Is Outdated Wealth Management Technology Costing You Business?

Two-thirds of financial advisors have lost business from clients or prospects because of outdated wealth management technology, according to survey results released Tuesday by Advisor360°, a provider of integrated technology for broker-dealers and other wealth managers.

Fifty-eight percent of survey participants classified their technology as modern, but only 3% described it as integrated and innovative. The remaining 39% admit they need a technological upgrade.

Respondents who said they have modern technology were 50% more likely to report growth in new client assets and had a 33% better chance of getting client referrals compared with those who said their technology needs an upgrade.

“Technology can be a game changer for advisors who want to grow their business,” Richard Hart, senior vice president of corporate development at Advisor360°, said in a statement. “Firms that can’t innovate to today’s standards or don’t stack up to peers are leaving money on the table.”

More than half of advisors who reported losing business because their wealth management technology did not meet expectations said this has happened with prospects. The remainder said they had lost business from existing clients.

Coleman Parkes Research conducted the survey in September among 300 financial advisors and executives at large broker-dealers, RIAs and bank trust companies across the U.S. with more than $5 billion in assets under management and more than 1,000 employees on average.

Gaps in Current Wealth Technology

The survey findings indicate that firms need to assess how well their existing technology enables advisors to work with clients, as 53% of respondents said their technology is an extension of their practice. Three in 10 advisors said their current technology holds them back when it comes to new business.

Still, 67% of those surveyed gave their existing wealth management platforms high marks for enabling them to focus on their most important clients, and 63% said the same about delivery of robust financial planning advice.

Advisors opined that digital onboarding could have the biggest effect on their practice and the way they work with clients. Indeed, 25% categorized their current onboarding process as a constraint when it comes to getting new client relationships off the ground.

Respondents’ biggest complaints about their existing platforms concern the lack of automation and functionality. For example, 41% of advisors said they spend two hours on average scheduling, running and reconciling reports before each client meeting, and 26% spend more than two hours.

In addition, 58% of advisors said their account aggregation capabilities need to be improved.

Staying Connected to Clients

Although advisors said the most important aspect of a client’s digital wealth experience is the ability to see a complete picture of their financial lives, many firms are coming up short on delivering.

Forty-three percent of respondents said their technology is primarily advisor-facing, not client-facing. Survey participants reported that their clients are product-savvy, so they want technology that gives them access to products that are specific to their client’s financial goals — the highest client demand is for structured investments, annuities and long-term care insurance.

According to the survey, advisors are also striving to use technology to connect with clients in ways that are familiar outside of the financial planning world. Seventy-three percent of respondents said millennials and Generation Z require a different type of engagement than baby boomers and Gen Xers, but tech-savviness has no age barriers.

Seventy-six percent of advisors noted that the ability to securely text or direct message clients of all ages has transformed client relations. Eight in 10 said integrating social media platforms into client-facing tools is a must-have, with a third considering this extremely important.

“Firms with the right technology improve their advisors’ ability to offer robust financial guidance and form deeper client connections, which ultimately translates into strong, healthy businesses,” Hart said.