Bad tech is bad for advisors’ business

With everyday tasks so reliant on technology, advisors were recently asked about how their firms handle technology.

As it turns out, if advisors are using outdated or subpar tech, they’re likely to ditch their firm for another, according to a study released Wednesday.

Advisor360’s latest Connected Wealth Report found that 92 percent of advisors would switch firms because of a poor technology set-up, while 44 percent already have. In addition, 58 percent said they’ve lost new business over bad tech.

The report also found that firms that invest in great technology have a proven competitive edge over their rivals. Ninety-three percent of advisors with state-of-the-art technology have gained new customers because of competitors’ bad tech.

Nate Lenz, CEO and co-founder of independent registered investment advisory firm Concurrent, said that even though the industry has increasingly moved toward independence, the majority of advisors are still at large banks and wirehouses, where the technology remains antiquated.

“For them to be able to make the changes and customizations they need to keep up takes massive investment for them to change course,” Lenz said. “The inability to be nimble is what ultimately prevents those firms from making changes that would move the ball forward, whereas independent firms can be more nimble and have the ability to change out solutions without large-scale negative impacts or the learning curve associated with implementing a new system.”

According to the report, most advisors consider their existing tech set-up to be mediocre, at best. Just 35 percent of advisors said they have state-of-the-art or modern tech at their firm, while 65 percent say their technology needs some improvement.

When it comes to advisors’ tech stacks, it seems most are undecided as to which components are driving clients away, although 41 percent said back-office aspects, such as e-signatures, didn’t meet expectations, while 38 percent said front-office components, like the client portal or texting, didn’t measure up.

“I have heard from many clients that our client-facing site/app is not great,” Liz Windisch, founder of Aspen Wealth Management, wrote in an email. “Clients who also have an account at another firm unfavorably compare our site to theirs. For clients who like to check their accounts often, this is a big disappointment for them, and a disadvantage for me. I haven’t lost any clients over this, but I suspect I have missed out on gathering additional assets because of it.”

Gerald Goldberg, CEO and co-founder of GYL Financial Synergies, said that while technology is important, clients who leave might not be doing so in response to the firm’s technology but as a result of the value proposition.

“Although we employ state of the art technology, our clients are not with us because we’ve got a really good GUI interface or a great website, it’s because there’s a trusted adviser relationship that exists with the client,” he said. “Having a robust technology stack, is essential for supporting the advisors at the firm so that they can take care of our clients.”

Advisors surveyed cited bad data and a lack of AI or automation as their top complaints about their current tech.

Adrian Johnstone, CEO of Practifi, an Australian-based firm, says there’s a bit of a dangerous pairing between AI and automation and that the “technology still remains a little unproven.”

“There is no doubt a huge amount of power that can be brought to bear,” Johnstone said of AI being grouped with automation. “But the use cases remain pretty narrow … I don’t think that anyone has turned around and said, ‘Here is the powerful AI-backed [platform] that investors will get comfortable with, that regulators will get comfortable with, that feeds into the client experience that advisors are trying to deliver.’”

Increased efficiency around client onboarding, marketing and prospecting for new clients were found to be top priorities for advisors. “It’s the value of a first impression and making sure … that those new investors, those new households, know that they’re going to be well cared for,” said Jeff Schwantz, chief revenue officer at Advisor360.

If advisors are looking to launch their own firm or joining a firm, Lenz suggests that they not only have the tools that will help take their business to the next level, but ensure that the underlying tools are fully integrated. “That overall experience is going to be one that will create operational lift for their business,” he said.


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