Welcome to Financial Planning's 2010 Technology Survey. This year marks our fourth anniversary, and there is plenty to be excited about. Thanks to an overwhelming response from our loyal readers, we logged 3,139 responses to this year's survey, more than doubling last year's 1,550 responses. To put things in historical perspective, this year's responses exceeded our inaugural survey by a factor of roughly 13. With our growing sample size and a historical record to draw upon, we think we are better positioned than ever to offer readers an analysis of the state of technology within our industry. As we've done each year, we've tweaked existing questions and added a few new ones to keep you apprised of new technology trends.

When we released last year's survey, both the technology sector and the financial sector were still mired in a slump. What a difference a year makes. One of the lessons advisors learned from the Great Recession of 2008-2009 was that their practices were not nearly as efficient as they thought. As a result, advisors have refocused their attention on becoming more productive, and technology certainly plays a role in that process. In addition, a new product cycle of hardware and software has once again forced advisors to reevaluate their technology needs; this in turn has created significant new technology demands throughout the financial services industry.

Broker-dealers and RIA custodians have also refocused their attention on technology. The growth and profits of these firms is closely tied to the fortune of the advisors they serve. For most B-Ds and custodians, servicing a $500 million advisory firm does not require much more than servicing a $250 million firm, so they would like to see all of their advisors prosper. Broker-dealers and custodians are finally realizing that better technology can free up advisors to spend more time attracting new clients and servicing existing ones. As a result, virtually all of the firms with custody of advisor assets have technology initiatives designed to help their advisors run more efficient, profitable practices.



Last year was the first time we asked questions about smartphone usage, and there were a few surprises. The iPhone grabbed the highest user satisfaction ranking of any product or service ever, and the Google Android phones scored surprisingly poorly. We speculated that Android's poor showing in 2009 was due to the fact that only a limited number of Android phones were available and that T-Mobile, a firm with weak coverage in parts of the United States, was the only company marketing Android phones at the time. We predicted that other manufacturers and carriers would soon offer Android phones and that Android's satisfaction ratings would improve over time.

We were right on the money. Last year, only 18% of Android users were "very satisfied" while 24% were "very unsatisfied." This year, 51% of Android users are "very satisfied" and another 34% are somewhat satisfied. Conversely, only 8% of Android users were "very unsatisfied" in 2010. That's a stunning reversal. Those numbers place Android securely in second place, ahead of BlackBerry but behind iPhone.

The iPhone's satisfaction numbers continue to impress. Sixty-four percent of iPhone users are "very satisfied," the same as last year, while another 27% are somewhat satisfied, up from 21% last year. Only 5% of iPhone users were "very unsatisfied," down from 7% last year. If we had to guess, we'd bet the few dissatisfied iPhone and Android users are more a reflection of coverage than of the phone's functionality.

Although the iPhone and Android rule the roost with regard to satisfaction, BlackBerry is holding up well. While 35% are "very satisfied," another 50% of respondents were "somewhat satisfied" and only 5% were "very unsatisfied."

It is also worth noting that BlackBerry still leads in total number of survey users (1,199) followed by the iPhone (899) and Android (531). On the other hand, Android is now the most widely used phone operating system in North America and the iPhone will soon be offered by Verizon, so we expect those two operating systems to remain strong in the months ahead. We suspect that trend will hurt BlackBerry's usage rankings among advisors, particularly if Apple and Google invest more to promote their products to business users.

In the smartphone arena, Windows and Palm are lagging. Only 13% of Windows users are "very satisfied" and 19% are "very unsatisfied." If the new Windows Mobile does not take off, Microsoft's share of the market could slip further. Early indications are that Windows Mobile 7 is a big step up from the previous version, but it may be too little too late. Palm is also fading, with 18% of advisor users being "very satisfied," but 18% also "very dissatisfied."



We didn't survey iPad usage last year because it didn't exist back them. The device launched in April 2010, and Apple sold three million in the first 80 days. It is estimated that sales will top 13.8 million units by year-end.

Financial advisors are not generally early adapters when it comes to technology, so we were surprised that respondents were uncharacteristically enthusiastic about the iPad. Of the 1,808 who answered this question, 17% have already purchased an iPad and another 51% plan to buy one. Among advisors, those numbers are impressive for a new technology that initially had few, if any applications designed specifically for advisors. In addition, another 7% of respondents said they own another tablet brand, and 9% plan to purchase one.

This clearly indicates that vendors within the industry who are developing applications for the iPad are on the right track. Unless this trend reverses itself, which appears unlikely, there should be strong demand for iPad applications among advisors. Given the strong consumer demand, client-facing iPad apps will also be in greater demand next year.

Although the iPad is off to a tremendous start, the market for tablets may soon grow substantially. Over the next few months we will see the release of new tablets that run on operating systems from Google, RIM (BlackBerry) and Microsoft. We expect competition to boost innovation and put downward pressure on prices.



Among custodians, for the second year in a row, Schwab distanced itself from the competition. Forty-nine percent of Schwab advisors are "very satisfied," up 4% from last year; another 39% are "somewhat satisfied." Financial advisors are a difficult bunch to deal with, and if you can keep 88% of them satisfied, as Schwab has, you are doing something right. What's equally impressive is that only 5% of Schwab's advisor clients are "very unsatisfied."

We continue to believe that Schwab's high scores are at least partially attributable to the fact that much of their client base has been with them for years; however, there is more to it than that. Schwab seems to do a great job of communicating with their clients and delivering the tools that they need to succeed. We suspect that Schwab Performance Technologies (SPT) plays a large role in the high satisfaction scores. Although we did not specifically survey advisors on this point, our conversations with advisors lead us to believe that those Schwab advisors who use PortfolioCenter or PortfolioServices (full-service portfolio data management and reporting hosted by Schwab Performance Technologies) are satisfied with both the service and the pricing they receive through SPT.

TD Ameritrade solidified its second place ranking this year by raising its overall satisfaction rating to 77%, up from 73% last year. Of those 77%, 35% were very satisfied and 42% were somewhat satisfied; that's up from only 29% who were very satisfied last year. We think the highly successful web-based Practice Roadmap played a role in TD Ameritrade's strength in our rankings.

Fidelity showed marginal improvement this year, but not enough to keep pace with TD Ameritrade. Fidelity earned an overall satisfaction rating of 74% this year, up from 73% last year. The number of "very satisfied" Fidelity advisors inched up to 26% vs. last year's 25%. Here, we suspect that WealthCentral's rather subdued rollout held Fidelity back a bit, but more recently, adoption of WealthCentral has picked up steam, which should bode well for the future.

Shareholder's Service Group (SSG) served up the biggest surprise in this category for the second year in a row. Last year, we were somewhat surprised by its low rating, which we attributed, at least in part, to the fact that they had not yet rolled out NetX360 to their advisors. In one short year, however, SSG has engineered a remarkable turnaround.

Last year, 24% of advisors were very unsatisfied with SSG's technology offering. For 2010, the number of advisors very unsatisfied with SSG's technology offering dropped to 11%. Even more impressive, the number of advisors who were "very satisfied" with SSG's technology soared to 38%, the second highest score in that category behind Schwab. Overall, total satisfaction jumped to 71%, up from last year's 54%.

We believe that the turnaround at SSG is for real, and we attribute it to a number of factors. Perhaps the most significant was SSG's decision to hire Dan Skiles as their vice president of technology consulting. Skiles, who formerly held a similar role at Schwab, brings a great deal of much-needed technology experience to SSG as well as a deep knowledge of the vendors servicing advisors. Clearly the rollout of NetX360 and a close working relationship between the Pershing technology folks and those at SSG are paying dividends as well.

Last year, we listed Trade PMR in the broker-dealer category. This year we moved them to the custodial category where they really belong. Like SSG, they are showing remarkable progress. Last year, just 7% of Trade PMR advisors were "very satisfied" with their custodian's technology. This year, 27% are "very satisfied." Overall, Trade PMR had a disappointing 51% satisfaction rating last year. This year it was a more respectable 64%.

Pershing also showed progress. Twenty-four percent of Pershing advisors are "very satisfied" this year vs. 20% last year. At the other end of the spectrum, only 8% of Pershing advisors are "very unsatisfied" this year vs. 12% last year.

Scottrade continues to disappoint. Although they've managed to increase the number of "very satisfied" users and decrease the number of "very unsatisfied" users a bit, the overall picture is not encouraging. Only 47% of advisors are very or somewhat satisfied with Scottrade's technology. The good news for Scottrade, if there is any, is that SSG and Trade PMR have demonstrated that satisfaction can improve dramatically. It will be up to Brian Davis, who was recently promoted to director of advisor services at Scottrade to get the job done.

On the independent B-D side, Commonwealth continues to lead in the "very satisfied" rankings, with 51% of reps very satisfied with Commonwealth's technology, up from 47% last year. Total satisfaction came in at 73% vs. 75% last year. Not everything is coming up roses for Commonwealth, however. Last year, only 8% were very unsatisfied with Commonwealth's technology; this year the number of very unsatisfied almost doubled to 15%.

Cambridge Investment Research, a survey newcomer this year, racked up impressive rookie numbers. Forty-five percent of Cambridge advisors were very satisfied vs. 14% very unsatisfied. Total satisfaction was 72%, just a hair behind Commonwealth. Like last year, LPL, at 35%, trailed the leaders in the very satisfied category, but its total satisfaction score, at 73% was among the best.

What's striking among the B-D category as a whole is the number of firms with high "very unsatisfied" numbers. On the custodial side, Scottrade, at 20% was the only custodian that exceeded a 14% "very unsatisfied" ranking. On the B-D side, the firm with the best "very unsatisfied score" was Cambridge Investment Research at 14%. Five firms, Ameriprise (26%), HD Vest (24%), Lincoln Financial Advisors (24%), the AIG Advisor Group (21%) and Raymond James (20%) all hit the 20% "very unsatisfied" mark. ING (19%), National Financial Partners (19%) and Securities America (18%) fared only marginally better. Lincoln Financial also achieved the notorious distinction of ranking last in the "very satisfied" category with a meager 12%. Clearly there are a number of B-D firms that need to do a better job of delivering technology solutions to their advisors.



Advisors are finally starting to part ways with Windows XP, the operating system originally released in 2001, but progress is slower than it should be. Two years ago, 87% of advisors were using Windows XP. Last year, the number declined slightly to 80%. This year, thankfully, usage has declined to 66%. Usage of Windows Vista, a much ridiculed operating system, has dropped as well, from 21% last year to just 14% this year.

On the other hand, usage of Windows 7 has jumped from 4% last year to 37% this year. Since Windows 7 was only available for a few days before the close of last year's survey, it didn't have much of a chance to make an impact then, but it seems to be catching on now.

The Apple operating system continues to show modest gains, up to 5% from 3% last year. Apple would have fared even better if Microsoft had dropped the ball with Windows 7, but most advisors seem satisfied with the new Microsoft operating system. On the other hand, Mac penetration continues to rise among advisors' clients, and that could impact the way advisors view Mac computers in the future.



Every year, a number of well-meaning technology experts send email informing us that MS Outlook is not client relationship management (CRM) software and should not be part of our annual rankings. We are well aware that MS Outlook is not CRM software. Unfortunately our readers have not yet caught on.

Once again, MS Outlook ranked first in our CRM category, confirming that a substantial number of advisors do not know what CRM is, nor do they realize the potential opportunity cost of doing without CRM software. So, before we discuss our winners and losers, let's briefly highlight the benefits of CRM software.

CRM software may be the single most important piece of software that advisors buy. The key to success is the strength of client relationships. The client relationship is enhanced by regular communication. CRM software systematizes those communications so that clients receive the care they need.

During the volatile markets of 2008 and 2009, CRM software provided demonstrable benefits. Those who had systematized communication and grouped clients were able to respond much more rapidly during times of turmoil than those who did not.

In addition, efficient practices employ uniform workflow processes. CRM software is generally the application used to manage and record all workflows within the firm. CRM software can do so much more. It can track every client interaction. It can analyze the profitability of each client relationship. It can trace the productivity of employees. With this information, advisors can set fees appropriately. In fact, it is impossible to efficiently manage a financial services firm without CRM software.

As has been the case over the last several years, the overall outlook with regard to CRM is mixed. Although MS Outlook was again the top vote-getter at 23%, that's down from 24% in 2009 and 35% in 2008. The number of advisors who are willing to admit that they do not use any CRM software at all dropped slightly from 8% last year to 7% this year. There was also a drop in the usage of older, legacy desktop CRM software, like ACT! (10% to 8%), Act4Advisor (4% to 3%) and Goldmine usage (4% to 3%).

Salesforce has limited appeal among our respondents. It gained incrementally to 4% from 3% last year.

The biggest winner in this year's CRM survey was clearly Redtail CRM. This web-based, industry-specific CRM package surged from a modest 6% last year to a commanding 23% this year, falling just nine votes short of MS Outlook. Redtail's popularity stems from its relatively low cost ($65 per database for up to 15 users), its relative ease of use and the fact that it's industry specific and web based.

Although Junxure dropped from 24% last year to 15% this year, we still think it has a bright future. Due to its sophistication and steeper learning curve, it probably does not appeal to as broad an audience as Redtail does, but larger RIA firms like it and are loyal to it.

Beyond MS Outlook, Redtail and Junxure, only Advisors Assistant, with an 8% share, topped 5% among industry-specific products. We were disappointed to see the lack of support for other vendors that develop products targeting this segment. Does this lack of support indicate a lack of education on the part of advisors or deficiencies in the software applications? We are not sure, but clearly there is still room for improvement in the advisor CRM niche. It will be interesting to see if advisors consolidate around the few current leaders, or if other firms can emerge over the next year.

As was the case last year, 11% of responses fell into the "other" category, and the responses were widely dispersed. Proprietary CRM packages from Commonwealth and Trade PMR showed up multiple times, as did Bill Good's Gorilla system, Big Contacts, Oracle CRM on Demand and EZ Data (apparently many respondents did not know that EZ Data is now part of Ebix).

Just as we were going to press, Schwab announced that it has chosen three CRM integration partners for its Schwab Intelligent Integration (SII) initiative: Salesforce, Microsoft CRM and Junxure. This is significant since Schwab serves approximately 6,600 independent RIAs, and the three firms participating in SII will presumably have a major competitive advantage among Schwab RIAs in the future.

Of the three CRM selections, the biggest winner is Salesforce. It will participate in the OpenView Gateway modular integration initiative and be the exclusive CRM provider on the OneView Office turnkey offering.

In light of the relatively low share that Salesforce and Microsoft CRM received in our survey, those choices may surprise some; however bear in mind that the typical Schwab advisor makes up only a portion of our survey's demographic. According to Schwab, approximately 50% of its advisors managing over $100 million either use or plan to use one of the three CRM integration partners selected by Schwab. As for Junxure, Schwab and Junxure currently have between 800 and 900 common clients. It would have been impossible for Schwab to exclude Junxure from the process even if they wanted to.

In the longer term, the impact of the Schwab announcement could be significant. Schwab has implicitly endorsed three CRM vendors over the rest. That will no doubt influence the purchasing decisions of Schwab advisors, as well as many non-Schwab clients. It could also accelerate the trend away from some of the legacy desktop CRM products in favor of Salesforce and Microsoft CRM.

Will some of the smaller marginal CRM providers in the financial service space be hurt by this? It's too early to tell, but it certainly won't help them. We'll have to wait for the 2011 or perhaps even the 2012 survey to find out more.



As was the case last year, 84% of respondents said they offer comprehensive financial planning to their clients. Of those we surveyed, 16% said that they do not use financial planning software, meaning that the other 84% do.

Of those who do use financial planning software, MoneyGuidePro is the clear favorite for the third consecutive year. MoneyGuidePro solidified its No. 1 ranking this year, with a 26% share vs. 20% last year. The stable of financial planning software products from EISI (Profiles and the various versions of NaviPlan) came in with a combined 18% share. Since both MoneyGuidePro and EISI sell a substantial number of private- label versions, their numbers are actually somewhat understated in the survey. eMoney showed substantial gains year- over-year, rising from 9% last year to 17% this year. MoneyTree also did well, rising from 11% last year to 13% this year.

As was the case last year, we received a substantial number of "other" responses (21%). Those that showed up multiple times as write-ins included Financeware, Morningstar (Office or Workstation), Cheshire, Lumens, ExecPlan, MasterPlan, Brentmark and Methuselah. There were a fair number of respondents who said they were using some sort of proprietary system supplied by their B-D, and a few who were using home-baked Excel spreadsheets. Two respondents said they were using Redtail (a CRM application) for financial planning. We'd be interested to know how that is working out for them.

Consolidation is still taking place in the financial planning software niche. There remains a great many vendors to choose from, but MoneyGuidePro, EISI, MoneyTree and eMoney stand out, with SunGard still holding a meaningful share. After that, there is a significant drop-off. Will the larger providers eventually knock off some of the smaller providers, or will a few of the smaller ones emerge from the pack to compete with the market leaders?



The portfolio management software market is competitive and dynamic. Albridge users certainly came out in force this year, with the firm jumping to first place at 23% vs. just 14% last year.

Morningstar Office came in second with a respectable 19% share. As we've mentioned before, we've been highly suspicious of the Morningstar numbers because we are certain that many respondents were not using a true Morningstar portfolio management product. We now feel fairly confident that this year's result is indicative of Morningstar's growing footprint in the portfolio management software space, even though the Office share dropped a bit from last year.

Schwab's PortfolioCenter ranked third at 16%, down from last year's 19%. PrincipaCAMS, the successor to the old dbCAMS showed surprising strength, at 9%, up from last year's 4%. Perhaps rumors of its demise are a bit premature. Advent scored an 8% share this year, down from last year's 11%.

Below the list of leaders, a number of smaller, newer competitors are starting to demonstrate noticeable strength. Tamarac Advisor, which has only been around for about a year, has already grabbed a 3% share. That's impressive for a new entrant into the space. Black Diamond upped its share from 2% to 3% this year. Investigo held steady at 2%

Other smaller providers like Adhesion, CapTools, Interactive Advisory Software, Orion and PowerAdvisor held steady at 1%. We were perhaps premature to include the FinFolio Workstation in this year's survey since it is just coming out of beta, but we expect it to win over some converts by next year.

Of those who responded that they use some other application for portfolio management, the vast majority were either proprietary B-D offerings or something that did not qualify as portfolio management and reporting software under our definition. The possible exception was Advisors Assistant, which garnered multiple votes.



The multifunctional platforms category has been dominated by Morningstar and eMoney in recent years, but this year we added some additional candidates, and the results were interesting. NetX360, which is available to tens of thousands of reps who clear through Pershing, plus Pershing Advisor Services RIAs as well as those on the Shareholders Service Group platform and others came in first in its rookie season with a 21% share.

Morningstar Office, the perennial leader, came in second with a 14% share, followed closely by eMoney at 13%. Fidelity WealthCentral, another newcomer to the survey, drew a 3% share as did another newcomer, Commonwealth's Client 360. Yet another newcomer, Tamarac Advisor, debuted with a 2% share, while Trust Co. of America doubled its showing, rising to 2% this year. Trade PMR's eCustody Advisor Workstation debuted at 1%, missing the 2% cutoff by a few votes.

Since integration is one of the hottest topics in the financial software space right now, we expect more custodians and B-Ds to promote integrated solutions. By next year, the list of multifunction contenders is likely to expand further as Schwab and others get into the act. Furthermore, we would not be surprised to see attempts from third parties to develop multifunctional platforms as Tamarac has done.



Document management software certainly ranks among the most important applications for office efficiency, so it is troubling to find that adoption rates remain low across the advisor community. As was the case last year, 30% of respondents said they do not use document management software, but that doesn't mean the remaining 70% do.

Another 24% of respondents say they use Adobe Acrobat for document management, down from 28% last year, but still a troubling number. Adobe, the developers of Acrobat, does not believe it is document management software, and neither does any other knowledgeable expert in the field. PaperPort, unchanged from last year at 7%, does not really fit the definition either, nor do at least half of those who responded "other" (17%). Add up those numbers, and almost 70% of respondents are not using document management software. That's the bad news.

The good news is that although adoption rates are still low, they are increasing. Two years ago our analysis led us to believe that as little as 14% of respondents were using document management software. Last year, the same analysis led us to believe that usage was approximately 25.4%. This year, it seems like usage has risen to approximately 30.5%, still too low, but at least the trend is moving in the right direction.

Which firms are winning over advisors to their document management applications? Redtail jumped into the lead this year at 13%, up from last year's 4%. Laserfiche, perhaps the most recognizable name in document management software for advisors, came in second with 6%, vs. 5% in 2009. DocuPace, at 4%, Worldox at 3% and Pershing/iNautix at 2% all had their share of fans.

Although advisors seem to be slowly realizing that document management software can benefit their businesses, too many are still missing out. Studies have shown that the return on investment (ROI) from document management software is substantial. In most cases, the software pays for itself soon.

In addition, financial advisory firms of all sizes struggle with document storage and retrieval. As the regulatory burden on advisors increases and the ability to access information almost immediately becomes more important, we expect document management software firms to prosper in the coming years.



While advisors are slowly catching on to the value of document management software, the same cannot be said of rebalancing software. Last year, approximately 33% of respondents said they used it; this year, the percentage shrank to 27%. In both this year's and last year's survey, the true number is probably lower, since many of the "other" answers (15%) entailed applications that do not approach the functionality of those listed in the survey results.

Tamarac led the field this year as it did last year, although its percentage slipped from 9% to 6%. ASI was in second place with 4%, unchanged from last year. eAllocator, iRebal, Northfield (through Fidelity) and Total Rebalance Expert all garnered a 1% share. RedBlack, which was inadvertently omitted from the survey, received an almost 1% write- in total. We suspect they would have exceeded the 1% mark if listed.

As was the case last year, when we asked advisors what software yielded a high ROI, only 11% mentioned rebalancing software. However, we would argue that only 11% of those surveyed are using a sophisticated, full-featured rebalancing application, so we can infer that almost all of those using a sophisticated rebalancing solution are reaping a significant return on their investment. That begs the question: Why aren't more advisors using a quality rebalancing solution?

There may be a number of answers. First, many advisors are under the misconception that rebalancing software is expensive. Some providers do charge high fees compared to financial planning software or CRM software, but they more than make up for it in the hours of labor they eliminate. Furthermore, as more providers have entered the field, the cost of entry has dropped dramatically. While you can still easily spend more than $50,000 per year for rebalancing software, there are alternatives available in the $5,000-$10,000 range.

A second reason is the time and effort required to set up and implement these solutions. The better ones do require an upfront commitment, but they pay substantial dividends over time.

A third reason is that many advisors perhaps are not fully aware of the benefits that intelligent rebalancing software can bring to a financial firm. As advisors begin to better understand the compelling case for intelligent rebalancing solution, we expect adoption rates to increase substantially in the future.



Historically, adoption rates for account aggregation have been low. In 2008, less than 25% of advisors were using account aggregation software. That's troubling since these services have been marketed to advisors for over a decade now. Much of the fault lies with the aggregation providers themselves, who early on promised more than they delivered. That damaged their reputations and hurt their sales in subsequent years.

Was 2009 any different from 2008? Not really. Only 27% of advisors said they use aggregation software, but looking through the "other" responses we concluded that the true number was less than 27%.

For 2010, 38% say they are using some sort of account aggregation provider. Although we believe the true number falls short of 38%, we do see a real movement toward account aggregation software again. Provided the aggregators do a better job of keeping clients happy this time around, we think there is a substantial growth opportunity here.



Each year we ask, without specifying specific brands, which categories of software are you satisfied with and which are you not? Some trends are starting to emerge. Within the industry, the developers of financial planning software are tops at keeping their customers satisfied. Thirty-six percent of respondents are "very satisfied" with their financial planning software and another 46% are "somewhat satisfied," for an overall satisfaction rating of 82%. Conversely, only 4% of advisors were "very unsatisfied" with their financial planning software. That is the lowest "very unsatisfied" response in the survey (even better than the iPhone's 5%). The message to advisors is clear: If you are unsatisfied with your financial planning software, change vendors and join the overwhelming majority of satisfied financial planners.

The high financial planning software satisfaction numbers come as no surprise. All of the major vendors have continued to invest significantly in their applications despite the market turmoil over the last several years. In addition, advisors we speak with continue to tell us that overall satisfaction among financial planning clients has been much higher than among those who are strictly investment driven, so we'd expect financial planning software to score well.

CRM satisfaction also reached new heights. Thirty-six percent of respondents were "very satisfied" and another 44% were somewhat satisfied, for a total satisfaction ranking of 80%. Conversely, only 6% of CRM users were "very unsatisfied." Again, no surprise here. Through our product review and our conversations with advisors, we notice that generally speaking, vendors in this category have been upping their game, delivering good value at reasonable prices.

As was the case a year ago, the satisfaction ratings for document management software and portfolio management software were positive. Overall satisfaction with portfolio management software was 76%, while overall satisfaction with document management software was 73%.

For the first time we surveyed satisfaction with rebalancing software, and this category was the one sore point in this section. Only 15% of rebalancing software users were "very satisfied." In contrast, 21% were "very unsatisfied."

While these numbers are troubling, they are also somewhat misleading. As we stated earlier, only a small number of advisors are using what we would consider competent, intelligent rebalancing software. For example, if you add up all the responses for the rebalancing products named in our rebalancing question, you get roughly 300 responses. That's almost the number of "very satisfied" responses we received on our satisfaction question. On the other hand, we received over 450 "very unsatisfied" responses. We suspect that those respondents are using inferior products, and that's why they are dissatisfied. Still, rebalancing software vendors need to do a better job of communicating their value to advisors, and they need to make sure their products are easier to use than they have been in the past.



As a whole, the survey results offer more positives than negatives. Advisors are abandoning ancient operating systems like Windows XP for state-of- the-art systems like Windows 7. A small but growing number are also gravitating to Apple's Mac operating system. Advisors are also dumping older, clunkier smartphones for more modern, feature-rich models. Although advisors are not early adopters, they are buying iPads in significant numbers, and more of them will own iPads or similar devices next year.

Overall, we believe the software available to advisors is getting better, and the survey results seem to bear that out. With the exception of rebalancing software, advisors are pretty satisfied with their software. There certainly is room for improvement, but things are moving in the right direction.

There are some troubling indicators, though. Sixty-five percent of respondents claim they would be willing to spend more to improve the efficiency of their practices, with only 6% saying that they would not be willing to. We feel certain that many of those willing to spend more do not have high-quality document management software or rebalancing software. Some are using suboptimal CRM, financial planning or portfolio management and reporting systems. What are you waiting for? Upgrade!

Roughly half of you say that you review your technology at least annually, but only 19% of you have a written technology plan. That is a deficiency this industry must address. To get the most for your technology dollars, you need to have a comprehensive plan, and it needs to be spelled out so that all members of the firm understand it and work toward implementing it.

When we asked you how you evaluate the ROI of a technology purchase, only 6% of you said you do a formal ROI analysis; on the other hand, 31% of you don't perform an ROI analysis at all. The rest seem to be relying on intuition or some informal approach. We are convinced that the lack of attention to ROI has led many advisors to underinvest in technology or to invest in technologies that do not provide the highest ROI.

It's striking that many respondents cited improved workflow (44%), time management (25%) and client communications (17%) as their single greatest business challenge. Clearly CRM can help address all of these challenges, but simply purchasing the software is not enough. Setting up the software correctly and providing ongoing training to the staff is also essential. In the case of CRM, we believe the lack of ongoing commitment to training is a key reason that pockets of inefficiency still remain.

As we stated at the outset, it appears that B-Ds and custodians are expending considerable resources to upgrade the industry's technology infrastructure. They clearly understand that by leveraging technology they can help make their advisors more efficient, which should result in higher revenues per advisor and more assets for the B-Ds and custodians. With the renewed interest and investment in advisor technology, we expect to see further gains next year. It is a slow process, but as an industry we are becoming more technologically proficient.


Joel P. Bruckenstein, CFP, is an international expert in applied technology and co-producer of the annual T3 Technology Conference for financial advisors. For more information, visit www.technologytoolsfortoday.com/.

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