Adopting new technology can significantly help advisors, potentially providing both greater efficiency and improved productivity, but many advisors continue to be resistant to new tech, according to research firm Cerulli.
Advisory firms that are “heavy” technology users “tend to be larger and better-resourced practices whose scale affords them the ability to better take advantage of technology solutions,” the company said in its tech-focused Cerulli Edge — U.S. Asset and Wealth Management Edition for October.
“Technology may also make them more efficient, therefore allowing them to achieve scale,” the report said, adding: “Average practice productivity increases as technology use expands, suggesting that technology plays a role in improving productivity” also.
“It’s a virtuous circle — technology begets growth and growth begets increased adoption,” according to Marina Shtyrkov, a Cerulli senior analyst.
One of the most significant findings of Cerulli’s study was that most advisors did not use technology extensively, focusing only on several core tools with moderate outcomes, it said.
Cerulli estimated that, as of 2019, 40% of advisor-managed assets were held by “medium” tech adopters— practices that incorporated tech tools for financial planning and investment research, in addition to a client portal and customer relationship management, but used minimal technology in addition to that.
Client portals were used by 43% of “light” tech users, 87% of medium tech users and 95% of heavy tech users, while CRM was used by 41% of light users, 84% of medium users and 93% of heavy users, Cerulli said.
Lower down on the advisor usage chart were: Cybersecurity (40% of light users, 78% of medium and 99% of heavy users), e-signature (42%, 70% and 95%, respectively), compliance (21%, 63% and 89%), risk analytics (6%, 39% and 74%), and rebalancing (15%, 37% and 76%).