The use of electronic signatures in the advisory industry will pick up speed in 2014, as providers improve their products, advisers and their clients get more comfortable with digital transactions and more financial services firms adopt the technology.
E-signature technology got a boost on Tuesday when DocuSign Inc. announced it had raised $85 million from large institutional investors, including customer relationship management firm Salesforce.com Inc. The funds will help DocuSign create new innovations on its platform, invest in strategic partnerships and expand internationally, the company said in a statement.
In addition, DocuSign, which has coined the term “digital transaction management” to describe its soup-to-nuts document tracking service, has just released a new cloud-based version of its platform. It also last week entered a strategic partnership with Microsoft Corp. to bring DocuSign's management services to more than 1 billion Microsoft Office users around the world.
Andy Wang, senior manager for technology product management at TD Ameritrade Institutional, identified digital transaction management as a significant tech trend for 2014. Mr. Wang also believes advisers will adopt e-signatures at a much faster pace this year because the technology lets clients create a secure online signature and then quickly click through the pages of a digital document and sign as they go.
“Digital transaction management is more than signing a document. It's workflows and audit trails,” Mr. Wang said, adding that while DocuSign is the market leader, advisers on TDAI's open-architecture Veo platform also are able to use e-signature products from Signix, Adobe Systems and other providers.
“Designing a solution is one thing; getting advisers to use it is another issue,” he said. “But e-signature is such a clear trend compared to two or three years ago. The attitude now is, 'I want to do it. Help me do it.'”
At the T3 Technology Tools for Today conference in February, T3 co-founder Joel Bruckenstein agreed, announcing, “This is the year of e-signatures.”
Until recently, advisers' concerns about whether e-signatures were safe and legally binding held them back from fully embracing the technology. However, U.S. legislation making e-signatures as legal as handwritten ones, and broader use of e-signatures in the mortgage and other industries, have encouraged the advisory industry to start adopting the technology.
Crystal Clifford, senior vice president of business technology solutions for LPL Financial, has looked into the security of e-signatures for clients.
“From a risk and compliance perspective, LPL has certainly found it to be safe,” Ms. Clifford said. “We did an in-depth analysis of DocuSign's platform, and they have a whole suite of authentication options.”
LPL adopted DocuSign as its provider in 2012. Now, Ms. Clifford said, the firm is looking for more financial services companies to sign on with e-signature technology in order to make third-party transactions run more efficiently.
“The more firms that adopt e-signatures, the more commonplace it will become, and we welcome that,” she said.
Tom Gonser, DocuSign's founder and chief strategy officer, said that in addition to LPL and TDAI, financial institutions now using DocuSign include Bank of America,
Fidelity Investments, The
Charles Schwab Corp., GE Gapital, ING U.S., The Hartford Financial Services Group Inc., Aon Corp. and American Express Co.
“Fidelity is probably the furthest along” in adopting e-signatures, Mr. Gonser said.
He sees room for improvement in financial firms' adoption rate of the technology, mentioning his own frustration when recently transferring his own accounts to a new financial adviser.
“They sent me a lot of paper, which drove me crazy. It took me a month,” he said. “It was easy to just put in a briefcase and forget. With e-signatures, you can do it all in one week to a day, with no sticky tags — and my wife can sign even if she's not sitting next to me, on a web service or tablet.”
Bill Winterberg, founder of the technology consulting firm FPPad, noted that advisers' use of a particular e-signature provider will depend on which product their custodian or broker-dealer accepts. However, advisers can use the e-signature product of their choice for internal documents such as client contracts or fee disclosures, he said.
“Certainly, DocuSign is the 800-pound gorilla in this space, and you see that with the money they raised [Tuesday],” Mr. Winterberg said. “Clearly, there's a client experience aspect to [e-signatures]. It's got to be easy to use. It's another lens advisers need to use when evaluating these systems: How easy, yet secure, is it for the client to use?”
