Account opening is No. 1 tech concern: Survey

Beacon finds 'client onboarding' has replaced social-media archiving as brokers' biggest technology challenge

Apr 2, 2014 @ 10:04 am

By Joyce Hanson

Technology, practice management, account management, social media
+ Zoom

The challenge of capturing account-opening data has replaced social-media archiving as advisers' primary technology concern, according to a survey conducted by advisory think tank Beacon Strategies.

In fact, 96% of the 55 broker-dealers surveyed by Beacon reported that account opening is their number one tech concern in 2014, versus 62% in 2013. Last year, 65% of brokers named social media archiving and monitoring as their number one concern, according to Beacon, which announced the results of the survey Tuesday at the second annual TechLeaders 2014 conference in Las Colinas, Texas.

(Don't miss: SEC OKs use of third-party social-media endorsements.)

“People are concerned that with everything we do online, companies are collecting data on them and they don't know why,” said David Woltman, principal of Girard Securities Inc. and owner of automation firm Financial Database Services Inc.

Technology moves so fast that broker-dealers are able to capture new account data without knowing how digitized customer information might ultimately be used, Mr. Woltman said. Meanwhile, broker-dealers are worried about the potential risk, real or imagined, that capturing so much data will attract negative attention from the Financial Industry Regulatory Authority Inc., he said.

“It's the fear of being written up by Finra for something we don't completely understand,” he said.

(See also: Workflow platform could revolutionize the way advisers use technology.)

Also known as “client onboarding,” account openings go well beyond simply entering a new client's data, said Beacon partner Larry Paley. Broker-dealers are now reducing paperwork and increasingly moving their operations online, he said, and the digital capture of a client's information ends up supporting a wide variety of records processing and data mining.

“For the vast majority, onboarding has grown more complex, instead of becoming easier,” Mr. Paley said.

Chip Kispert, founder and managing partner of Beacon, said the findings reflect the rapid speed of change in financial services technology.

“In the last three years, I've seen more change in the way people do business than in the previous 25 years,” he said.

Consumerization of technology — exemplified in products that offer the look, feel and ease of use of Apple and Android products — also showed up as a significant finding in this year's Beacon survey, senior partner Marshall Levin said.

Sixty-five percent of broker-dealers named cost as a key consideration when choosing a technology product provider, followed closely by 60% who named user experience as a key consideration, he said.

“A product has to have an interface that people are comfortable with,” Mr. Levin said. “That's a big deal, and I think it's going to grow.”

As for traditionally in-demand technology offerings, “people just don't care,” Mr. Kispert said, noting that only 20% of broker-dealers had preferences for database design and programming languages.

The financial stability of a tech firm also was low on broker-dealers' demands.

“Five guys and two dogs in a garage” is a tech business model that works just fine now for the majority of broker-dealers, Mr. Levin said.

“Will it play and work well with other solutions? Those are the things that players are looking for,” he said.

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