How Advisors Rate The Technology They Use

Last month, Joel Bruckenstein and I completed and published the T3/Inside Information Software survey, which addressed the three issues that most advisory firms want to know:

Q4 hedge fund letters, conference, scoops etc

mohamed_hassan / Pixabay

  1. Which vendors are operating in the advisory market and what programs and services are they offering?
  2. What’s the respective market share of the different software and service providers in each category (which programs are most popular)?
  3. How satisfied are users with these software and service providers, on a scale of 1-10?

In some categories, we also looked at market share broken down by size of firm, years of experience and business model for some of the more popular software categories, like CRM and investment performance reporting.

In all, the survey attracted 5,508 participants in the advisor space, who reported their use of software and service in 20 different categories. The report includes 90 charts/graphs/rankings, and more than 500 different tools and resources were listed.

You can read the full report here. In this article, I’ll share some of the key insights and trends that the survey respondents told us, and what surprised us and stood out as significant to a potential user of professional software.

advisory firms

Let’s start with adoption rates. In each category, we listed the percentage of total respondents who reported using at least one program or service in that category. So, for example, 85.82% of the respondents report that they (or their firm) use at least one of the CRM programs we listed. Not surprisingly, this was the highest adoption percentage in the entire survey. But our first reaction on seeing that number pop out of the final analysis was: What are the other 14.18% of the respondents thinking? Of course, we know; they believe that Outlook, ACT! or a spreadsheet are professional CRM programs. Those advisors are leaving a lot of productivity on the table.

Two other numbers jumped out at us. Only 24.26% of our respondents are using document management/processing tools – a category which includes Redtail Classic Imaging, DocuPace, Laserfiche, NetDocuments, Worlddox, Citrix Sharefile and Remember 10 years ago when everybody was talking about the “paperless office?” There’s no evidence that we are any closer to replacing those paper-stuffed filing cabinets in advisor offices than we were back then. By the way, the three asterisks note that we changed this category between 2018 and 2019; last year, the category also included document processing tools like DocuSign and LaserApp, which continue to enjoy high adoption. This accounts for the drop-off in adoption rates from last year to this one.

The other number that surprised us was the surprisingly low adoption percentage of financial planning software. How do we explain the year-over-year drop down to 63.57% of our respondents using planning software for their clients? Our best explanation is that our 2019 survey attracted roughly three times as many respondents as the 2018 version; in 2019, we heard from many more dually-registered advisors who are affiliated with independent broker-dealers, and modestly more wirehouse brokers. It appears that dually-registered advisors and brokers are much less likely to offer financial planning services to their clients than are fee-compensated advisory firms. We didn’t realize it, but our survey tapped into a sizable silent minority of professionals whose value proposition is still heavily weighted toward asset management.

advisory firms

Let’s dive into some of the categories and see what we learned. In CRM, the market share leader was Redtail, and it wasn’t close between Redtail’s 56.90% total share of respondents down to number two Salesforce, at 8.01%. But in each category, we asked respondents which program they were thinking about switching to or adding, and here we got a surprise: Salesforce was the leader by a wide margin in this ranking, ahead of number two Redtail.

Read the full article here by Bob Veres, Advisor Perspectives

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