Technology is not just about Excel spreadsheets anymore.
Advisors’ use of technology grew exponentially in 2012, and that growth shows no signs of stopping in 2013. As tech keeps evolving, advisors are eager to use those adaptations so they can make their practices more efficient and open up more time to spend with clients.
The big stories next year will include a plethora of new mobile apps, of course, but advisors can expect to see other, deeper tech developments. These include improved platform integration, greater reliance on outsourcing and increased development of quick planning tools.
Read on to learn about these and other tech trends that advisors can expect to see in 2013.
This year, Fidelity launched an iPhone and Android mobile trading application for RIAS, Schwab rolled out an advisor app for the iPhone, and TD Ameritrade added fund and equity trading via Veo on iPad.
And that’s not all. Financial Social Media President Amy McIlwain identified the top 10 mobile apps for financial advisors in 2012.
In 2013, clients will drive advisors to assign even more importance to mobile apps, according to Actifi Chief Executive Spenser Segal in a roundup of top 10 tech trends.
“It is important for advisors and institutions to realize that their clients are going to increasingly expect that the tasks that they can perform on their mobile devices with other businesses such as looking up information, contacting employees and conducting simple analyses will spill over into the advisory space,” Segal writes.
The advisory world may have entered the social media space with caution because of unknown compliance and regulatory risks, says Actifi’s Segal, yet “financial institutions and advisors are increasingly using social media including LinkedIn, Facebook, Twitter, Chatter and other services.”
Expect to see advisors enter the social-media space more in 2013. Why? Because FINRA released social media and smartphone regs last year, and brokerage and other financial services firms have had all of 2012 to figure out what it means for them.
In a sign of things to come, both Morgan Stanley and Raymond James have moved to embrace social media. Morgan Stanley said in July that it would allow its 17,000-plus advisors to use Twitter and LinkedIn with certain restrictions, and Raymond James in late 2011 announced that it implemented a new social media platform from Actiance that complies with FINRA regs.
Microsoft’s Windows 8 operating system, released for general availability on Oct. 26, is designed to do good things like improve cloud-computing performance and work well on tablets such as iPad. What’s not so good is the money that advisory firms must spend to buy Windows 8 and the time required for users to get up to speed on the new system.
Dan Skiles, an executive vice president with Shareholders Service Group whose focus includes providing tech services to RIAs, acknowledges in Investment Advisor‘s November issue that being an early adopter of Windows 8 is not a quick and simple decision.
Yet Skiles makes a convincing argument that 2013 may be a good year to take the plunge and upgrade, if not to Windows 8 then to at least a newer operating system:
What is your firm waiting to do with technology? Are you still running Windows XP? Generally speaking, once an operating system release is considered successful, it is a best practice to upgrade. By waiting, you are not only giving up functionality enhancements, you are also missing important security improvements. Windows Vista was widely thought to be a disappointment, but Windows 7 has been very successful. If you’re still using Windows XP, put together a plan to upgrade to at least Windows 7 or be an early adopter of Windows 8.
The lean economy and tight margins will be good incentives for advisors to integrate state-of-the-art technology into their operations in 2013.
The latest Scottrade Advisor Services Study, commissioned in 2012, finds technology adaptation and incorporation was topped only by client acquisition, preparing for new regulations and advising in a volatile market as a major challenge for advisors. “The first three, however, are ongoing and reactionary challenges an advisor must do to keep his business afloat, while technology appears for the first time,” writes John Sullivan for AdvisorOne.
But the benefits of true integration are extensive, according to an SEI white paper released in late November. After climbing the learning curve that adoption of a new technology requires, advisors stand to increase revenue by up to 30% and afford staff 10% more time to prospect for new clients.
For example, Private Client Resource’s Palette Platform is an open architecture integration of systems that allows quick access to aggregated data. The platform provides a complete view of the client relationship on a single screen.
“PCR’s innovative Palette Platform was designed, and continues to be enhanced, with the needs of wealth managers foremost in our minds,” says PCR President and CEO Robert Fiore in a statement. “When wealth managers are empowered by a combination of the most accurate aggregated data, the best technology and the highest caliber service, they gain a competitive advantage over their peers who still operate using fragmented systems and inefficient processes.”
The speed and complexity of both the markets and technology have conspired to make outsourcing a popular option for advisors on the go. Next year will see a continuation of the outsourcing trend–and in its latest incarnation, outsourcing doesn’t involve sending jobs overseas so much as sending specialized work to professionals who can leave advisors more time to focus on clients.
To help advisors sort through the avalanche of services available, Envestnet’s Advisor Suite offers a supermarket of choices with online access to investment managers, portfolios, custodians and other services on an open architecture platform. Envestnet has more than $93 billion in assets under management and advisement from 22,500 advisors who seek help with integrated portfolio, practice management and reporting solutions.
In another instance of outsourcing–this one to share research, opinions and other content created by economists, strategists and other experts on key issues–Bank of America-Merrill Lynch announced in late November that it has launched its own channel on Flipboard, a web application that assembles content on tablets and smartphones.
“We know that investors are increasingly using their mobile devices to access ideas about issues of importance to them, and delivering content through Flipboard fits in perfectly with Merrill Lynch’s overall strategy of offering high-quality thought leadership,” says Joe Corriero, head of digital marketing for Bank of America’s Global Wealth & Investment Management unit, in an interview with AdvisorOne.
In 2013, the mass affluent investor with investable assets of $250,000 and more is likely to benefit from technology’s efficiencies. While advisors in the past have worked with a limited number of high net worth clients because of the expense involved in serving them, the new year will see explosive growth of planning tools online–thus making financial planning available to more families.
For instance, Advisor Software Inc. launched GoalgamiPro last year as a quick planning tool so advisors can see a complete snapshot of mass-affluent clients’ wealth that includes account balances in real time. About 200 advisors currently use GoalgamiPro, but in 2013 ASI expects to see many more use the tool to better help their younger clients achieve financial goals.
ASI President and CEO Neal Ringquist says there’s a gap in the market because only a small percentage of advisors–whether at independent broker-dealers, wirehouses or independent RIAs–actually do the sort of comprehensive planning that requires hours of effort and pages and pages of documentation.
“The mass affluent is the segment of the market that desperately needs financial planning,” says ASI President and COO Neal Ringquist. “Many advisors want to have a discussion on goals with clients, but it’s not practical to use a comprehensive planning application due to the time commitment required to create a comprehensive plan.”
GoalgamiPro, which integrates Redtail Technology’s client relationship management (CRM) suite, makes it possible for an advisor to check in with clients on an annual basis because “it only takes about eight minutes to create a plan,” Ringquist says.
As asset classes have become more highly correlated, advisors in search of diversification also are seeking specialized online research that offers analysis of complexities such as tail risk.
Zephyr Associates, for example, offers tools to help finance professionals create more efficient portfolios and make strategic asset allocation decisions by running in-depth analysis and optimization models that go beyond traditional methods. Zephyr’s software products are used globally by advisors, money managers and fiduciaries to analyze investment managers, mutual funds, financial markets and investment portfolios.
“These days, investors are seeking out diversification by expanding their opportunity sets to include entirely new asset classes,” says Marc Odo, director of applied research for Zephyr. “Asset classes once considered exotic, like commodities, private equity, hedge funds, infrastructure projects, timber and precious metals are seen as the only way one can get uncorrelated returns.
Check out AdvisorOne’s complete lineup of Outlooks for 2013.
Stay informed on technology issues for advisors by reading Investment Advisor Technology Coach Dan Skiles’ columns.
Read Top 10 Tech Trends for Advisors and Their Partners by Actifi’s Spenser Segal at AdvisorOne.