Advisors use fintech frequently but which ones and why?

Trading and portfolio rebalancing are among the most popular types of technology among advisors, but which providers are their favorite and what determines satisfaction?

Financial advisors have shown almost unanimous support for using financial technology products for key elements of their working week. A poll of more than 800 advisors across the U.S. shows that 95% reported using fintech for processes such as trading and clearing, portfolio rebalancing and investment analytics.

Less than 4% of respondents said they never use fintech for trading and clearing, making this the most popular use, although this is usually software provided by an advisor’s home office rather than third-party solutions.

However, the survey conducted in May and published this week by ISS Market Intelligence reveals that solutions provided by asset managers (26% of advisors said this) and other third-party firms (41%) are commonly used for investment analytics.

Among those asset managers providing analytics solutions, BlackRock is the most popular among advisors — used by 26% of respondents, almost 10 percentage points ahead of Morgan Stanley in second place.

Asset managers’ software is also frequently used by advisors for direct indexing (24%) and portfolio construction (29%), with Vanguard rated the best for direct indexing by advisors although wirehouse advisors prefer Morgan Stanley.

In the RIA channel, where direct indexing solutions are used the least, Schwab and Vanguard are the preferred providers.

For portfolio construction, all three advisor groups ranked BlackRock’s Aladdin software as their favorite.

WHAT MAKES A GREAT FINTECH?

Asked about the things that matter most to them when choosing a fintech to use, respondents were clear.

Eighty percent said ease of use is most important, but best-in-class features (43%) and level of integration (44%) are also key factors.

However, peer recommendations and existing longevity and reputation matter less, which may encourage more competitors to offer innovative solutions to advisors.

“With only 5% of advisors considering market longevity and 2% considering peer recommendations as their number one factor, newcomers to the fintech market can be optimistic that managers will seek out the highest quality product, not the most entrenched,” said Greg Bawin, head of U.S. research at ISS Market Intelligence.

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