Illusive Integration: Wealth Management Firms Reevaluate Their Technology Strategies

Guest Commentary by Darrin Courtney, CFP®, Research Director, CEB TowerGroup.

Bio: Darrin Courtney is a Research Director at TowerGroup covering important topics in Wealth Management. His research focuses on how technology supports the distribution and servicing of investment products, including the advisor desktop, financial planning tools, customer relationship management, portfolio management, retirement income, and client reporting. Darrin has more than 20 years of financial services experience in operations, client service, sales, product management, and business development roles in wealth management. He joins TowerGroup from The Hartford Financial Services Group, where he was a director in their Innovation Studio, focusing on the Wealth Management division. His previous experience focused on the support, creation, and distribution of Retail, Education, Retirement, and Financial Planning products and services, including both Qualified and Non-Qualified Retirement Plans. Prior to joining The Hartford, Darrin held positions at well-known investment companies such as Scudder, Stevens & Clark, Columbia Asset Management, MFS, and AARP Financial Inc.

One of the most pressing goals for wealth management firms is the need to become the primary advisor for their clients. This is better defined as being the wealth management institution where a client houses the majority of their investible assets. CEB TowerGroup research shows that firms that attain this status, and the financial advisors who work for them, have a tremendous amount of influence over the financial decisions their clients make. In fact, 99% of surveyed high-net-worth individuals indicated that their advisor had some level of influence and over 55% indicated that the advisor had a good or great deal of influence over their financial decisions. It is not surprising then that many firms are looking to the wealth management channel to be the growth engine in the years ahead. As revenue remains flat and resources are scarce however, advisors have indicated that technology would play a significant role into their productivity and performance to support existing clients and grow business. Unfortunately for many financial institutions, providing appropriate technology has not proven to be their strong point. A recent CEB TowerGroup advisor productivity survey, for instance, indicates that more than half of surveyed advisors would rate client facing technology at their firms as fair or poor, and this is actually better than the more than 65% who would rate advisor facing technology as fair or poor as well. Whereas the majority of advisors would rate themselves as satisfied with other forms of support from their firms, such as operations or administrative support, the same majority would rate themselves dissatisfied with technology support. It is for this reason that many firms are starting to re-evaluate their existing legacy or installed systems and are beginning to look seriously at cloud-based offerings.

One of the biggest challenges these firms hope to solve via technology is improved integration, both across the advisor desktop as well as across the enterprise. Currently, 9 out of 10 advisors cannot see held-away client assets, 3 out of 4 cannot see client assets across their enterprise and more than half cannot even see assets across different product silos within the wealth management division. Firms that partner with technology providers who can bridge the gap between wealth management, online brokerage and trust services will have a significant advantage. Clients expect a holistic relationship with their wealth management providers and advisors are seeking ways to meet these needs.

Integration across the desktop and, more importantly, across the front, middle and back office also takes on a significant role of importance. When asked why they stay with their current firm, advisors overwhelmingly listed work/life balance as their primary reason. Firms that can aid advisors with achieving this balance are better positioned to retain those advisors and the assets of the clients they serve. Various components of a best-in-breed  integrated desktop serve various needs, with CRM being attributed to sales improvement, financial planning linked to better advice and client portals attributed to enhanced client service according to surveyed advisors. When it came to time savings however, advisors overwhelmingly pointed to document management and workflow solutions as the most effective tools. Automating and integrating key functions, whether they be reporting, trading or rebalancing all help to give advisors back the precious time they desire.

This time savings will help assist advisors with engaging clients and prospects, which leads to a final integral form of integration. Synchronizing both the client experience and the advisor experience is crucial to creating the collaborative relationship clients demand. In a previous blog, I indicated that 71% of clients chose “online or the firm’s website” as the preferred method of accessing accounts, products or services and recent surveys indicate that 55% of clients under the age of 50 would be interested in interacting with their advisor via tablet. As wealth management firms evaluate technology providers, those that can best support integrated collaboration through multiple channels, including portals, tablets, and other consumer driven choices will gain priority. In the end, all of the integration options discussed will support both consumer demands and advisor productivity needs, and ultimately support wealth management firms in the attainment of primary advisor status.

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