From their first book in 2002, “Virtual Office Tools for a High Margin Practice,” to their conference, Technology Tools for Today (T3), Joel Bruckenstein and David Drucker have made a name for themselves as the authority on technology for advisors.
That book “put us on the map as people who were following technology in the industry,” said Drucker, who had his own advisory practice for 20 years, and led to a series of monthly newsletters they’ve been producing since 2003. The conference followed in 2005 because, as Bruckenstein put it, “there was nothing really in our industry, which I thought was ridiculous because I was struggling with technology in my own practice.”
“Early on, advisors knew very little about technology and specifically about technology for this industry,” Bruckenstein added. Advisors have responded and have even caught up. “As advisors have gotten more sophisticated about technology, we’ve had to up our game,” he said.
At the 2014 conference, which wrapped up in mid-February, there was a big emphasis on emerging technologies, Bruckenstein said, with “a record number of new companies with interesting products. It seems there’s a lot more interest among people who are interested in building technology for the financial services industry, and more and more of them are targeting the RIA space.”
The goal isn’t to host a huge event every year—and really, “there are only so many people in a given year who are willing to come to a pure technology conference,” Bruckenstein said—but to “bring technology to the masses,” according to Drucker.
From about 150 advisors to 600, the conference has grown as a way to educate advisor tech users, but has also served the tech makers. “The sponsors at our conferences probably get as much out of visiting with each other as visiting with the advisor attendees,” Drucker said. “Many product integrations have grown out of the relationships that were formed at our conference.”
Bruckenstein and Drucker have even added an enterprise edition of the T3 conference to bring tech education to executives at broker-dealer firms. The second annual enterprise conference will take place in November.
The tech trends of the future should come as no surprise to advisors; they’ve already taken shape. Indeed, although Bruckenstein and Drucker spoke in separate interviews, they were of one mind on the subject. “Trends that are in existence now are going to continue,” Drucker said.
Bruckenstein elaborated, “The big trends in the industry over the last few years still continue, but they’re evolving.” Integration and mobile will remain major trends for advisors, they agreed.
Of integration, “It’s much better than it used to be, but it’s still not where advisors would like it to be, which is totally seamless,” Bruckenstein said. For example, “A lot of advisors don’t want to use all-in-one software packages,” according to Drucker. “They want to use best-of-breed software packages. For example, they might have a MoneyGuidePro for financial planning and a Redtail for CRM and something else for outside portfolio management, and they want everything to talk to each other.”
Mobile is another big trend, but advisors are still getting comfortable with it. “Advisors were quick—relatively quick for advisors, anyway—to adopt the iPad and smartphones, but are they really using them to their full potential yet? Probably not,” said Bruckenstein.
Another trend that will benefit advisors is what Drucker calls “workflow.” He said, “It may sound very elementary, but advisors with growing firms are learning that they can’t keep the procedures manual in the head of one or two people in the firm. Not only does it have to be written down, but it has to be embedded in the software, so to speak. You have to have CRM systems that tell all employees what the status of any given task is at any given time.”
For advisors who have watched the proliferation of online financial service providers with some concern, Bruckenstein and Drucker agreed that they aren’t much competition. If an advisor isn’t providing much more than asset allocation services, “yeah, I think you’re in trouble,” Bruckenstein said, “because robo-advisors are offering those kinds of services, if not for free, for next to nothing.” However, “most good advisors provide many, many services that go beyond just asset allocation.”
Drucker added that there’s room for everyone in this industry. “There’s room in the industry for all different sizes of players and all different types of players. We were told about 10 or 15 years ago that by now the industry would be all large shops, and smaller practitioners wouldn’t be able to survive. I think that’s been disproved. In the same way, I think there’s probably room for robo-advisors too, without upsetting the landscape too much.”
One thing advisors can learn from online services is reporting. “If your client can go to [a robo-advisor] and get these graphically pleasing, easy to understand, dynamic web-based reports for free or almost free, and you’re charging a lot more than that and providing crappy reports, I don’t think that’s sustainable,” Bruckenstein said. “Advisors are waking up to the fact that they can’t use the software, no matter how good the calculation engine is, if the reports are something that they wouldn’t be proud to share with their clients.”
(Check out Investment Advisor’s full IA 25 for 2014 list on ThinkAdvisor.)