From the July 2007 issue of Boomer Market Advisor • Subscribe!

Hire the right virtual employee

Steve Bailey recalls that when he entered the financial services business more than three decades ago, his office technology "suite" consisted of a telephone, calculator and typewriter. The calculator was used to crunch numbers, which he then entered by hand into a ledger. All this occurred before sliding over to the typewriter to incorporate the figures into the typewritten reports he produced for clients.

"I'm blown away by how far technology has come," says the principal at HB Financial Resources in Charlotte, N.C.

Bailey acknowledges that his practice has benefited greatly from the new systems and technology to which he has access, many via his broker/dealer. And just in the past several months, when Bailey's firm switched broker/dealers, technology was one of the catalysts for the move.

"We switched for two main reasons: technology and marketing," he explains. "NEXT Financial, our new broker/dealer, gave us more options on the technology side. No longer are we locked into using a certain type of system. Instead we have access to three or four systems for analysis, financial planning, compliance and client management."

Bailey is part of a generation of advisors that appreciates the edge that technology gives them over the competition, and they'll do what it takes to gain access to the tools they require -- even if it means switching broker/dealers. This in turn puts added pressure on broker/dealers to differentiate themselves on the technology front.

Broker/dealers "are operating in a much closer environment today," says Mike Shelly, vice president of business technology management at Raymond James Financial Services, whose broker/dealer operation is headquartered in St. Petersburg, Fla. "Years ago you had a great deal of technological differentiation. But technology has come so far, so fast, things like account data and market data systems are commoditized now. So broker/dealers are looking for technology pieces that are going to separate them, or at least put them in a separate group with a few others. Differentiation is about how you integrate and implement those technology pieces, and how you tie them into the back office."

Differentiation comes with knowing the kind of technology tools advisors need, and how they use them. Among the most formidable challenges is putting the technology pieces in place to satisfy an advisor base whose needs and level of expertise can vary widely.

Prior to launching a new CRM system and financial planning suite in 2006, the Raymond James technology team conducted extensive field research in an effort to thoroughly understand the needs, priorities and practices of the roughly 4,600 advisors it serves.

"We did a deep dive into hundreds of advisors' practices, and took all the information we got into account" in choosing and configuring the new CRM system, explains Shawn Tabor, Raymond James' technical product manager for CRM. "We didn't want to be an IT organization that simply says, 'This is what's good for you.' Instead we went directly to advisors for input. Now they can see their requests actually reflected in the systems and that really helps with buy-in."

Bailey changed his affiliation in part because he wanted a broader selection of technology tools. But broker/dealers, he notes, must strike a delicate balance between providing tools to satisfy tech-savvy advisors and not overwhelming advisors whose needs are more basic.

"You may end up getting access to a lot of stuff you really don't need, so you need to be able cull through it all. Your broker/dealer can help you do that."

Stiff competition on the technology front has brought major advances in back-office and client interface systems. These advances are benefiting advisors and clients alike, and the progress is most noticeable in the area of system integration.

"Data entry could be very time-consuming," Bailey recalls. "Now most of these systems talk to each other. That's freed me to take on more clients, to do more for those clients and to focus more on personal relationships. That's true for most advisors I know. You've got billion-dollar producers now, and it's because of technology and integration that they've gotten to that level."

Bailey points to the improved efficiency of CRM systems as one of the biggest boons to his practice. Systems that produce consolidated (and paperless) statements and give clients online access to portfolio information allow advisors to spend more time doing what they do best: provide advice.

Today's integrated financial planning tools also give advisors greater versatility in how they deliver information to clients. The new Raymond James financial planning suite is a case in point. Its three main components -- SunGard PlanningStation, Forefield Advisor and Ibbotson Asset Allocation Library -- are integrated to deliver information in client-customized formats.

"Everyone assimilates information differently," explains John Catalano, manager of financial advisor solutions at Raymond James. "Some people like numbers. Some people like to read about a topic. Others like to see pictures and illustrations."

Raymond James has integrated its new financial planning and CRM systems. According to Tabor, the latter will eventually serve as the portal through which advisors will access all client information. Also in the offing, he says, is a tool for managing multigenerational wealth that tracks accountholders and their non-account-holding family members.

Advisors should also expect extensive training and support in the tools they ultimately choose to use. A broker/dealer on the technological cutting edge will mean little if the firm fails to package its systems with strong advisor education, training and support programs. Advisors aren't likely to embrace tools that take too much time and effort to learn and use, Catalano says.

"Having been a financial advisor myself, I think I understand reasonably well the time constraints our financial advisors face, and, truly, it is a challenge to keep up with all the technology out there.

Tech support from the broker/dealer is crucial, particularly with a new system that's unfamiliar to an advisor. Bailey can speak from experience, having recently undergone extensive training on the systems offered by his new broker/dealer.

"If nobody shows you how to use it, it's a complete waste of everybody's time and money," he says.

The technology that broker/dealers offer advisors in order to combat inefficiency has indeed come a long way since the advent of the calculator and typewriter. But broker/dealers aren't content to stay put.

"We view this as really the first step in a marathon," Catalano says.

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