked in My Shoes?
As human beings we all relate to people based on what we share in common: our professions, our favorite sports teams, our communities, to name a few. Similarly, it’s important in the financial advisory business to surround yourself with people who know the challenges your firm faces and can relate to them. You want the “Oh, I get it” look and head nod when describing the frustrations of unclean data, or fragmented reports or clunky trades. Integration fails driving you mad? A knowing expression from a vendor is a much better sign of future success than a look of befuddlement. And the best possible outcome is if your vendor can anticipate potential issues you will have down the line because they know what you’re going through.
After all, it’s one thing to be able to create and sell a technology or service, but it’s another to build a custom solution based on tried-and-true past experiences. Having a service provider that truly understands your market and its nuances will help you cut to the chase rather than compelling you to explain every intricacy of your business operations. You and I both know that understanding the differences between RIAs and IBDs and wirehouses and custodians and asset managers and TAMPS is no easy task. How many meetings have you been in, having to smile politely as your counterpart confuses RIAs for IRAs? Ask them what an IAR is and watch their head spin. Just kidding don’t do that, its cruel.
Working with a service provider who has experienced the pain points and headaches that you have, such as delayed reporting or a lack of redundancy (which means their service outage has become your problem), means that these firms intentionally innovate to ensure their clients will not experience what they did when they sat on the other side of the desk.
3. How Much Are They Asking Me to Do Myself?
The do-it-yourself model may be a big craze in home renovations, but many businesses need more support and flexibility than what is offered by traditional, out-of-the-box providers. Would you electrically wire your own home or install the plumbing? Odds are, this would be a bad idea. Trust the experts for that.
There are some things that are just plain unacceptable when it comes to working with a vendor. For instance, having to do manual billing. Or create customized individual report packages. You want a technology operations provider who is just as well known for its service. No one wants to be told the equivalent of “Here’s the manual, good luck.” How is that helpful?
In a previous role, I was working with a team to implement an enterprise middle office system, which only accomplished about half of the functionality that we needed it to. So ensued the awkward “workable workarounds” process necessary to make up for some of the shortfall in functionality.
Many of us have experienced the “Excel spreadsheet Hall of Fame” where there’s a rogue data set that people are basing investment decisions on. That not only increases a firm’s maintenance but exposes them to potential pitfalls. That’s not something that should be tolerated from a vendor. It isn’t asking too much to call upon a firm to do only what you need them to – and that should be the case for technology as well as service. A one-size-fits-all solution rarely serves each customer exactly as they need it, which leads to them creating workarounds in tools like Excel and, ultimately, adding risk to your business.
Vendors need to take a holistic approach; they need to look at what’s working and what isn’t so they can create a more comprehensive solution. As you approach your vendor with more complex situations, such as a global strategy, you don’t want to hear as a response “Thanks, but no thanks, we don’t do that.”
4. Are They Open About Their Shortcomings, and Have They Addressed and Corrected Them?
Many fintech providers have somehow failed during an implementation or integration if they’re being honest about it. Some providers even have a public track record of significant delays and failed implementations that are worth avoiding. The service provider that has not failed is the rare pearl that is worth clutching onto.
After you’ve done this due diligence and found your trusted technology-enabled services provider, it’s beneficial for your firm to use that relationship to the greatest extent possible. When you spot another area of your business that could benefit from a solution, there is no need to do an exhaustive search all over again when one of your current partners can perform that service for you. When you have an established, highly functional relationship, often times you are only tapping into one sliver of what your partner can offer, service-wise. Ask your trusted partners for recommendations, first—I think you’ll be shocked at how much easier they can make your search. If they can offer more and haven’t had the opportunity, they will. If they can’t, they’ll know who can. They would never refer you to another partner if that partner had not proven themselves reliable, and their values should be aligned. Trust is difficult to gain and easily broken. Why take a chance on a new technology-enabled services provider if you don’t have to?
Patrick Murray is president and chief executive officer of STP Investment Services.
