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Technology > Marketing Technology

Tech-Obsessed Advisors Looking to Streamline: Jefferson National

By Emily Zulz

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More and more advisors are enhancing their technology. The next step for many is integrating it all.

According to Jefferson National’s inaugural Advisor Authority study, three-quarters of advisors surveyed plan to integrate new technology into their practice over the next 12 months.

Advisors use an average of 7.8 different software applications in their practice today, the study found, and 16% of advisors use 11 or more software applications in their practice.

This tech overload is driving the demand for better integration.

“This may be why advisors say that ‘integration of multiple technologies and software’ is the top area for innovation in the industry over the next three years,” the report states.

As part of the report, Jefferson National talked to Aaron Grey, managing partner for Denver Money Manager LLC, about how he handles multiple software applications.

“For me personally, I won’t adopt anything new unless it can integrate with what I’m currently using,” Grey says. “I let the vendor reach out to me, and I also make sure to be proactive and ask questions. If you’re a new advisor who is starting from scratch, I recommend researching and looking at product reviews.”

Grey predicts there will be more meaningful integration available with future technological advances.

“The ability to pull from rich data and consolidate it on a single platform — where your financial planning software is talking to your risk software, which is talking to your portfolio management software, which is talking to your investment policy statement software — that’s going to be a pretty big deal,” he says.

The survey finds that the majority (61%) of advisors have a strategy in place to improve or enhance the integration and consolidation of technology and software applications into their practice.

Jefferson National’s Advisor Authority study, which was conducted online in April among 535 financial advisors, examines which innovations and issues RIAs and fee-based advisors care about most — among them technology and more specifically mobile devices, software and robo-advisors.

While software applications (57%) top advisors’ list of the types of new technology being integrated into practices, mobile features are clearly becoming increasingly important among advisors.

Nearly half (49%) of all advisors in the survey reported that they plan to integrate smartphones into their practice in the next 12 months. Forty-nine percent also said they plan to integrate tablets, and 52% will reportedly integrate mobile apps over the next year.

Cloud-based solutions are also gaining traction among advisors, with 48% saying they plan to add them.

As part of the report, Jefferson National spoke with Kenny Landgraf, president and chief investment officer for Kenjol Capital Management, on the importance of going mobile.

“There’s this company called Apple and they came up with this thing called an iPhone. And there are still earthquakes all around us about the power that you can have in your hand,” he says. “You can access emails, link to your company’s network, stream media, watch CNBC. You’re connected to your office — but you’re not tied down to your office. And you’re connected to your clients. It’s very, very powerful.”

Jefferson National’s survey also found that just one-fifth of advisors currently use any type robo-advice in their practice, and only one-quarter of advisors say they are “extremely or very familiar” with the robo-advice model.

“Adoption of robo-advice has been tepid at best — and is not likely to accelerate in the near future,” the report states.

Of the advisors who are not currently using robo-advisors, only 15% are very likely to integrate this model into their practice in the next 12 months.

The survey also asked advisors on whether they see robo-advisors as a threat and found advisors almost evenly divided.

While 42% say robo-advisors do pose a threat, 48% say they do not.

Those who see robo-advisors as a threat cite increased pricing pressure, the commoditization of financial advice, and bringing fees and recommendations into question as top concerns.

But, Landgraf, who also spoke to Jefferson National about robo-advisors, sees the need for advisors to adapt to digital advice.

“It’s not a question of good or bad,” he says. “You need to be a digital advisor. And robo-advice is one sleeve of that digital transformation. It can complement your practice. But it’s no replacement for financial advice. I make the analogy to TurboTax and its rollout. It replaced the calculator, the pencil, and paper, and manual IRS forms, it allowed people to file their own taxes and do it electronically. But in the end, as great as TurboTax is, it didn’t put CPAs out of business. I view the robo-advisor in that same light.”

The study finds a clear correlation between tech-obsessed advisors and high-earning advisors.

According to Jefferson National’s inaugural edition of Advisor Authority Executive Report, 43% of all “tech innovators” are also high earning advisors — earning $500,000 or more per year.

A “tech innovator” is considered someone who will integrate new technology in the next 12 months, use 7 or more software applications, have a strategy to enhance integration or consolidation of tech and software, and spend more than $50,000 annually on technology.

Of the total 535 RIAs and fee-based advisors nationwide that Jefferson National surveyed, 96 were considered “tech innovators.”

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