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The Fear of Change: A 3-Part Series for RIAs

As the RIA industry matures, consolidates, grows, and evolves, many of our clients contemplate M&A transactions, changing their technologies or workflows, or they may strive to break away from their current employer to build their own RIA.  We focus our attention on building and improving the operations and efficiencies of these firms, and often write practice management pieces to share our learnings and best practices.  However, we have yet to plunge into the emotions that are often involved in each of the above projects, and what recurring fears we find, regardless of the engagement at hand.  Our aim is to explain the impetus to the following fears, and how to prevent/calm these uncertainties:

  1. Fear of change in human capital
  2. Fear of giving up legacy processes
  3. Fear of the unknown

The Fear of Change, Part 2: The Emotions of New Technology

As RIAs assess their technology and back office infrastructure, they often find that some aspect of their systems and/or processes need updating.  For firms that have been around for over a decade, their technology is often outdated and no longer scalable for the business they’re trying to grow.  They may look to upgrade to tools that help automate certain tasks, such as performance reporting providers that automatically run billing files or create scheduled quarterly client reports rather than requiring an employee to manually prompt the system to create one.  Sometimes firms recreate some of their manual, paper-driven processes electronically, usually within their CRM and developed through various workflows.

When we work with firms looking to make such changes, typically the RIA executives have a vision and a pretty good idea of the system/process they’d like to implement before even hiring us.  When we meet with the team in person, we have the executives explain their vision and then step out of the room so that we are left with the employees of the firm that will be responsible for implementing such changes.  It’s at that point that their frustrations and fears arise as we begin to map out exactly how the new technology will need to be designed.

  1. The fear of change in human capital

As we brainstorm with employees how the new technology will be built out, we often find they are initially quite hesitant in being transparent with us.  They fear that with new and improved technology, the role they once had will cease to exist.  I once sat with a team of five individuals that focused solely on reconciling data pulled from their performance reporting provider.  Their system was outdated, and their job was entirely based in Excel, scrubbing and cleaning data for reports.  With the replacement of that system, all reconciliation would be done within the new system automatically.  A report that would take 8 hours to download from the legacy system would now takes 8 minutes in the new one.  After realizing this, it became pretty clear why they might not be keen in talking to me when it means potentially eliminating their current job function.

We quickly had to pivot our approach and explain that while their responsibilities and titles might be changing, their position with the RIA would remain.  We saw relief pass through them as they relaxed and began talking through how to set up householding new accounts, how to organize fee schedules, etc.  It’s a wonder what a little reassurance does, and how important it is to openly communicate with staff throughout any change in technology to make them feel part of the process and validate their value to the firm.

  1. The fear of giving up legacy processes

Employees have often spent much of their tenure developing processes surrounding their day-to-day activities and routinely work through specific functions based on how they’ve always done things.  When we begin to analyze how a new technology system will affect current and future processes, we again feel resistance against change.  After all, if things have worked well enough, why change the status quo?

Assuming employees have been reassured at this point that their role within the firm is secure, the difficult work of rewiring how people think about their day-to-day begins.  It should be emphasized that the employees have the opportunity to take ownership of the new system(s) and processes and should actively think about how to better their experience in delivering exceptional service to clients.  They should also be reminded that time saved in eliminating manual tasks can be reallocated toward spending more face time with clients, servicing more clients, or delivering new services to clients.

  1. The fear of the unknown

As we discussed in Part 1, employees’ fear of the unknown may be the most familiar emotional response.  How much time will this new system take to plan and implement?  What about the recreation of processes that work just the way they are?  What if the new system ends up being more cumbersome than the legacy system?  While valid, many of these concerns can be addressed just as quickly as they arise.  The executives of the RIA should work closely with the new system’s vendor to develop an implementation plan and timeline that clearly sets expectations for the rollout of the new system and eventual replacement of the legacy tool.

This implementation plan and timeline should include the phases of development of the new system, who from the RIA and vendor will need to be involved, what steps will need to be taken by whom to remain on target, and how each party defines success.  This will enable employees to have a say in what the end goal is and create a deeper sense of ownership in the ultimate outcome.

By reassuring job security, emphasizing that time saved will allow for better client service, and sharing an implementation plan, employees’ fear of change that ignites when introducing new technology should be alleviated.  RIA executives need to work closely with their new vendors and own employees to align the end goal and keep in mind that more efficient processes, while designed with the end client in mind, ultimately are created to reduce duplicative efforts and enhance the daily work of employees.

If you haven’t read Part 1 already, please click here, and look out for Part 3 next week, The Fear of Change, Part 3: The Emotions of Breaking Away.