Executive Summary
New RIAs are told to build the full stack early. A CRM, a financial planning tool, a portfolio management and rebalancing platform, a client portal, a compliance archiving tool, maybe a risk questionnaire on top. The advice comes from custodians, from vendor reps, from every “tech stack for new advisors” webinar on the circuit, and the logic sounds right. Bigger firms run more software, so a firm that wants to look bigger should run more software too.
What the 2026 T3/Inside Information Software Survey actually found is a stack that has grown past almost anyone’s ability to track it, more than 800 different programs across roughly 70 categories, reported by 2,906 firms. A firm buying its way into that sprawl in year one isn’t building capability. Most of the time it’s paying full price for overlap it will spend the next three years discovering.
Dana runs a firm outside Fort Worth, three years old, forty some households, no staff besides herself and a part time bookkeeper. When she launched, her custodian rep walked her through a recommended stack, a CRM built for teams of ten, a planning tool with a modeling suite she’d never touched, a portfolio management platform billed per account with a minimum that assumed she already had triple her book. She signed up for all of it in her first ninety days, because that’s what the checklist said a real firm runs.
Eighteen months later she pulled her card statements and found she was paying for two separate tools that both stored client documents, one she’d set up on day one and one that came bundled free with her custodian relationship and that nobody had told her to cancel the first for.
The Full Stack Advice Was Written For A Different Firm
The full stack recommendation isn’t wrong. It’s aimed at a firm with an ops person, a junior advisor, and enough accounts that a $400 a month CRM add-on is a rounding error against revenue. Most new RIAs are not that firm.
Of the 12,593 RIA firms in our own database that report a regulatory assets figure, 11,964 of them, 95.0%, manage under $100 million. That’s nearly the entire population of firms this advice is supposedly written for, running at a scale where a software budget built for a ten person shop doesn’t compress down cleanly, it just costs the same dollar amount against a fifth of the revenue.
The 2026 Investment Management Compliance Testing Survey, which polled 411 advisory firms, found compliance technology budgets split about evenly between firms spending under $100,000 a year and firms spending over $2 million. That gap describes two different businesses reported in the same survey, and a three person RIA copying the stack of the firm at the other end of that range is buying tools sized for a budget it doesn’t have.
What Eight Hundred Programs Across Seventy Categories Actually Means
Seventy categories doesn’t mean seventy jobs a firm has to do. Client relationship management, financial planning, portfolio construction, rebalancing, performance reporting, document storage, e-signature, cybersecurity, billing. Most firms need something in eight or nine of those categories to function. The other sixty exist because the software industry serving RIAs has kept splitting single jobs into narrower and narrower tools, each one another line on a statement.
The overlap shows up quietest in document storage and client communication, because almost every category leader now includes a version of both as a bundled feature. A CRM stores documents. A planning tool stores documents. A custodian portal stores documents. A firm that bought a dedicated document management tool in year one, back when nobody had told her the CRM already did it, is paying twice for the same shelf.
It shows up loudest in cybersecurity, where firms are least willing to cut corners and vendors know it. Roughly 22% of surveyed firms use a dedicated cybersecurity vendor on top of whatever protection is already built into their CRM, custodian platform, and email provider, and almost nobody at a three person firm has mapped which of those three is actually doing the work.
Small Firms Carry The Same Sprawl With None Of The Scale
A billion dollar RIA absorbs this differently. Cerulli’s research found 61% of billion-dollar RIAs have initiated or completed a data project as part of formal strategic planning, with a dedicated person often owning the decision of which systems talk to each other and which get retired. That firm treats a redundant license as a $6,000 line item to fix next quarter.
Dana treats the same discovery as a Tuesday afternoon she doesn’t have, because she is also the compliance officer, the marketing department, and the person answering the phone when a client calls about a required minimum distribution. The sprawl costs the same dollar figure whether the firm has one advisor or twenty. It costs a very different share of what the firm has to spend.
The industry is still growing fast enough that this gets easy to ignore. Schwab’s 2024 RIA Benchmarking Study, covered by Financial Advisor magazine, found firm assets grew 16.6% and revenue grew 17.6% that year, with 78% of firms reporting they hired someone. A firm riding growth like that doesn’t feel the software waste in the same quarter it happens. It shows up two years later as a firm that’s bigger and somehow no more profitable than it was.
Schwab’s most recent RIA benchmarking coverage found 68% of RIAs now use some form of artificial intelligence to improve efficiency, mostly for administrative support, marketing content, and client correspondence. That’s a real productivity gain for a firm that adds it deliberately to close a specific gap. It’s a different thing entirely when a firm adds an AI tool because a vendor pitched it during onboarding and it seemed like the kind of thing a modern firm should have.
The Three Places Software Spend Actually Hides
Three patterns account for most of the waste we see when a new firm actually lines up its software statements next to what the team uses.
The first is the bundled duplicate, a feature that came free inside a platform the firm already pays for, sitting unused next to a standalone tool doing the identical job. Document storage and e-signature are the most common pair.
The second is the scale mismatch, a tool priced and built for a ten advisor firm, sold to a one advisor firm on the promise that it’ll grow into the extra capacity. Most firms don’t grow into it inside the contract term. They renew it anyway, because canceling and re-evaluating takes longer than paying the invoice.
The third is the orphaned seat, a login nobody has opened in six months because the person who set it up left, or the workflow it supported got replaced by something else, and the subscription just kept renewing because nobody owns the job of watching for that. WealthManagement.com’s reporting on firms that trimmed their stacks describes the same pattern from the other side, firms layering new systems on top of old ones instead of retiring anything, until nobody on staff can say what half the subscriptions are actually for.
The Three Question Audit Every New Firm Skips
None of this requires a consultant or a formal technology review. It requires answering three questions about every tool on the statement, in order.
- What does this do that something else in the stack already does. Answer it by opening both tools side by side, not by remembering what the sales call said each one was for.
- Who logged in this month. Most platforms show this on an admin screen. If the answer is nobody, the question isn’t whether to cancel, it’s why it took this long to look.
- What was this priced for. A tool built for a ten person team and sold to a firm of one should get renegotiated or replaced, not renewed on autopilot because it’s already there.
Dana ran this against her own statements and found four months where she’d paid two document storage vendors and one CRM add-on nobody on her two person team had opened since setup. She canceled two of the three and kept the one her bookkeeper actually used.
What To Do Before You Add Another Tool
The instinct when a firm feels behind is to add something. A new AI notetaker, a nicer client portal, a dashboard that promises to finally connect everything. Sometimes that’s the right move. Most of the time the firm hasn’t finished auditing what it already owns, and the new tool becomes category 71.
Run the three question audit before the next renewal, not after. A tool that survives all three questions is worth what it costs. A tool that doesn’t isn’t a hard call, it’s a quiet drain that compounds every month it sits there unexamined.
AI adoption and the wider technology stack are part of the same picture. We write about the rest of it on our advisor resources page, including where AI actually fits for a firm this size, and how the same kind of line-by-line audit applies to every other expense category in our piece on what RIAs are overpaying for.
Our goal is to help firms spend on technology that earns its place instead of the stack a vendor recommended in a first meeting.
Grab twenty minutes and go through your own statements with us:
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