How Woodmont Investment Counsel Modernized Its Tech Stack

• Today’s clients are more discerning and they recognize there’s value beyond returns.
• Fragmented software can weigh down your firm through redundant work and operating gaps.
• Firmwide tech integration is painful — but imperative to efficiency, scaling, and client success.

In this exclusive series, we ask top RIAs from around the country to share their biggest challenges and successes from the past few years. You’ll learn how they’re overcoming the unique issues facing our industry today and glean insights that may be helpful in your own practice.

This article features Woodmont Investment Counsel’s Stephen Frohsin, who shares how they cater to evolving client profiles and what he learned from his firm’s technological overhaul.

How do you see the wealth management industry evolving in the coming years?

We expect the wealth management industry to evolve at an even faster rate.

Clients are savvier now — they understand fees, tax sensitivity, planning, and, perhaps most impactfully, they understand there are a sizable number of firms and resources available to them. Years ago, investors didn’t have this level of access and insight.

In the same vein, clients understand there are ample index products and product providers. If they’re just solving for an investment situation, it’s much easier to do. While I’m not fond of the term, investment returns are being somewhat “commoditized” in this regard. If people can use a low-cost index strategy, why would they pay a fee when these investment products exist in the marketplace for next to nothing?

That said, clients are also recognizing that their needs extend beyond performance. They want a holistic relationship with advisors and their teams, which is why we’re seeing more firms assemble multifaceted teams with broader capabilities and capacity. Plus, most firms now choose to lead with financial planning because you can’t build a house without a blueprint.

It’s incumbent that firms offer detailed, hyper-customized financial plans, including balance sheets, cash flow analysis, tax planning, charitable giving planning, Medicare planning, Social Security planning, and so on. Clients are looking for, in effect, a team-based approach of experienced professionals with diverse skill sets.

If investment returns have been commoditized, what elements of the investment management process can be differentiated?

If you took a sample of a broad cross-section of index investors and shared a scatterplot of returns at the end of one, two, or three years, the dispersion should be fairly tight. So the question then is, why is somebody going to hire you? And what benefits are you providing that people can't get on their own?

The answer was true decades ago and it's true today. All of these products exist, but that does not guarantee a successful outcome, even if you have the greatest selection of investment products or the best asset allocation on earth.

As advisors, our greatest value to clients comes from crafting a plan and, most importantly, keeping clients committed to that plan, especially during periods of extremes. Otherwise, people will make emotional decisions if left to their own devices. In my 27-year career, I’ve rarely seen an emotional investment decision produce a desirable outcome.

How have you embraced new technology and what role does it play in your practice?

Like most RIAs, we have assessed our technology needs and worked hard to build an efficient tech stack. Whether it’s using the appropriate hardware for remote and office needs, retaining a best-in-class third-party IT firm to assist with software integration and cybersecurity, or identifying software partners for portfolio management, trading, client reporting, financial planning, tax planning, or CRM (customer relationship management) software, RIAs often live or die based upon the successful integration of critical IT services and software.

An increasing number of clients have grown up with modern technology and expect their advisors to offer and communicate using modern standards. Successfully integrating technology is critical to our future success.

When did you see this decision about your firm's tech stack start to gain momentum? Was there a specific pain point or catalyst?

I’m reminded of Hemingway’s quote about going bankrupt: it happened “gradually, then suddenly.” At first, we were using fragmented solutions — everything was bolted on, and nothing spoke to each other. We had a CRM tool that didn’t speak to portfolio management, which didn’t speak to client reporting, which didn’t speak to trading, and so on. Not to mention our planning department had its own assortment of disparate software for cash flow, net worth statements, tax planning, estate planning, etc.

To scale, we had to figure out how to become more efficient. It’s impossible otherwise. You need thoughtful, holistic systems from prospecting and onboarding to reporting and financial planning. Even if you’re not looking to grow your business, efficiency is imperative to providing clients with the best experience and outcomes.

So, we began to explore how to integrate different pieces of software for both our sanity (managing the business) and our clients. We eventually hired our Chief Operating Officer, and then, in 2023, we re-underwrote every aspect of our firm and its operations.

We adopted, integrated, or hired new systems and specialists, including:

• Customized CRM platform
• Server
• Cloud-based file sharing
• VoIP phones
• HR payroll
• Bookkeepers
• Insurance
• CPA
• Banking relationship
• Accounting software
• Credit cards
• Expense tracking
• 401(k) and HSA provider
• Tax planning software
• Data gathering software

Using an analogy, I liken it to a race car in the garage: we were tinkering and building this race car, optimizing it for performance so that we could eventually take it on the track and accelerate the firm’s growth. But we couldn't grow until we addressed these road bumps. We weren't well equipped and couldn’t handle much growth because we were constrained by our systems, the software, and the inefficiencies of our business.

What tech or tools would you say have made the biggest impact at your firm?

CRM, hands down. It’s just an enormous lift, particularly because we wanted to preserve historical client performance data and didn’t want to penalize clients for our decision to switch systems. The consequence, though, was migrating an enormous amount of data onto the new platform.

It was a long, painful process. However, the finished product is life-changing. A great CRM is critical to operations, relationship management, document management, financial planning, estate planning — you name it. When there’s interconnectivity between your teams and systems, you can finally let the race car do its thing.

And considering how fast the industry is evolving, that will be crucial.

Stephen Frohsin’s Tips for Successful Tech Integration

• Gain executive buy-in before you transition systems. When exploring new technology, the senior team must be on the same page and committed to the process, which could be time-intensive and disruptive.
• Find the right technology for you. No two firms are the same. Don’t settle for the first vendor you speak with — identify your firm’s pain points and needs before you make any decisions. To catch possible blind spots, consider asking clients for feedback, too.
• Don't just listen to the salespeople at the software company. Talk to other firms who have lived through the migration so that you can glean best practices and learn what to do or what not to do.
• Prioritize ongoing training and support. People and processes can always improve. Plus, software updates are inevitable.
• Leverage CRM segmentation features. At Woodmont, we also segment clients by “lift,” either low, medium, or heavy. Some clients are content with a relatively limited amount of communication, while others have much higher expectations in terms of planning and communication.
• Align specialties to streamline tasks. Instead of having one person handle scores of responsibilities, we aligned tasks with personnel. For instance, moving money — transfers, wires, recurring distributions, and any other related actions fall under one person’s purview.

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