Advisers look for ways to squeeze money from their tech budgets

Many financial advisers who attended the Technology Tools for Today conference last week are looking to squeeze as much money as they can from their precious technology budgets.

Take, for example, adviser Junmin Chang, a principal with the financial planning and portfolio management firm Cannon Beach Consultants.

“I’m here to get the best bang for our buck,” he said.

Mr. Chang said that he attended the conference to take a closer look at document management systems and client portals. He was also looking to get some difficult questions answered by the tech vendors at the event.

Mr. Chang said that he also came to glean from the informational sessions as much as he could on how to streamline his firm’s processes when it comes to using the technology it has.

“I want to find out where technology can add value both for me and the partners, and ask some hard questions face to face about ease of use and maintenance,” he said.

During the conference, held in San Diego, Calif., I attended many of the panel discussions and spoke with dozens of advisers to get a sense of what tech issues are important to them.

Among the most interesting panel discussions I attended was on application integration. It was clear from the session and the comments from advisers in the audience that there remains a conceptual divide between advisers and the tech providers that serve them.

Advisers who attended the conference said that they would like to have a variety of applications to choose from and they want any one system to fit easily with any other. They would also like adding applications to be easy.

Some vendors, meanwhile, noted that such software compatibility is a long way off.

To make a software program work with any other program, the industry has to implement uniform integration standards. But advisers’ day-to-day concerns have led companies to create a patchwork of compatible programs, one combination at a time.

“I think we will move toward having standards, but for now, we are starting with a base standard in terms of a data protocol: XML,” said panelist Reed Colley, chief executive of Black Diamond Portfolio Reporting LLC. (XML stands for extensible markup language, and it allows for the exchange of data between vendors because it defines the data with tags agreed to by all.)

Also on this panel was Suresh Kumar, chief information officer of Pershing LLC, Tony Leal, chief technology officer of PIE Technologies Inc., the makers of MoneyGuidePro financial planning software, and Brian McLaughlin, chief executive of Redtail Technology Inc., a provider of customer relationship management technology.

Attaining a paperless office through the use of document management and, increasingly, electronic content management software also remains a strong concern among advisers.

Selecting a product and actually getting started continues to be a challenge, many advisers said.

As is the custom at T3, as the conference is known, industry experts, many of them vendors, provided company-agnostic presentations on areas of interest. One such session was presented by CEO Image Systems Inc. president Conrad Foster, who noted that 70% of advisers are still not actually using a true document management system, even though they think they are.

One of the liveliest sessions that I attended was on the use of smart phones by advisers. Many of those in attendance wanted to find out what their peers are using and to share their own favorite applications, in addition to getting a sense of what the best device or platform is for advisers.

At that session, I sat next to adviser Malay Vasavda, principal of Quantum Financial Management LLC. He readily showed me how easily he could access his Redtail Technology CRM system from the web browser on his new Palm Pre smart phone.

“Certainly, this isn’t going to be the way I primarily access it, but it does point to the future — secure access from anywhere on whatever device you are using while mobile,” he said.

There was also an interesting tidbit that came out of a security session.

About 2 million laptop computers were stolen in the U.S. last year, according to the FBI. That means advisers need to make sure that all the PCs in their offices are always up-to-date in terms of anti-virus and firewall protection software. And if you have a laptop or a notebook with client data on it, and especially if you travel, turn on encryption and at least make sure logging on to the device requires a password unique to you.

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CONTINUED INTEREST IN ACCOUNT AGGREGATION

I continue to hear from advisers that account aggregation is going to be one way that they can increase their assets under management — or at least assets under advisement — this year.

No adviser can provide solid advice in a vacuum, and account aggregation is the only way advisers are going to achieve a holistic view of a client’s assets beyond what they are directly managing.

ByAllAccounts, one of many providers of account aggregation to advisers, conducted a survey over the last two months using the online service Surveymonkey.com.

The Q1 Revenue Survey was promoted through several outlets (mainly banner advertisements and e-mails), and about 500 advisers participated.

It should come as little surprise that 35% of advisers cited attracting new clients as their biggest goal for 2010.

In addition, 48% of survey respondents said it is extremely important to provide advice on all financial assets, including not only those directly under management but those that are held away, such as a client’s 401(k) and other retirement accounts.

What is surprising, however, is that 46% of survey respondents are already billing for account aggregation by including held-away assets in their service fees.

Even with last year’s downturn, aggregation companies are attracting advisers.

ByAllAccounts chief executive James Carney said in a recent interview that the company added 140 advisory firms as clients in 2009, bringing the total to nearly 500. And over the last 24 months, he said, the company has doubled the total assets it aggregates for advisers to $100 billion.

E-mail Davis D. Janowski at [email protected].