LAS VEGAS — At what point does an abundance become too much?
Advisors now have a wide array of options for financial planning software, risk management and analytics platforms, asset allocation, rebalancing, digital marketing, CRM and cybersecurity tools — and it is leading to fatigue, technology executives acknowledge.
“It’s almost too much choice,” says John Connor, vice president, Schwab Advisor Services Technology Solutions. “RIAs are getting a lot of attention that they’ve never had before and advisors are in their offices saying, ‘I don’t know what to do, I need someone to help me with all these choices.’ Ten years ago we didn’t have that. You’d be lucky to have two portfolio management systems.”
Contemplating the surge in advisor technology growth, attendees at the T3 Enterprise conference debated sustainability of the niche. Many agree that proliferation in options is partly the result of client demands to deliver an experience comparable to Amazon, but also from increased investment into new providers and the ongoing breakaway advisor movement.
Former SEC Commissioner Steven Wallman says there is “firm fatigue” among many advisors.
“Now everybody’s got the next best solution,” says Wallman, who is now CEO of FOLIOfn, a financial services firm that includes an institutional offering and an online brokerage.
“It’s just too much. You end up either somebody picking for you, or you go back to less choice. We’re building out a service offering on our platform for two very large firms because they’ve given up. They don’t want to pick and choose and they feel uncomfortable about making those choices.”
MoneyGuidePro CEO Bob Curtis expects that consolidation will soon happen, as planning firms either limit choices available to their advisors or the market simply chooses winners in every category.
“There will be a movement toward reduction of choice,” Curtis says. “Firms benefit from consistency, especially for proper compliance. I think firms will look realistically at what they can support within a firm, and some firms will go to one.”
Commonwealth Financial Network has adopted that strategy to supply technology to its independent advisors, says Darren Tedesco, the firm’s managing principal for innovation and strategy.
“Through feedback, we make sure we have the functions being asked for,” Tedesco says, acknowledging that the exception is financial planning tools, as Commonwealth supports six different options. “Advisors who choose Commonwealth are generally outsourcers and they trust our decisions and strategy. They don’t want to build the next best mousetrap. They want us to do that due diligence for them.”
A SILVER LINING FOR RIAs
But the upside, adds Schwab’s Connor, is improved RIA practices.
“The crowd is always going to find greater innovation than [a core group of companies],” he says. “So if we don’t remain open to that from an integration perspective, innovation is never going to happen at the core. It’s going to be critical if we want innovation in the RIA space.”
Stifled innovation is the definitely the result of restricting technology choices, says Jeffrey Vivacqua, Cambridge Investment Research senior vice president of marketing.
“I wouldn’t call it fatigue as much as being overwhelmed,” says Vivacqua, who notes Cambridge supports 10 different financial software choices for its advisors. “But independent advisors are still glad they had those choices, instead of being pushed into a box.”
FIDUCIARY RULE EFFECT
Emphasis on improving the front-end experience and adapting to the demands of the Labor Department fiduciary rule will continue to feed tech investment by wealth management firms, says Kendrick Wakeman, CEO of analytics firm FinMason.
“There will be consolidation, but not for a while,” Wakeman says. “There’s such an open field for running right now. There have been a lot of strategic investments in wealthtech and because of the DoL, everyone is in the process of investing in new systems or upgrading old systems.”
The debate over supply glosses over a critical point, says Lee Gordon, CEO of Chicago-based Mesirow Wealth Advisors: The best technology will always be in demand, but advisors really are waiting for the industry at large to get better at working in concert.
“What advisors want to do, whether it’s digital or analog, they want to be able to provide aggregation, performance reporting, all-in fees transparency, and deliver it 24/7,” Gordon says. “All the applications are there, but tying them together, making them an elegant, user-friendly experience for the client, that’s the missing piece.”