Slideshow FP Tech Survey: 10 Essentials to Know

Among the big trends identified in Financial Planning's latest Tech Survey were movement toward the cloud, better B-D technology and market shifts in CRM, portfolio and rebalancing software. You can read the full story here -- or click through to see a few of the highlights. -- Kayan Lim

There has been a clear trend away from desktop- and server-based systems to modern cloud-based tools -- particularly in the CRM space. While a large number of advisors still primarily use Microsoft Outlook for CRM, more advisors are shifting to modern systems like Redtail, Salesforce and Tamarac Advisor CRM, according to tech expert Joel Bruckenstein.

Providers of older systems will eventually discontinue those desktop- and server-based products in favor of cloud-based alternatives, says technology consultant Bill Winterberg. As an example, he cited Advicent, which announced it will discontinue its desktop version of NaviPlan software at the end of the first quarter of 2014.

Rebalancing software is trending right now, especially among bigger firms. Although 60% of the advisors surveyed still do not use rebalancing software, that’s down from 69% last year, notes Bruckenstein. Morningstar Office is the top rebalancing software, although its features are more rudimentary, he says. Bruckenstein expects iRebal Cloud, which had not been released at the time of the survey, to do well the coming year, as it will be available to advisors using TD Ameritrade Institutional .

Tablets and smartphones have seen an increase in use among advisors, with 58.8% of advisors now using tablets -- up almost 9 percentage points from last year. Leading the category was the iPad, followed by Android and then Windows tablets. Similarly, use of smartphones for work has increased to 87% from 80% last year. Apple leads the smartphone category as well, but its iPhone has a less decisive margin; Android phones are the second most popular, followed by BlackBerry.

LinkedIn, Facebook, Twitter, Google+ and YouTube are still the most used outlets -- results that are largely unchanged from last year, says Bruckenstein. Smaller firms and independent RIAs are more likely to use social media, the survey found -- possibly because these firms have more control over their compliance policies.

While advisors say financial planning tools have had the greatest impact on their practices, the number of advisors who do not use planning software has actually risen, says Bruckenstein. In fact, more than 50% of commission-based advisors do not use financial planning tools. MoneyGuidePro remains the dominant product, followed by eMoney, while Zywave’s NaviPro Suite is particularly strong at firms with more than $500 million in AUM.

Portfolio management is a highly competitive and attractive market for software developers, probably because its products carry high price tags -- so advisors can expect a wide variety of products in this category, says Bruckenstein. Morningstar and Albridge dominate the rankings for commission-only and commission- and fee-based advisors, while Schwab’s PortfolioCenter and Advent Axys are leading products for fee-only advisors.

Last year, a shocking amount of advisors (37%) reported using Windows XP -- which is more than a decade old. Thankfully, Bruckenstein says, many have upgraded to Windows 7 or 8 this year, and only 22.3% of advisors still report being on the older operating system. That number is expected to go down even further: Microsoft has announced that, as of April, it will no longer support Windows XP.

Security continues to be a major issue, as search engines and databases make the financial industry even more accessible to hackers and thieves. One of the trends to watch out for in 2014 is the use of multi-factor authentication, says Winterberg. Many tools will start to require advisors to use a second method to confirm their identity, usually through a one-time login code sent to a trusted mobile device.

Almost half (43%) of advisors say they evaluate technology based on its price and not its features. But the survey found that firms that invest more in technology have higher satisfaction ratings, Bruckenstein says. Respondents identified financial planning software, smartphones and CRM tools as the technology investments that brought the greatest returns to their firms.
One key issue: With business environments changing every year, Winterberg urges advisors to evaluate whether a technology investment will be “portable” enough in the event of a business transition.

Ultimately, it is clients who are setting the technology bar ever higher. The next generation of advisors will have to identify the most efficient strategies to present data to clients in real time, Winterberg says, and cater to their needs by monitoring financial activity and communicating through mobile devices.