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The State of Advisor Technology

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Just as the baby boomers represented a bulge in the 20th century’s birthrate trend, the early ’80s saw a bulge in the number of career changers seeking and discovering the field of financial planning. Interestingly, this trend paralleled the advent and evolution of the personal computer.

It’s helpful to understand these historical events to fully appreciate how far we’ve come, technologically-speaking. If you started your planning career in the late ’70s, for example, the tools of your trade probably consisted of a pencil, a legal pad and a Hewlett Packard 12-C financial calculator.

(During part of the ’70s, I worked as a financial analyst for the federal government and would often find myself day-dreaming about the possibility I might be given one of those new “word processors” to use in my work — essentially a typewriter with a small LCD screen on which typed text appeared and could be corrected before printing). Just a few years later, advisors were facing a double-edged decision: On the one hand, here was this new technology — an IBM PC coupled with the spreadsheet software, Lotus 1-2-3 — that most advisors could see had the power to transform the analytical process essential to financial planning and, on the other hand, advisors were faced with the daunting task of learning to use these new tools.

But learn them we did, although some advisors took to computers and technology more readily than others. And that’s not a minor point, as a small difference in tech-savvyness uncorrected since, say, 1983, will have become a competitive chasm 25 years later. Advisors who haven’t aggressively followed and adopted the more essential technologies developed in the intervening years may, by now, be significantly less profitable than their tech-savvy counterparts.

Of course, the need to adopt certain technology has always been a function of one’s role in the financial services industry. At one extreme are those who, regardless of title, function primarily as salespersons. As employees in large financial institutions, the software they primarily must master is that which helps them prospect, cold-call, track their progress in recruiting new clients and, ultimately, deliver sales literature and other information needed to convince the prospect to buy something. At the other extreme are fee-only (or fee-based but largely fee-only) independent advisors with their own businesses whose software must allow them to serve a permanent and growing clientele for whom they perform a multitude of advice-oriented services.

The technology needs of the latter group are significantly greater than those of the former group because these advisors have the ultimate responsibility to filter and digest ever-larger volumes of information on all aspects of financial services affecting their clients — tax and estate planning, retirement planning, risk management, budgeting, counseling, etc. — as well as create and manage the technological infrastructure that supports their entire business operation. The financial advisor as employee must learn to use the software her employer gives her; the financial advisor as business owner must not only master his software tools, but must also select and network into an effective whole the hardware and software that keep his business running and his clients happy.

From this point on, we’ll discuss the technology required of the latter group of independent advisors — those who own their financial advisory firms and provide professional, consultative services to clients.

Client Relationship Management SoftwareIn the ’80s, they were called personal information managers and, later, contact managers: software that lets you keep track of people and places important to your business — clients, other professionals, financial institutions — and associated information like addresses and phone numbers.

That’s when CRM systems were used like the Rolodexes of the pre-PC world. Now CRMs are so much more — or at least have the potential to be in the right hands. Your CRM should be robust enough to serve as the “dashboard” to your practice. If there’s one software system that should remain open every minute of every manager and employee’s day, it’s the CRM. Advisors are using robust, industry-specific CRMs like Junxure (, a desktop system, and Redtail (, a Web-based system, to send, receive and archive e-mails; to initiate client communications; to manage mass-mail and e-blast marketing programs; to track workflow among employees and outsource partners; to store electronic documents; to schedule individual and group meetings, and much more.

If your CRM doesn’t do these things — or if you’re not using it this way — what kind of centralized system do you have to coordinate all the pieces of your client relationships?

Financial Planning SystemsLike the CRM decision, the choice of financial planning systems today hinges as much on the method of delivery — desktop system vs. Web-based system — as it does on the functionality of the system itself. Is an online planning system, like Naviplan Standard for the Web ( or MoneyGuidePro (, valued for their inherent ability to make collaboration among you, your client and other advisors simple, more appropriate for your business style and clientele? Or does a desktop system like Naviplan Standard Standalone Desktop or MoneyTree ( better suit your operation?

In my opinion, today’s advisors are somewhat less concerned with their planning software choice than they might have been two decades ago because they understand this software, while important, isn’t the glue that binds the client relationship; it’s just a behind-the-scenes tool. Some advisors even use two or more planning-software systems — one type for wealthy clients with complicated planning needs, and another for simpler client situations — just as they might use different hammers for different construction projects.

Portfolio Management and Reporting SystemsIf you’re not running PMS software in your practice, then you’re probably not providing a full-service advisory offering. Why? Because PMS software doesn’t just track your clients’ investments and enable you to report to them their portfolio’s performance; it (perhaps more importantly) enables you to track gains, losses and other taxable events emanating from their portfolios. Successful advisors look at the tax consequences of all their recommendations to clients, and even use the tax information collected from their PMS software to do tax planning during the year with their clients. Whether they use an online system like Portfolio Director Web (, outsourced solutions like BridgePortfolio ( or a desktop system like Schwab PortfolioCenter (, independent advisors are collecting more investment and tax information through these software systems than their broker-dealers or custodians can provide in order to fully serve their clients.

Document Management SystemsThe paperless office is no longer optional. Advisors understand that the ability to protect critical client information via electronic backups and to access that information readily is key to providing timely service clients deem invaluable. The only way to provide this service is to get your clients’ information off of paper and onto electronic media — whether that be a desktop system linked to your CRM or a Web-based, stand-alone system like Cabinet NG ( To transform paper into electronic files, advisors are using scanners from Fujitsu (, like the new fi-6140c High Performance Color Duplex Scanner or a Kodak ( offering, like the Kodak ScanMate i1120, employing optional bar-code technology to make document scanning and filing even faster.

Software IntegrationThe successful advisor today isn’t content to use stand-alone software products that handle one or two office functions but fail to “talk” to each other. What are they doing instead? They’re either looking for integrated solutions, like Interactive Advisory Software (, which combines under one, integrated roof a CRM, financial planning and portfolio reporting capabilities, or they’re tuned into the Your Silver Bullet ( consortium of software companies that serve advisors and are working together to create bridges between their software products. Integration enhances efficiency, which is essential to competition and goal achievement.

Remote ComputingThe last hallmark of the tech-savvy advisor is her ability to work from anywhere. Not synonymous with working constantly, working from anywhere means the advisor isn’t tied to her physical office space and can do a better job of making “downtime” productive or balancing her work and personal life. Whether you work with 50 other advisors tied together by a local area network and computing remotely through a virtual private network or GoToMyPC ( connectivity, or a sole practitioner carrying around your office on your laptop, the remote computing capability is essential today. Among other things, it makes you more e-mail-accessible to clients, which is positive for your relationship with them.

Taken together, these technologies represent the typical independent advisor’s tech platform. You should be able to readily see from this overview where your own operation is deficient in technologies that can significantly improve your efficiency and, hence, profitability.

Next month is this space we will take a look at how advisor technology is likely to develop in the future and what advisors should be gearing up for. Stay tuned.

David J. Drucker, CFP, is president of Drucker Knowledge Systems; see


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