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How do US advisor firms use technology, what are the latest trends? - Ian McKenna at T3, Orange County

Ian McKenna



This week's Technology Tools for Today conference in Orange County California got off to a great start yesterday afternoon with outstanding presentations from conference host and all round US advisor tech guru Joel Bruckenstein and Investment News associate publisher Mark Bruno each presenting key findings from recent research on the use of technology by American advisors.

Bruno kicked off the session with a summary of key findings from the Investment News 2017 advisor technology survey. This is the latest iteration of the biannual study which the company has been conducting since 2011 giving them the ability to provide useful comparisons with previous years, indicate trends, and areas of growth or decline.

Nearly 300 firms responded to what is an exhaustive questionnaire taking nearly an hour to complete. It even goes into the firm's financials so gives a good indication of what successful firms are doing. Typically respondents benefit from higher than average revenues and margins.

Overall the report identifies that whilst advisor technology spending continues to increase it may be beginning to level out or perhaps reaching a point of maturity.

Whilst the amount advisors spent year on year on software has significantly increased, hardware spending has hardly altered over the last few years. There is however an increased willingness for advisors to pay for external third-party support to successfully implement technology.

I find this a stark contrast to the UK perhaps indicating why US advisors are more advanced in their IT adoption. The main growth areas Identified in the latest study are compliance and document management services, this is understandable against the background of the US Department of Labour Fiduciary which was due to take effect from April, although there are indications that the Trump administration may push this back.

Similar to the pre-RDR mood in the UK most US advisors are resistant to the change however it’s notable that many more forward thinking independent RIA see the higher professional standards as an opportunity to differentiate themselves to clients. Generally these firms have seen their role as acting in the client's interest so the proposed changes are seen by many as less of a challenge.

For the first time the latest study includes the use of risk management tools which just over a third of firms surveyed are now using. Although current regulatory requirements in the US are nowhere near as stringent as the FCA Suitability requirements, it’s clear there is an increasing focus on risk profilIng with some very impressive solutions being demonstrated by some suppliers at T3.

The main driver for firms making IT investment is identified as catalysing new and emerging technologies. A strong focus on workflow is recognised which may also be influenced by the move towards higher regulatory obligations.

When assessing their investment a firm’s most important measure is seen as the extent to which systems free up professionals time to focus on other activities.

78% of the firms surveyed have now deployed client portals and 60% of their clients typically visit these services once or more per month. This is a powerful indicator of the appetite amongst consumers for personalised online financial information.

Advisors see the main two benefits of client portals as providing portfolio performance reporting and account aggregation, which allows the reporting of assets not managed by their firms.

No fewer than 83% of those surveyed to use video conferencing software to communicate internally or with clients on a regular basis.

Although still limited 7% of these advice firms now offer Robo advice type services with a further 19% planning to roll them out in the next 6 to 12 months. The primary motivation for such development, cited by 70% of firms is a desire to attract new types of customers with the implication being that these would be lower value accounts who would be uneconomic for full-service traditional advice.

The sources firms are turning to in order to offer Robo technology are fairly evenly split, third-party software suppliers (32%) are most popular. Broker-dealers and custodians or both are the source for 24% of firms with 18% seeking to build in- house. This seems a high figure given creating technology is unlikely to be a specialist skill for most firms. Only 2% of advisors will source their Robo solution from asset managers demonstrating the increasing risk that asset firms will be locked out of the digital future.

Joel Bruckenstein’s presentation of research he had conducted began by highlighting the stark risks around data, particularly that the client is the weakest link. Only 11% of consumers were identified as “very aware” of the risks associated with data security.

Chillingly Bruckenstein pointed out that only 2.9% of advice firms believe they have suffered a successful security attack in the last year; some cyber experts believe 100% of firms will have been victims of successful attacks. There is a stark contrast here with the UK. At least in America these issues are being actively discussed by advisors, in the UK such conversations are virtually non-existent.

It must only be a matter of time before the FCA acts to enforce data security standards on firms. I hope our industry can start addressing such issues urgently otherwise the consequences for firms could be grave.

On a positive note it was identified that technology decisions are increasingly being taken by younger people within advice firms, a trend seen as encouraging as these will be technology natives with greater understanding of the potential of such investment.

Financial planning software is clearly seen as the technology that delivers the greatest return on investment for advisors. Just over 20% of firms identified this as the most profitable technology investment, increasing to nearly 25% for independent RIAs. CRM systems are the next most popular for delivering a positive return. A residual 12½% of firms are still not using CRM.

The survey also asked the percentage of firms about clients who are  40 or younger. In nearly 2/3 of firms this is less than 25%. Joel Bruckenstein warned that firms who are not growing their younger customers are in fact dying.

The two presentations provided a great backdrop for the coming days' demonstrations, lessons and key points from which will appear on this site soon.


You can follow Joel on Twitter @FinTechie and Mark @brunz99


The Investment News Adviser Technology study can be ordered from:



A link to Joel Bruckenstein’s research will appear here soon so please check back.


I’m at T3 until Friday evening looking for subjects for Money Marketing, Corporate Advisor and of course DigitalWealthInsights.com.  If you are a Technology Supplier  with a great story to tell, an advisor with a view on technology or you want to learn more about how the Digital Wealth and Adviser Software markets are evolving in the UK feel free to message me via the T3 app or LinkedIn



You can follow me on Twitter @ianmckennaftrc



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