If your roof is leaking and your kitchen is showing its age, both may need work. But only one of them is going to ruin your week. Your firm’s IT budget can put you in the same position. There’s plenty worth spending money on, but deciding what comes first isn’t always obvious.
A few advisors’ laptops are getting older but still work. Your email and text archiving contract is up for renewal. There’s a security improvement your CCO has flagged ahead of your next annual compliance review. And the operations team has been asking to replace a system that slows them down every day.
There’s a reason to consider every one of those expenses. That doesn’t mean they all need funding at the same time.
The real work of IT budgeting is deciding what deserves attention now, what you should prepare for next and what can reasonably wait. Here are three questions that can help your firm sort that list.
1. What happens if we wait?
Start with the consequence of waiting.
An older laptop may be slower than it used to be, but if it’s reliable, encrypted and still receiving security updates, replacing it might not be the priority. A gap that puts client nonpublic personal information (NPI) at risk is a different decision. So is a device running an operating system that no longer gets security patches, or a system that regularly goes down and keeps advisors from serving clients.
The difference is what each problem means for the firm. Before approving an expense, consider what another three or six months would look like. Would advisors or staff lose time? Could the firm face more downtime, a finding in an SEC exam or unnecessary risk to client data? Could a relatively manageable issue become more expensive to deal with later?
For RIAs, that last question carries extra weight. Regulation S-P requires written policies and procedures to safeguard customer information, and a known gap that sits unaddressed is harder to defend than one with a plan and a date attached.
The priority should reflect what waiting could cost your firm and your clients, not simply how long an item has been on the list.
2. What do we already know is coming?
Many technology costs are predictable well before the bill arrives. Say your firm uses Microsoft 365 and plans to bring on two new advisors and a client service associate later in the year. Those hires will need accounts, licenses, a firm-managed device and coverage under your communications archiving. You may not be paying for them yet, but you already know the expense is coming.
The same goes for archiving and compliance software renewals, CRM and portfolio management contracts, hardware warranties and other costs with a date attached. Your annual compliance review and any planned penetration test or risk assessment belong on that calendar too.
That might mean setting aside money for a renewal, spreading purchases across different quarters or delaying a less important project.
3. What’s changing at the firm?
What your firm plans to do next can change what it needs from IT. Take a firm preparing to open a second office. Along with the space itself come questions about internet and Wi-Fi, equipment, secure access to firm systems and client data, and how the new office will be supported day to day.
Leave those until opening week, and you have less time to compare options, solve problems and plan for the costs.
The same is true for adding advisors, acquiring another practice or book of business, shifting to remote or hybrid work, or launching new services. Each can bring technology and data-protection needs, such as migrating client records or vetting new service providers, that may not surface until the work is already underway. Before deciding what gets funded and what can wait, make sure the IT budget reflects what the firm is planning for the year ahead.
Know what needs to come first
The roof and the kitchen may both need attention. The difference is knowing which one can wait.
The same thinking belongs in your firm’s IT budget. Some expenses address problems that could disrupt client service, put client data at risk or become more costly over time. Others prepare you for changes you already know are coming. And some can stay on the list for another quarter without creating a bigger problem.
You shouldn’t have to treat every IT expense like an emergency.
CyberSecureRIA can help you review what’s on your list, understand the impact on your firm and your compliance obligations, and prioritize your spending, including telling you what can wait.
Schedule a 45-minute discovery call and we’ll help you get a clearer picture of what should come first, what’s coming next and what can wait. Call us at 865-622-9304 or visit our website.
