As new technology emerges, vendor relationships are becoming more fleeting

Shortening Vendor Relationships in Wealth Management: The Impact of Rapidly Advancing Technology

In today’s fast-paced world, technology is advancing at an unprecedented rate, and vendor relationships are feeling the impact. Just as consumers quickly upgrade to the latest phone models, wealth management firms are seeking shorter vendor contracts to keep up with the ever-evolving landscape of technology.

Joe McQuaid, managing director at Concurrent, emphasizes the importance of negotiating shorter contract terms, stating that three years is too long given the rapid pace of technological advancements. John Mackowiak, chief revenue officer at Advyzon, echoes this sentiment, highlighting the absurdity of five to seven-year proposals in an industry where technology changes so rapidly.

The fear of being stuck with outdated technology or a different vendor than initially chosen is a driving force behind the trend of shorter contracts. With new technology providers being acquired by larger organizations, there is a risk of being locked into a contract with a vendor that no longer aligns with the firm’s needs.

Despite the push for shorter contracts, Natalie Wolfsen, CEO of Orion Advisor Solutions, acknowledges that some relationships should not be changed annually, especially when complex integrations are involved. She emphasizes the importance of technology providers adding enough value to warrant a longer-term relationship.

Maintaining a long-term relationship while keeping up with technological advancements is a delicate balance. Firms like Envestnet have managed to partner with companies like Fidelity Investments for decades by continuously evolving their platforms to meet the changing needs of their clients.

Adrian Johnstone, CEO of Practifi, emphasizes the importance of choosing a partner, not just a provider, when entering into a vendor relationship. By selecting technology that will suit the business’s needs in the long term, firms can avoid the hassle of constantly switching vendors and implementing new systems.

In a world where technology is constantly evolving, the key to successful vendor relationships lies in flexibility, adaptability, and a commitment to staying ahead of the curve. By prioritizing shorter contracts, firms can ensure they are always equipped with the latest tools and technologies to serve their clients effectively.

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