5 Key Needs from Software Integration to Profitability to Expanding Markets through Your Own RoboAdvisor

Need #1: Software Integration

Integration Chart from Fidelity Study

“Driving increased levels of system integration to accrue potential benefits such as streamlined workflows is a top priority for High-Performing Firms.” (2013 Fidelity Benchmarking Study)

“Technology consultant Spenser Segal, president of ActiFi, Inc. in Plymouth, MN, has lately been saying that the next major revolution in advisor technology will not come from dramatic innovations in software, but from more effective integration and implementation in advisor offices.” (Bob Veres, 2014 Advisor Perspectives)

“There’s no shortage of evidence on the need for and the benefits of technological integration. In fact, according to a recent SEI survey of over 250 financial advisory firms, nearly two-thirds of the respondents report using four or more vendors or separate technology systems.” (2013 SEI)

“When comparing registered investment advisor (RIA) practices that have similar team sizes, practices with some level of technology integration have, on average, more than double the amount of client assets then practices without technology integration.  Similarly, clients of RIAs that have some integration have close to twice the amount of investable assets than clients of RIAs that lack integration.  On average, this equates to approximately $90 million more in client assets per practice.”  (April 2013, Aite Group)

Need #2:  Efficiency

Workflow Chart from Fidelity Study

“They [Top Performers] look at efficiency gains as their primary measurement of successful technology implementation. Many indicated that their firms do not have a formal process in place for evaluating their technology. Rather, most advisers indicated that they primarily examine how much more efficient they feel their firms have become as a result of a particular implementation. The No. 1 factor top performing firms used to ultimately evaluate the implementation of a technology was the efficiency of their internal processes.  They are more likely to use portfolio management and portfolio re-balancing software.  Lastly, top performers are more likely to use cloud computing and mobile devices in their work processes than all other financial adviser firms.” (2014 Cadaret Grant and InvestmentNews Research)

“Enhanced workflow can automatically generate and distribute tasks to multiple team members. Recent research conducted by ActiFi discovered that 87% of advisors acknowledge the need to improve their workflow capabilities.” (2013 SEI)

“Staffs at firms that boast some level of integration spend 32% less time on operations processes than do staffs at firms that lack integration, despite having similar team sizes.”  (April 2013, Aite Group)

Need #3:  Increase Revenue

Revenue Chart from WealthManagement.com Study

The 2013 Schwab RIA benchmarking study identified “Technology” as the third most important growth enabler, just behind “Quality of Client Service” (84%) and “Closing Success” (74%)

“By shifting the primary objective from cutting costs to maximizing productivity, these firms actually see greater revenue, profits and profit margins. This top tier of financial firms earns an average of 17% more revenue per staff and 42% more profit per staff than all others.” (2013 InvestmentNews Research/Laserfiche)

“Investments in technology allow the advisers and business development professionals at “Innovators” [those that use technology strategically] to have more shared and centralized intelligence, more efficient access to firm technology – which is enabled by remote, cloud-based and mobile technologies – and, ultimately, a greater capacity to expand their firm’s revenue without increased head count.”  (2013, InvestmentNews Research)

Need #4:  Migrate to Wealth Management

Wealth Manager Chart from FPA

  • “76% of Money Managers indicate they will change. Of those who plan on changing, 44% will transition to Wealth Managers”
  • “72% of Investment Planners indicate they will change. Of those who plan on changing, 46% will transition to Wealth Managers”
  • “53% of Financial Planners indicate they will change. Of those who plan on changing, 62% will transition to Wealth Managers”  (2013 FPA Research and Practice Institute)


“Clients and advisors both cite holistic goal planning and wealth transfer as two of the most relevant trends driving the industry. However, our survey suggests that managers have yet to implement effective strategies to capitalize on these trends.  Holistic goal planning has a fairly limited impact on client acquisition and retention, yet it’s the most important trend influencing clients’ decisions to seek out wealth management firms.  This suggests that clients see little differentiation across firms’ planning approaches and are not fully aware of the benefits of their current firm’s planning offering.  Capitalizing on the client desire for goal planning requires not just a differentiated offering that attracts clients but one that communicates the value proposition to clients.  In terms of wealth transfer, advisors and clients both view this as an attrition driver, suggesting firms still have work to do to realize the opportunity, or mitigate the risk, posed by generational wealth transfers.” (Ernst & Young, 2014 Wealth Management Survey)

Need #5:  Compete with Robo-Advisors

Roboadvisor Pie Chart from Tiburon CEO Summit

“Trend: Discount brokerage firms and robo-advisors both looking to fill market gaps (mass affluent; disenfranchised; millennials)” (2014 Tiburon CEO Summit)

“Trend: Ease & price compression of robo-advisors and marketing & investment process strengths of financial advisor scale models may challenge smaller (and less sophisticated) financial advisors to survive”  (2014 Tiburon CEO Summit)

“Both looking to serve the disenfranchised (underserved mass affluent market (economics); Millennials comfort with technology; Loss of confidence in some financial advisors and their firms”  (2014 Tiburon CEO Summit)