Tech-heavy advisor practices have a performance edge: Cerulli

Tech-heavy advisor practices have a performance edge: Cerulli
Survey research finds heavy users tend to grow faster as advisors report greater operational efficiency and productivity in serving clients.
APR 25, 2024

New research by Cerulli Associates indicates that financial advisory practices that integrate technology extensively are experiencing more rapid growth compared to those that do not.

The findings, detailed in the research and consulting firm’s “State of US Wealth Management Technology 2024” report, are the latest addition to the rich body of knowledge confirming the advantages of wealth technology for advisors.

According to the report, advisory practices that lean heavily into technology gain a valuable edge over their competitors, as they do better in attracting new clients and managing larger assets.

In survey research conducted by Cerulli, nearly thirty percent of practices identified as heavy technology users have seen higher growth over the past three years, a stark contrast to only nine percent of light users.

The benefits of technology are most evident in enhanced productivity and efficiency within these practices. Cerulli found heavy tech adopters tended to serve more clients per staff member, outperforming other firms across measures of clients per producing advisor, clients served per professional staff, and clients per senior advisor.

"When used effectively, technology is a valuable growth driver," Michael Rose, director at Cerulli Associates, said in a statement. “However, more tech is not necessarily better for practices. Simply incorporating more technology within an advisor’s practice can have the opposite desired effect.”

When asked what tools boosted their operational efficiency, advisors’ top answers were e-signature programs (cited by 65 percent), CRM software (44 percent), and video conferencing (29 percent). Those tools were also among the most frequently used, ranking first, second, and fourth on the usage leaderboard, respectively.

Despite the benefits, advisors also face hurdles in adopting technology. Among those polled by Cerulli, at least seven-tenths said they were held back by compliance restrictions (73 percent), lack of integration between tools (71 percent), and a too-short runway for training and implementation (70 percent).

"Advisor practices should use a technology strategy that closely aligns with the types of clients they serve, the specific services they offer, and how they offer them" Rose added. “Educating advisors on best practices and enabling them to collaborate and learn from their peers is likely to have as much, if not more of, an effect than rolling out the next generation of an existing set of tools and technologies,” he said.

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