Biting the tech bullet

Despite scarce resources, advisers boning up on technology or hiring young guns for it

Jul 27, 2014 @ 12:01 am

By Joyce Hanson

Technology is at the top of many advisers' minds, but despite an interest in efficiency and automation, low adoption can be attributed to scarce resources — namely, time and money. While some are biting the bullet and getting trained themselves — or outsourcing tech upgrades — some firms are looking to next-generation advisers to assist with adoption.

Take Peter Blehl, for example. In April, eight months before his scheduled graduation from William Paterson University's financial planning program, Mr. Blehl started a full-time job at Heller Wealth Advisors.

The 26-year-old financial planning associate credits his early hire at least in part to his technology skills and ability to implement customer relationship systems, financial planning platforms and other software applications. When he interviewed for internships at other advisory firms prior to joining Heller, the conversations would revolve around technology as well, he said.

“My questions would be pointed and specific about tech systems they were using for planning, CRM and portfolio re-balancing, so if there were a second interview and an offer, I would be prepared on software systems,” Mr. Blehl said.

But during the internship interviews, Mr. Blehl noticed that the people in their 40s and 50s who interviewed him had “a mix of awareness” about technology when they asked about his software skills.

As suggested by Mr. Blehl's early career experience, demand is high for technologically proficient advisers. Yet the rate of tech adoption among advisers industrywide is low. Indeed, a Fidelity Investments study this spring found that while eight in 10 advisers say they would like to increase their use of technology, 95% reported they find it a challenge to integrate and use it.


According to advisers, the struggle with technology adoption is generational, as well as a question of time, training and cost.

“The average age of advisers is about 55, so maybe it is a generational thing. But it's also a busy job,” said Damian Gallina, a 44-year-old principal at Buttonwood Financial Advisors. “To get new technology into place is time-consuming. But if you're a 25-year-old adviser with 10 clients, you have all the time in the world to find new technology.”

Shaun Dowling, a partner and director of financial planning at Howard Financial Services, agrees that time — or lack thereof — plays a part in slowing down tech adoption.

“The biggest hurdle is the time that it takes to get a system put into place and running, while learning the system and getting your staff and clients up to speed,” he said. “There's software we're still looking to implement, but after one technology change this year, we have no interest in implementing additional technology.”

Advisers also worry they'll disrupt their business practices and client service if they're bogged down with integrating the latest in tech, according to Trish Haskins, who leads the technology consulting group at Fidelity Institutional Wealth Services. Among the top reasons for low technology utilization are insufficient training, poor understanding of the benefits of using software and a lack of clear incentives for staff to use it, she said.

Poor use of technology is especially pronounced with CRMs, she said.

“The effectiveness of the CRM is dependent on how many and how well people are using it,” Ms. Haskins said. “You have different people across the firm, and to have a robust set of data, everybody should be using it.”

Advisers who lack training and use CRM software simply as a digital Rolodex aren't getting their money's worth, said Greg Friedman, CEO of Junxure CRM and Private Ocean Wealth Management.

“I could use the CRM as a case study of low return on investment,” he said. “But if you use it to create and automate workflows and identify and push out client services and identify profitability, that's where you get real ROI.”


Expense certainly plays a part in the reluctance to adopt technology. But many registered investment advisers mistakenly pay more attention to cost than potential revenue when buying a new product, said Sheryl Rowling, principal of tax and financial planning firm Rowling & Associates and founder of portfolio re-balancing software firm Total Rebalance Expert.

“They might buy the cheap one because they got a deal, or get a free one from a custodian, because they're looking at the cost instead of the benefit,” she said. “But if spending $10,000 means I now have the ability to get $50 million of new business and eliminate trade errors, then the $10,000 is immaterial.”

Spending on training instead of on the latest technology can be the better investment, according to Raef Lee, manag---ing director of platform solutions for the SEI Advisor Network, which provides technology services for RIAs.

“There's no formal training program in place at a lot of firms,” Mr. Lee said. “But if you have a few thousand dollars put aside for a budget at the end of the year, it's almost certainly better improving your processes or training than putting it toward new technology. If you buy that shiny new toy, it will cost you three times more.”

As firms struggle with low tech adoption, the integration of different products has complicated matters, said Robert Powell, vice president of sales and marketing at document management firm Laser App Software.

“People buy things on impulse but don't implement on impulse,” Mr. Powell said. “You buy things because they look amazing, but deploying software is very different from buying it, and integration plays into that. Unfortunately, it's the bells and whistles that sell the software upfront, but advisers aren't honest with themselves about what software they're going to use.”


The key to a successful integration is ensuring that data from one system fit smoothly into another, according to Mr. Powell.

“You have to look at who has the right type of data for a particular integration,” he said. “Once you understand what the downstream system needs, you better understand how to locate data in the upstream.”

For RIAs that can't afford an information-technology staff, outsourcing may be the best way to ensure a higher rate of technology adoption, Mr. Lee said.

“Some of our advisers talk way more about technology than they should,” he said. “Part of it is proclivity: They get sunk into it, and they enjoy it. But it takes time away from their clients, and it doesn't help them much. This has to do with tech vendors' talking to advisers like technologists rather than trying to understand the adviser world.”

Mr. Blehl is an example of someone headed toward technology outsourcing, even though he's tech proficient. He plans to take a CRM course in August from web-based adviser software firm Envestnet | Tamarac, but he won't be responsible for purchasing, setting up and maintaining the CRM.

“Our advisers don't want to be IT departments,” said Stuart DePina, group president with Envestnet | Tamarac. “They want to plug and play, and only deal with one vendor who can solve all of what they do.”


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