It’s an age-old question: buy or build? For financial firms choosing between buying vendor software or building a system in-house for their wealth management technology, the choice can determine future growth opportunities, available resources and workflows.

Let’s look at a strategic framework to help you decide when it makes sense to build technology — and when buying is the better strategic choice.

When building is the right choice
Building a completely custom platform can be a solid choice for some firms, but it isn’t the best solution for every situation. Here are three times when building is the right decision:

1. Custom IP. Building in-house allows firms to connect the system to their specific IP addresses. That makes it easier to share data and stay connected within the firm. Building a custom IP gives firms total control over their data, which can help keep information more secure and unique.
2. Competitive differentiation. Financial services is a competitive space, and firms may want to use their technology to create a competitive advantage. Building in-house allows firms to create a totally customized product and innovate with features and options that no other firm has. Those unique qualities can make the difference when attracting new clients.
3. Specialized tools. A firm may need digital tools that don’t come standard on most vendor products. It could be because of the type of products and accounts offered, the niche clientele or internal workflows. If your firm needs specialized tools to work effectively, it’s often easier to build them yourself than to try to explain to a vendor or tweak an existing tool.

When buying is the right choice
Buying often gets a bad reputation for being too expensive or cookie-cutter. But there’s a reason vendors include popular features in their products: they work! Buying can be a solid option for a firm that wants to adopt new technology immediately. Here are three situations when buying is the better option:

1. Back-office automation. Automation is huge for firms that want to do more with less. It also helps streamline workflows, allowing advisors and employees to spend more time with clients. However, building automation is complex, and automation options continue to evolve as technology advances. Firms that prioritize back-office automation can benefit from buying an established platform with built-in automation options.
2. Compliance. Compliance is crucial for all firms and should be central to processes. Buying a platform designed for financial firms with strong compliance features helps firms know they have the right tools to stay compliant. Buying a system that prioritizes compliance can be a good option for firms that need to improve compliance efforts or firms that don’t have well-established compliance processes.
3. Onboarding. Adopting new technology can be challenging, especially when it interrupts existing systems. Onboarding a vendor product usually comes with resources from the vendor, such as learning modules, individual coaching and on-site training. To get teams up and running with the technology faster, it can be helpful to buy.

Buy and build: flexible options
Perhaps the ideal financial services technology strategy provides the best of both worlds: layer custom features on vendor platforms for ultimate flexibility. This option provides firms with the freedom to build specialized tools and features, establishing a competitive advantage without the time-consuming task of building a platform from scratch and worrying about compliance and onboarding.

Instead of having to reinvent the wheel or build every platform and function from scratch, firms can collaborate with vendors to get more flexible results.

Those partnerships can happen between wealth management firms and vendor development teams. The firms bring an expert understanding of their workflows and clients, and the vendor brings expertise in technology and the best features to help the firm reach its goals. Instead of working in isolation to build a platform in-house, firms can partner with established vendors to leverage their knowledge and resources.

When you’re ready for new software, turn to Docupace for a full-service, integrated platform. Click here to download our Buy vs. Build guide to get the full decision-making framework for smarter tech investments.

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