Tech Survey

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From iPads to Androids to cloud providers, technology evolves oh-so-fast, and FP's annual tech survey reveals that advisor technology usage is changing rapidly too. Before the iPad, it was inconceivable that advisors - who are notoriously slow to adopt new technologies - would gravitate to a new and, to many, a foreign technology. But they have.

In less than two years, nearly 40% of respondents own a tablet. Yet it's taken a bit more than two years for Windows 7 to overtake Windows XP as the leading operating system among advisors.

When Financial Planning conducted its annual tech survey in 2007 - almost 300 advisors participated that year, compared with a record 3,200 this year - the markets were entering what would become the darkest period since the Great Depression. Operationally, the next few years exposed serious deficiencies at many financial firms, leading to the heightened interest in technology.

In FP's survey four years ago, we didn't even ask respondents about their smartphone usage because the industry was essentially devoid of such gadgets (most BlackBerry phones of that era did not qualify as "smart," in our opinion). No surprise, the advisor lacking a smartphone is the rare exception today.

The concept of cloud computing would have drawn a lot of blank stares just a few years ago. There were some web-based applications, but their market share was relatively small. Using CRM as an example, Redtail, perhaps the leading, industry specific, web-based program, was cited by 2% of respondents in FP's survey four years ago. This year, Redtail ranks first and a substantial number of advisors are using other web-based tools.



We noted last year that custodians and broker-dealers have refocused their attention on technology. The change in the attitude of custodians is particularly striking.

From 1991, the year that Schwab launched SchwabLink, its electronic platform for advisors, the main tech focus of custodians was providing access to the back office. Custodians were long hesitant to provide help with selecting, implementing or integrating third-party software, worried about the perception that they were limiting choice.

As 2007 to 2009 made clear, however, scale and investment were necessary to propel advisor technology to the next level. The only players in a position to provide it were custodians and broker-dealers. Both now view technology as a differentiator - a way to attract and retain advisors - as well as a way to help advisors grow their businesses.

Have they succeeded? Custodians are faring quite well.

Schwab leads the pack for the second year running, with 46% of respondents very satisfied with Schwab's technology, and another 40% somewhat satisfied. That's about the same as last year, when 49% were very satisfied and 39% were somewhat satisfied.

Schwab's very unsatisfied rating grew to 8% from 5%. There are a few likely reasons: Schwab's trading platform for advisors was built in 1999. Although there have been incremental improvements, the underlying technology limits what developers can do. Schwab is expected soon to roll out a new platform, which should increase satisfaction. Another issue is the pace of its Intelligent Integration initiative: Advisors have told us they'd like Schwab to move faster.

A bigger issue, and one facing all providers, is that of rising expectations. Advisors eye the changes taking place in the consumer tech market with envy, so it is natural for them to expect more of their tech vendors as well.

TD Ameritrade also posted gains. The very satisfied number rose to 38% from 35% in 2010, and somewhat satisfied advisors totaled 43% vs. 42%. Very unsatisfied advisors totaled 5% vs. 8%. Improvements in TD Ameritrade's technology may be bearing fruit.

Fidelity is making progress, too. While very satisfied clients totaled 26%, unchanged from a year ago, somewhat satisfied clients inched up to 52% from 48%. FP's analysis found Fidelity's numbers have been handicapped by the lack of software partner products offered through the firm's WealthCentral platform. However, Fidelity recently announced a significant expansion of WealthCentral's integration partners and we suspect the firm's showing will improve.

Pershing held steady with 24% of advisors very satisfied and somewhat satisfied advisors at 51% vs. 49%. SSG incurred a drop in very satisfied clients, to 34% from 38%, but a big jump in somewhat satisfied clients to 42% from 33%. Trade PMR also experienced a small drop in very satisfied clients, but also showed a drop in very unsatisfied clients. Somewhat satisfied clients surged to 48% vs. 37%.

Scottrade, a laggard last year, showed strong improvement. Very satisfied advisors rose to 18% vs. 14%. Somewhat satisfied rose to 45% from 33%. Very unsatisfied dropped dramatically: to 11% from 21%. This year, Trust Company of America and National Advisors Trust joined FP's list. TCA did well, with 28% very satisfied and 49% somewhat satisfied. NAT had 12% very satisfied clients, but 54% were somewhat satisfied.

Commonwealth was still the leader on the broker-dealer side. Its 51% very satisfied rating was unchanged, but the somewhat satisfied score rose to 32% from 22%, while the very dissatisfied rating plunged to 6% from 15%. A major technological upgrade helped drive the improvement. Cambridge Investment Research was again a strong second, with 47% very satisfied and 32% somewhat satisfied. Very unsatisfied dropped to less than 8% from 14%.

LPL made gains. Very satisfied held steady at 35%, but somewhat satisfied rose to 43% from 38% and very unsatisfied dropped to less than 9% from 15%. Woodbury, new to the survey, did well with 34% very satisfied and 43% somewhat satisfied.

HD Vest may be in the midst of a turnaround. Although its very satisfied numbers dropped to 17% from 25%, 45% were somewhat satisfied vs. just 30% last year, and the drop in very unsatisfied clients was stunning, to less than 9% from 24%. Ameriprise, which led all contestants with the highest very unsatisfied score last year (26%), showed some improvement to a bit below 22%.

While Ameriprise's very unsatisfied scores fell a bit, competitors were more successful in bringing them down. As a group, broker-dealers made notable progress lowering very unsatisfied numbers.



Tablet adoption, led almost exclusively by the iPad, has been historic. Never have so many advisors deployed a new technology so fast. Last year, only months after its launch, 17% of advisors had iPads. Another 51% said they planned to buy one. They made good on their word.

Overall, 38% of respondents own one or more tablets, and 33% plan to buy one. The vast majority (85%) of tablet owners say they own an iPad; almost as many plan to buy one. Alternatively, 21% of advisors own an Android tablet and another 22% plan to buy one. Just 3% own another brand of tablet and 8% plan to buy another brand.

With this sort of market penetration, iPad apps from software vendors are a must. Client-facing apps are also a must since clients of advisors have purchased iPads in droves, as well. In addition, advisors need to think about staking out real estate on their clients' mobile devices. That means developing their own apps or private-labeling ones provided by vendors.

We predicted last year that tablets other than the iPad might start to take off based on the assumption that Android and others would substantially undercut the iPad. But there's been no broad movement. Perhaps Amazon's Kindle Fire at $199 will be the breakout Android tablet.



Although iPhone and Android topped BlackBerry in user satisfaction last year, BlackBerry still held an edge in users with 1,199, followed by iPhone (899) and Android (531). But the tide has turned. Almost 49% of respondents this year say they use an iPhone, followed by Android phones at 31%. BlackBerry users made up just 25% of respondents. (Some respondents have more than one phone.)

BlackBerry's numbers are a bit higher at firms with more than $3 million in annual revenue. FP's analysis found that's likely because these firms have invested in BlackBerry servers and other equipment that they're reluctant to part with prematurely. Yet 54% of firms with more than $3 million in revenues say they use the iPhone. The Palm system is disappearing, with less than 2% of advisors using it. As for Windows Mobile, less than 3% cited it.

In looking at user-satisfaction atings, BlackBerry's fate comes into focus. Last year, 35% of BlackBerry users were very satisfied; this year, about 19% are. Only 10% were somewhat unsatisfied last year; this year 23% are. Very unsatisfied users grew to 8% from 5%. Android phones held their own: Very satisfied users was about flat at about 49% from last year's 51%, but very unsatisfied dropped to 4% from 8%.

Satisfaction ratings for the iPhone exceeded last year's impressive showing. Three-quarters of users are very satisfied, up from 64%. Another 19% are somewhat satisfied, leaving a very small pool of unsatisfied users.

Among advisors, who tend to be a demanding and critical lot, this is a monumental showing. By comparison, only 25% of Windows Mobile users were very satisfied, and more than 36% were either very or somewhat unsatisfied, suggesting that even if the next version matches Apple's iOS 5 in features, it will be an uphill battle to wean advisors off their iPhones.



Advisors enamored with their iPads and iPhones have altered desktop- and laptop-buying decisions. More than 11% of respondents told us at least one of their computers runs on the Apple operating system. That's more than double last year's total and up nearly fourfold from 2009.

Another significant development: Windows 7 has finally overtaken the antiquated (and decade-old) Windows XP as the most-used operating system by financial planners. Almost 58% of respondents indicated Windows 7 usage.

A bit less than 49% still own a Windows XP computer, but that's down from 66% last year and 87% in 2009. Clearly, advisors are buying new Windows 7 computers but are slow to part with their old XP models. The largest firms, those with more than $3 million in revenue, are the laggards. Windows Vista usage continues to drop, with roughly 10% of advisors using it, down from 14% in 2010 and 21% in 2009.



For the first time, MS Outlook has been dethroned as the leader or co-leader in the CRM category, although that conclusion requires an explanation. The new champion: Redtail CRM from Redtail Technology, the choice of nearly 32% of respondents, up from 23% last year.

Redtail, which charges as little as $65 per month for up to 15 users, has won over the hearts and wallets of budget-minded users. Redtail's commanding lead is even larger among small and midsize firms. Among firms with less than $500,000 in annual revenue, Redtail's share is about 37%. At firms in the $500,000 to $1 million range, the share is 34%. Larger firms are less enthusiastic - Redtail's share among firms with more than $3 million in revenue doesn't break 9%.

As many advisors know, MS Outlook is not CRM software. Unfortunately, many survey respondents have yet to catch on, so MS Outlook came in second at 23%, unchanged from 2010.

Junxure, the third most popular CRM system, came in at nearly 14% vs. about 15% last year. Given the robust nature of the Junxure offering, it seems a given that Junxure's user profile by revenue differs from that of Redtail. Junxure is used by only 6% of advisors among firms with less than $500,000 in revenue, but by nearly 19% of the $500,000 to $1 million segment, 27% of the $1 million to $3 million segment, and 21% of the more than $3 million segment.

Advisors Assistant, in fourth place, moved up to 12% overall share from 8% last year. This package scored significantly higher among respondents with revenue of less than $1 million. The share for ACT! (6%) and ACT4Advisors (1%), an ACT! overlay, continued to deteriorate, as did that of Goldmine (down to 2% from 3% in 2010) and SalesLogix (almost zero from 1%). ProTracker was unchanged at 2%.

Looking ahead, there were indications large firms are moving to cloud-based CRM platforms such as Salesforce and Microsoft CRM. Many custodians, as well as some third-party vendors, have rolled out versions of Salesforce and/or Microsoft Dynamics CRM, or plan to.

In addition, although Saleforce's overall share inched up to 5% from 3%, and Microsoft's score was 4% vs. 3%, the companies did much better among the largest advisors. In the more than $3 million revenue segment, both Salesforce and Microsoft are showing strength, with Salesforce achieving 15% share and Microsoft grabbing 8%. As custodians and others build out their custom versions and their integrations with Salesforce and Microsoft, it's likely these two will enjoy further gains primarily at the expense of older applications like ACT! and Goldmine, as well as some of the smaller providers who may not be able to secure access to custodial platforms.

Going forward, it's likely CRM will bifurcate into a large firm/small firm marketplace. At the high end, Salesforce and Microsoft, in all their various iterations, are likely to gain ground, with Junxure also doing well. At the other end of the spectrum, Redtail and Advisors Assistant are poised to continue their success. And the future is going to be cloudy: With the exception of Junxure, all of these applications offer a cloud version.



Of those respondents using financial planning software, the clear choice is MoneyGuidePro. Its rise to prominence has been impressive.

From a 2009 share of 20%, MoneyGuidePro grew to 26% in 2010 and to 45% this year. MoneyGuidePro scored well in all revenue segments, with at least a 41% share in each category. At nearly 17%, eMoney essentially tied NaviPlan and Profiles, the combined offering from Zywave (formerly EISI). Both MoneyGuidePro and Zywave sell a substantial number of private-label versions, meaning it's likely both are underreported.

A distinct positive for Zywave is that NaviPlan is still doing well with larger firms. In the $1 million to $3 million segment, NaviPlan holds a 10% share. For advisors with more than $3 million in revenue, the share is 13%.

Across all segments, eMoney did well, but was particularly strong in the $500,000 to $3 million segment, with responses ranging from 21% to 23%. MoneyTree lost a bit of ground, falling to nearly 10% from 13%. Financeware, which garnered numerous write-in votes last year, earned a place on the ballot this year. The package logged 2%, but did significantly better in the $1 million or more revenue segment.

Among other providers, SunGard held at 6% and FinanceLogix doubled its share to 2%. FinanceLogix recently won attention for its consumer-facing iPhone app, Retire Logix. The publicity will raise its profile, potentially spurring future gains.

FP's analysis indicates the financial planning software market could be in for changes. Among developments to watch: Zywave is releasing a new version of NaviPlan Select. The company has said it expects strong market response. Advisors also anticipate a major new release from MoneyGuidePro in the first or second quarter.



When Financial Planning's writers and editors reviewed the results of this year's survey, we noted potential anomalies in portfolio management software. This year's winner was Albridge, with 28% of respondents citing this application as their portfolio management application of choice.

FP's analysis concludes that Albridge is a popular, successful provider of consolidated reports and portfolio management reporting to independent broker-dealers and, to a lesser extent, to independent RIAs. It appears that the firm's popularity among advisors has grown since it became affiliated with Pershing.

There is a solid chance its popularity, particularly among those who work with Pershing, will continue to grow. But a tale-of-the-tape comparison between Albridge and Schwab PortfolioCenter, for example, would not be valid.

Albridge's first-place showing is reminiscent of the strong results of Morningstar Office in 2009. In that year's story, we wrote: "We're willing to wager, though, that not everyone who chose Morningstar is using their portfolio management and accounting application." That statement could very well apply to Albridge this year.

The firm offers a number of different services, largely through independent broker-dealer channels. In the typical offering, a broker-dealer offers its reps and RIAs multiple tiers of service. The lowest tier is generally provided at no charge to the rep, or a very nominal charge. This lower tier offers consolidated statements, but it does not offer full portfolio management and accounting. That service usually is available at the highest tier at a substantially higher cost to the rep.

As a result, there's a large population of reps who use Albridge as a provider but do not use their full portfolio management and accounting solution. Larger, more successful reps tend to be the ones who opt for the higher-end Albridge solution. In reviewing the revenue breakdown of the Albridge survey respondents, we find the highest percentage (32%) fall into the under $500,000 segment, while the lowest (13%) fell into the more than $3 million segment.

As for Schwab PortfolioCenter, this pure play in portfolio management and accounting logged nearly 18% share, up from 16%. It's worth noting that PortfolioCenter is used as the foundation of many third-party systems. The revenue breakdown of the typical PortfolioCenter user differs substantially from that of the typical Albridge user in the survey. PortfolioCenter comprises only 12% of the $500,000 and less segment, but nearly 24% of the top bracket. PortfolioCenter is strongest in the $1 million to $3 million revenue segment (29%), leading all firms.

Morningstar Office ranked third among survey participants this year, with a 16% share across all respondents, about flat with last year, but our analysis found that the results more closely reflect the application's penetration as a portfolio management and accounting solution. Morningstar showed the most strength among advisors with less than $1 million in revenues, indicating that it's often competing with Albridge for broker-dealer clients. In interviews with advisors, as well as with Morningstar and the research giant's competitors, it's clear the firm's footprint in the portfolio management and accounting space has grown substantially over the last several years.

The results for eMoney in portfolio management strengthen the case that advisors are confused about portfolio management and reporting software. This firm was listed as a portfolio management choice, placing fourth in the survey, even though eMoney does not offer portfolio management and reporting software. It does offer consolidated statements (account aggregation), and eMoney partners with firms such as Albridge to provide performance management and reporting solutions to clients.

There were more changes in this category. Advisors Assistant debuted at 6%, with particular strength in the less than $500,000 revenue segment. Tamarac jumped to nearly 5% from 3%, with particular strength in the more than $1 million revenue segment. Envestnet, another company that's new to the survey, logged 5%. Orion soared nearly fivefold to 5%, with notable strength in the $1 million to $3 million revenue segment. BlackDiamond (now part of Advent) improved to nearly 4% from 3%.

Advent results were split into AXYS and APX users. Advent logged an overall 8% share last year, which was flat with this year (AXYS at 5% and APX at 2%). Diving into the numbers a bit, it's clear Advent appeals to larger firms. In the more than $3 billion revenue space, APX has 4% share, AXYS has 13% and Black Diamond has 5%, close to PortfolioCenter. Our analysis found Advent needs to appeal to a broader audience in order to regain its former prominence in the RIA space. Advisors are wondering if the Black Diamond acquisition will give Advent the platform to do so.

The portfolio management and accounting space is likely to remain dynamic over the next few years. As the major custodians choose or expand their list of preferred integration partners, the fortunes of some firms are sure to rise.



The past several years, FP has bemoaned many advisors' lack of appreciation for document management software. Nearly 42% of respondents told us this year they only use Adobe Acrobat as their document management solution - the highest number of Acrobat-only responses ever and a whopping 74% increase over last year's 24%. Nonetheless, Adobe Acrobat is not document management software, nor is PaperPort, which logged 9%. Add that to the "other" answers, most of which were not document management solutions, and readers can infer that about 70% of advisors do not use true document management software.

This lack of penetration in the document management space poses an opportunity and challenge for document management vendors. Clearly, these firms have done a poor job explaining the benefits of their products to their prospects.

But some firms stand out. Widely regarded Laserfiche invests a considerable effort trying to educate advisors, appearing at conferences, sponsoring research papers supporting financial services organizations. Trumpet, a consulting firm and Worldox reseller, also offers heavy client education, as does Fujitsu, the premier manufacturer of workgroup scanners.

Who is having success selling document management solutions to advisors? Redtail, which offers a low-cost, cloud-based solution, led the field with 19% share. As one would expect of a low-cost provider, Redtail was strongest (23%) in the $500,000 and less revenue segment and much weaker (6%) among firms with $3 million or more in revenue. Laserfiche was No. 2 at 10%, up from 6%. Its strength was firms with revenues between $500,000 and $3 million.

After PaperPort came DocuPace, at 6%, up from 4%. Their sweet spot is the $1 million to $3 million advisor, where they captured 9%. NetDocuments, another cloud-based solution, is winning over advisors, jumping to 3% from 1%. Worldox and Pershing/iNautix also showed modest gains.

FP's analysis shows some advisors are still a bit clueless with regard to document management software. Studies have shown the return on investment can be substantial.

One example: The average employee who walks to a file cabinet to retrieve a document wastes about 10 minutes retrieving it before returning to their previous task, an informal study by Technology Tools for Today indicated. If that person stops to chat with a colleague, the time lost is closer to 20 minutes. Multiply all that time by all your employees times the number of working days in a year, and you can begin to see the time savings.

Document management software also allows firms to control document access, as well as what they can do with it (view, edit, copy, print, forward, etc.). From a compliance and security standpoint, many view document management software as essential.



Macro risk is a new software category. In the advisor space, the discussion of portfolio risk has been largely one dimensional: It is primarily in terms of standard deviation. For years, however, institutions have used sophisticated macro risk tools to analyze how such factors can potentially impact a portfolio.

Until recently, these tools were cost prohibitive, but two firms, MacroRisk Analytics and Hidden Levers, now offer these tools at lower prices. Only about 4% of respondents answered this question, but among those who did, Hidden Levers (21%) and Macro-Risk Analytics (20%) finished in a dead heat. FP's research indicates that these tools will grow in popularity as more advisors learn about their capabilities and benefits.



Pershing affiliates seemed to vote en bloc for NetX360, which built on last year's lead, jumping to 43% from 21% last year. Morningstar was second at 21%, up from 14%, and eMoney was third at 20%.

Fidelity WealthCentral, in its second year, jumped to 10% from 3%, and Tamarac Advisor jumped to 7% from 2%. In the $3 billion-plus revenue segment, both Tamarac (21%) and Fidelity (15%) showed strength, narrowing the gap with NetX360 (32%) among these large advisors.



After years as an emerging technology, rebalancing software is showing traction. Tamarac, last year's leader at 6%, soared to 21%, leading No. 2 contender Envestnet at 12%. Usage of ASI's tool provided through Schwab and TD Ameritrade more than doubled to 9%.

Both Total Rebalance Expert and iRebal jumped to 4% from 1%. RedBlack, Trade Warrior and Northfield (through Fidelity) all showed improvements, although their shares remain small. Clearly, the volatile nature of the markets, combined with the overwhelming value proposition of rebalancing software, is starting to win over advisors.



Usability remains an ongoing issue. The number of respondents who found software very easy to learn grew slightly to 10% from 8%, but the number of advisors who find software somewhat difficult (38%) or very difficult (3%) was essentially unchanged and still notably high.

Some advisors make tech purchases that are questionable, while others fail to make purchases that can clearly benefit them and their firms. When examining the data surrounding the business side of technology, you begin to understand what causes this.

No fewer than 82% of advisors are without a technology plan, a finding that has been constant over the years. Nearly half of respondents told us they have no schedule for reviewing their firms' tech needs, while another 2% confessed they never do. This means half of all respondents are not keeping up to date with the available tools - bad news for their clients, good news for their competitors.

Advisors do, however, seem to be aware of their weaknesses. When we asked what was the single biggest challenge they'd like technology to solve for them, the No. 1 answer (40%) was workflow, followed by time management (20%) and client communications (18%). That correlates well with the responses to the question on high return on technology investments, with CRM (45%) the clear winner. Since most advisory firms rely primarily on CRM to solve workflow, time management and, to some extent, client communication issues, it seems logical that advisors would perceive the ROI in a successful CRM implementation.

For the second year in a row, financial planning software came in second as an ROI investment. As an advisor, if your client relationship depends entirely on investment performance, your relationship will only be as good as that performance. However, if value is built around holistic financial planning, a client relationship is much more likely to be an enduring one.

As noted, custodians are taking a much more active role in third-party selection and integration for their advisors. The effects of this shift are just beginning to be felt.

It's likely a lack of custodial integration partners will put some providers of CRM, financial planning software, portfolio management software, document management software and rebalancing software at a disadvantage. This disadvantage may be profound for smaller providers that lack a loyal following.

What it will mean for potential new entrants remains to be seen, but it's likely those with innovative technologies will gain acceptance while the window of opportunity for them to reach critical mass might narrow.

FP's analysis shows that some markets, such as document management, may benefit from the trend toward custodial integration. As major custodians select their document integration partners and publicize their value, the 70% of advisors who lack a system may finally become enlightened as to the benefits, particularly ones that allow for straight-through processing of new account applications, transfers and other service requests, particularly if those solutions embrace e-signatures. The imminent entry of XTRAC solutions should further spur awareness and competition in the sector.

FP notes the work custodians are doing with third-party integrations, but TD Ameritrade deserves special recognition for delivering the applications most popular with our readers. The firm offers integration with the survey's leading CRM system, Redtail, and leading financial planning software, MoneyGuidePro.

Very soon, TD Ameritrade will also offer integration with Morningstar Office, the most popular portfolio management application available to them. Sources say the survey's leading rebalancing software, Tamarac, to be added as soon as TD Ameritrade's trading interface is ready to go.

This year's results demonstrate advisor technology is moving forward at an impressive rate. Advisors are embracing new technologies like the iPad, they are transitioning to the cloud. They are buying better smartphones and putting them to good business use. They are recognizing the value of CRM software and financial planning software, as well as newer applications like rebalancing software and macro risk analytics software. If these trends continue, 2012 will bring improvements in both advisor productivity and client service.


Joel Bruckenstein, a Financial Planning contributing writer, is a co-creator of the Technology Tools for Today newsletter and conference series, and president of Global Financial Advisors in Miramar, Fla.


Survey Methodology

Nearly 3,200 advisors participated in our survey, which was conducted from late September to early November. The margin of error is about +/- 2%.

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