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Firms Signal Desire for Change in Wealthtech: Report

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What You Need to Know

  • BDs, RIAs and bank/trust firms are most likely to license market-leading vendors.
  • The top three applications licensed from external vendors by wealth managers are portfolio accounting, financial planning and tax optimization.
  • Large shares of firms licensing tech solutions are looking to switch vendors.

Two thousand wealth management firms controlling roughly $10 trillion in assets under management represent the biggest market opportunity for financial technology firms. That’s according to Cerulli’s latest report, “State of U.S. Wealth Management Technology 2021: Aligning Firm Strategy With Technology Decisions.”

The report notes that the segment of the market most likely to license market-leading vendors consists of broker-dealers (BDs), registered investment advisors (RIAs) and bank/trust firms looking to distinguish themselves to advisors and investors through their tech stack. While these firms are not at scale to do massive internal development like the wirehouses, they are able to utilize and benefit from wealthtech vendors, according to the research. 

Three-quarters of these firms state that their tech philosophy is to license market-leading vendors and to maximize integration between tools. As noted in the research, many of these firms’ value propositions revolve around optimizing the advisor experience, which involves the use of technology. The top three applications licensed from external vendors by wealth managers are:

  • Portfolio accounting (75%): The research found that just over a third (34%) of wealth management firms are very satisfied with their portfolio accounting vendor. No firms reported being dissatisfied with their portfolio accounting provider. An additional third of firms report neutral satisfaction. Nearly three-quarters (71%) of firms that reported neutral satisfaction plan to switch solutions. 
  • Financial planning (58%): Overall, 25% of wealth management firms indicate an intent to change planning platforms in the near term and 18% are unsure of their stance, meaning that just 57% of relationships seem firmly secured. Interest in replacing the current platform is strongest among firms using internally built platforms (37%). 
  • Tax optimization (56%): Nearly two-thirds (65%) of responding firms said they planned to switch tax optimization solutions to a specialized external vendor. Nearly all firms (88%) with neutral satisfaction plan to switch to a specialized external vendor. 


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