No single vendor dominates the market for financial planning software and advisers are divided fairly evenly on whether they prefer self-hosted applications or applications hosted on the web.
That was one of the findings of an InvestmentNews technology survey conducted online from mid-April to mid-May.
Of the 242 financial advisers who responded to the survey, 53% were registered investment advisers and 43% were brokers-dealers. The entire survey was completed by 86% of respondents.
Twenty-eight percent managed less than $25 million in assets, 39% managed between $25 million and $100 million, 14% managed between $100 million and $250 million, 8% managed between $250 million and $500 million and 11% managed more than $500 million in assets.
Some of the other key findings of the survey:
• Technology spending. On average, firms reported spending 5% of their annual gross revenue on technology.
The maximum spent by a survey respondent was 12%
• What they bought. Sixty-four percent of respondents reported purchasing desktop and laptop personal computers last year, while 34% of respondents purchased servers, network printers and multifunction copiers/scanners.
Fifty-five percent of respondents purchased core advisory software programs such as those for asset allocation, financial planning, portfolio management and document management, and 16% purchased desktop software.
Advisers may have purchased more than one type of hardware or software.
• Customer relationship management software. According to the survey, 22% of advisers didn't use any dedicated customer relationship management package, and among those who did, no single vendor controlled the market.
Act from Sage Software Inc. of Beaverton, Ore., was used by 10% of respondents, while Junxure from CRM Software Inc. of Palm Beach Gardens, Fla., and Goldmine from FrontRange Solutions USA Inc. of Pleasanton, Calif., were each used by 7% of those surveyed. E-Z Data from E-Z Data Inc. of Pasadena, Calif., Advisors Assistant from Client Marketing Systems Inc. of Pismo Beach, Calif., and Redtail from Redtail Technology Inc. of Gold River, Calif., each had a 5% share of the adviser market.
Four percent of advisers surveyed used Salesforce from Salesforce.com Inc. of San Francisco, 3% each used Act4Advisors from Allied Financial Software Inc. of Alpharetta, Ga., and Microsoft CRM from Microsoft Corp. of Redmond, Wash., 2% each used Act for Financial Planners from SLM Holdings Inc. of Woodbury, N.Y., and Lotus Notes from IBM Corp. of Armonk, N.Y., 1% used ProTracker Advantage from ProTracker Software Inc. of Hampton, N.H., and 24% of respondents used other products. Respondents may have used more than one CRM program.
Among the advisers who reported having no dedicated CRM system, about half relied on Microsoft Outlook to keep track of their clients and contacts.
• Financial planning software. Forty-four percent of respondents have been using their primary financial planning software for five years or more, while 42% have been using it for one to three years and 14% reported using their primary software for less than a year.
Among those using such software, 19% used Advisor Workstation from Morningstar Inc. in Chicago, 15% used MoneyGuidePro from PIE Technologies Inc. of Midlothian, Va., 14% used Money Tree Software Ltd. of Corvallis, Ore., 13% used software programs from Emerging Information Systems Inc. of Winnipeg, Manitoba, 8% used WealthStation from SunGard Data Systems Inc. of Wayne, Pa., 5% used Thomson One from New York-based Thomson Financial, 1% used planning software from WealthTec in Clarksville, Md., and 25% used some other software program.
• Portfolio management software. In the area of custodian-hosted software, 16% each of RIAs used the platforms from Advent Software Inc. of San Francisco and Portfolio Center from Schwab Performance Technologies of Raleigh, N.C., a subsidiary of The Charles Schwab Corp. of San Francisco, 13% used Advisor Workstation, 10% each used the platforms of Albridge Solutions of Lawrenceville, N.J., and dbCAMS from Financial Computer Support Inc. of Oakland, Md., 6% used the platform of Investigo Corp. of Edina, Minn., and 2% each used the platforms of Captools Co. of Issaquah, Wash., NorthStar Systems International Inc. of San Francisco, Orion Advisor Services LLC in Omaha, Neb., and Thomson One from Thomson Reuters of New York. One percent used the platform from Interactive Advisory Software LLC in Marietta, Ga., and 20% of RIAs used no portfolio management software. Respondents may have used more than one portfolio management software program.
• Compliance. Fifty-six percent of respondents reported using an e-mail archiving and compliance service, and the remaining 44% used no service.
Of those respondents who used such a service, 40% used AdvisorMail from LiveOffice LLC of Torrance, Calif., 14% reported using the services of Smarsh Inc. of Portland, Ore., 6% used Global Relay Communications Inc. of Vancouver, British Columbia, 2% used Digital Info Security Co. Inc. of Westminster, Colo., and the remaining 38% used a variety of other service providers.
• Rebalancing software. Thirty-nine percent of respondents used an in-house program and 38% didn't use any rebalancing software. The remainder used a mix of solutions including dedicated rebalancing software. Four percent of those advisers using a dedicated rebalancing product used software from Advisor Software Inc., of Lafayette, Calif., 2% used iRbal from TD Ameritrade Inc. of Omaha, Neb., 1% each used Tamarac Advisor from Tamarac of Seattle and eAllocator developed by Joel Javer of Sharkey Howes & Javer Inc., the Denver-based planning and investment management firm, and 15% used some other rebalancing software.
• Application preferences. Of those surveyed, 23% favored self-hosted applications, while 24% preferred web-based applications. Meanwhile, 40% of advisers were in favor of a combination of both and 13% had no preference.
Certified financial planner Dylan L. Ross, founder of Swan Financial Planning LLC in East Windsor, N.J., said he prefers online applications primarily to save time on maintenance and upgrades.
"With online applications I can focus more time on my clients and less on maintenance, and the only drawback — speed — is becoming a thing of the past," said Mr. Ross, who didn't participate in the survey.
Another non-participant, H. Jude Boudreaux, a certified financial planner and director of financial planning at Bellingrath Wealth Management in New Orleans, said he favors self-hosted applications because they are fast.
"There's just no way I could see accessing the terabyte of data we have over the web," said Mr. Boudreaux, whose firm manages $50 million in assets.
• Technology assistance. When survey respondents were asked who they relied on for technology help in 2007, 38% reported relying on an independent consultant, 21% relied on a knowledgeable computer user on staff, 17% relied on a technology outsourcing company, 13% relied on a dedicated information technology person on staff and 11% relied on others for help.
Advisers may have relied on more than one person for technology help.
• Client account access. Eighty-five percent of independent brokers reported that their broker-dealers provided clients with Internet access to their accounts and 15% didn't permit client access.
RIAs were split almost evenly with 47% providing their clients with web access and 53% not providing such access.
• Web conferencing. Only a few respondents communicate with their clients via Internet conferencing. Just 6% reported using that form of communication often, 18% used it every once in a while and 76% reported never using it.
• Document management. Sixty-four percent of respondents said that they didn't use a document management system.
• Backups. Fifty-eight percent of advisers backed up their system daily, while 6% backed up more than once a week, 25% fully backed up their system weekly and 11% did a full backup monthly.
• Calculators. When asked which type of retirement income calculators they relied on, 66% of respondents reported that they used calculators bundled with their financial planning software, 19% relied on stand-alone software and 15% of respondents relied on calculators available from fund companies.
Most respondents (80%) were satisfied with their asset accumulation calculators, and 60% found their income distribution calculators satisfactory.
Michelle Ogden, a fee-only adviser in Oviedo, Fla., who specializes in retirement planning and analysis, said, “The majority of my clients remain in the accumulation phase, so I'm just not as concerned about [income distribution calculations] yet, but it is a concern for the future.”
She didn't participate in the survey.