Advisers are adopting tablets in a big way. That is the single most exciting finding this year in InvestmentNews' annual survey of technology usage and satisfaction.
Specifically, 51% of advisers are using a tablet device, an amazing level of adoption for a traditionally stodgy profession. While the iPad from Apple Inc. clearly dominates — 85.8% of advisers selected it as the tablet they use for professional purposes — Android-based devices achieved double-digit adoption at 13.3%.
Three of the four tablet applications most popular with advisers were those created by custodians for accessing their advisory platforms, according to the survey.
While it is difficult to tell yet just how transformative this technology ultimately will be, it already is having an effect on the way many advisers and their clients access data and reports.
Despite the hype surrounding Google's new Nexus 7 tablet (built by AsusTech Computer Inc.), the impending introduction of Microsoft Inc.'s Slate device and the consumer popularity of Amazon Inc.'s Kindle Fire, Apple's dominance in the tablet market is likely to continue for some time. Year-to-date global market share for 2012 shows the iPad leading with 64.4% of sales compared with 9.9% for Samsung and 4.9% for Amazon's Kindle.
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While such market dominance makes the iPad a pretty safe bet for advisers are interested in purchasing a tablet, shifts in application development could make decisions based on tablet operating systems less important.
Principal among these is the rapid adoption of the HTML5 specification. This, in a nutshell, should make it easier and less expensive for technology providers to produce and maintain web-based applications for tablet devices. To date, many of the most popular applications for tablets continue to be operating-system specific, such as iPad or Android apps downloaded to the device, versus those run from within a web browser.
Of the 1,002 advisers who participated in the survey, 38.6% are registered investment advisers, 29.2% are registered representatives of independent broker-dealers, 19.2% are financial planners and 5.5% are wirehouse brokers. The remaining 7.5% are advisers working at banks, insurers and trust companies.
Significant resources continue to be invested by Schwab Advisor Services and TD Ameritrade Institutional in building out advisory platforms. One goal of the survey was to measure adviser interest in these developments.
Among the 149 advisers who said that they keep assets under custody with Schwab, 45% said they would consider replacing their current technology with that being developed as part of the Schwab Intelligent Integration platform. This was very close to the response we received in last year's survey, when 42.2% of the Schwab custodial clients said they would consider switching.
TD Ameritrade Institutional's development initiative is far less centralized than Schwab's and is based on opening its application programming interface to third-party developers. That gives the typical adviser more choice in adopting specific technology products.
With this in mind, we rephrased our question this year. The advisers who indicated that they keep assets under custody at TD were asked: “Would any of the new applications integrating with TD Ameritrade make you consider dropping your current applications?”
Of the 108 TD advisers responding to the question, 63% said “yes.”
When TD Ameritrade RIAs were asked last year if they would consider a change to the new platform, 47% said “yes,” and 53% said “no.”
CUSTOMER RELATIONSHIP MANAGEMENT
It continues to strike me as very odd that a significant number of advisers use no customer relationship management system at all.
In fact 15.5% of respondents to this year's survey answered that they do not use CRM products, a tenth of a percent more than in 2011.
Redtail took the No. 1 one spot this year: 28.5% of respondents selected it, with Junxure second at 11.3%. Last year, the positions were reversed, with Junxure at 21.2% and Redtail with 18.1%.
The goliaths of the CRM world are on the list again, but haven't penetrated the investment advisory industry much further and came in with close to the same number of responses as last. Salesforce.com held on to the No. 3 position with 7% of respondents while Microsoft Dynamics fell to fifth with 4.4%. Advisor Assistant from Client Marketing Systems Inc. was fourth with 5.5% of respondents.
In what seems incongruous, given the centrality of CRM software in most advisers' practices, 15.5% of the respondents — about the same percentage as last year – indicated they use no CRM system at all.
Of those that have CRM, the vast majority of users — just shy of 78% — indicated they were satisfied with their CRM system, while only 7.2% indicated they were dissatisfied to very dissatisfied. Nearly 15% of the respondents said they were indifferent to their CRM. We interpreted this to mean that these users were not enthusiastic about the products they use.
The most notable changes in responses to the financial planning section of this year's survey can be explained partially by methodology. Instead of asking advisers which company's products they use, we asked, by name, what products they use.
MoneyGuidePro from PIETech Inc. again topped the list, having been selected by 26.1% of respondents.
That was followed by eMoney360 from eMoney Advisor LLC, selected by 10.3% of respondents; the planning module of Morningstar Inc.'s Advisor Workstation, 6.4%; NaviPlan Select from Zywave Inc., 5.1%; and, finally, the planning-related features of Morningstar Principia, 4.1%.
Compared with last year, fewer respondents selected products from Money Tree Software Inc. While we did not list the various products from the company in last year's survey, MoneyTree, as an overall provider, was selected by 26% of the respondents. This year, we listed all four of their products in the survey, but even after combining the number of respondents using any of them, the company's total was just 6.2%.
We noted that 17.1% of the respondents use no financial planning applications, probably an indication that a significant number of practitioners in our readership do not offer planning services.
Satisfaction levels again are high among users of financial planning software: Slightly more than 83% were satisfied to very satisfied. The percentage who indicated indifference was 12.7% and only 4.2% of respondents were dissatisfied to very dissatisfied with their planning technology.
PortfolioCenter from Schwab Performance Technologies, a commonly used product of RIAs, was selected by 12.8% of respondents. Two offerings from Morningstar took third and fourth place, respectively: Morningstar Office at 11.2% and Principia CAMS at 5.7%.
As was the case last year, a significant percentage of the respondents — 22.8% — use no portfolio management applications, up slightly from 20% in 2011.
More advisers have embraced re-balancing applications in the last year. Although 62.8% indicated they don't use a portfolio re-balancing system, that number is down from 70.7% last year.
While several product offerings have arrived on the market in the last two years, none of them managed to crack the top five on our list this year.
Many advisers continue to regard automated re-balancing applications from third-party vendors as too expensive, and 5.8% create their own customized solutions for this task.
Another 4.8% chose “proprietary system,” an indication that their firm or broker-dealer platform has created its own system.
The Advisor Rebalancing module from Envestnet | Tamarac was selected by 4% of the respondents this year, followed by the re-balancing system found on the WealthCentral platform from Fidelity Institutional Wealth Services (built by Northfield Information Services Inc.) with 3%, and that of Advisor Software Inc. with 2.6%.
While 58.2% of respondents indicated they use some sort of document management system, the category remains highly fragmented.
Redtail Technology again claimed the top spot with 10.9% of respondents selecting its Redtail Imaging product. That was followed by Laserfiche (a unit of Compulink Management Center Inc.), with 6.1% of advisers indicating use of its Avante product.
Microsoft Corp. also returned to the list with its Office Document Imaging (a component of the company's ubiquitous SharePoint Server product line), with 5.4% of respondents.
Paperport from Nuance Inc. again made the list with 5% of the respondents. Another 4.5% indicated that their firm uses a proprietary system.
To confirm the notion that this category is fragmented, respondents indicated that they use 10 other products, though just four of those could claim more than 1% usership.
Another extremely fragmented segment of the advisory technology industry is compliance applications.
Clearly, no single vendor can claim to have cracked this product category.
Again this year, a high percentage of advisers — 68.1% — indicated that they not use compliance products. That's down slightly from 69% in 2011.
Despite this low level of adoption, 70.5% of the 278 advisers who indicated they are users of this technology are satisfied to very satisfied with their products. Indifferent advisers made up 26.3% of the total and a mere 3.3% are dissatisfied to very dissatisfied with what they are using.
When it comes to getting a more holistic look at client assets, and the potential for bringing more of a client's held-away assets under management, many advisers have begun to turn to third-party account aggregation providers.
Even so, the only provider with double-digit representation in this year's survey was ByAllAccount Inc., which was selected by 13.2% of respondents.
AllData Advisor, another product of CashEdge — can claim 5.7% share of respondents.
Two products that primarily are not account aggregation providers occupy the third and fourth positions this year — an interesting development that may point toward the ultimate demise of the category as a distinct entity. eMoney Advisor, a provider of many different advisory modules and technologies, including financial planning, now aggregates almost 80% of client accounts on its own (a few years ago it outsourced this to other providers).
Grendel Online, which is another provider of multiple components, including CRM, also has its own aggregation service and was selected by 2.5% of respondents.
Advent Custodial Data (from Advent Software Inc.) was the fifth-most-popular selection, with 2%.