For many advisory practices, the technology focus will be making do with smaller budgets — and doing more with existing technology.
"Rather than seeing the opportunity that this market downturn presents, and increasing spending to increase efficiencies and take advantage of the current market, advisers will instead make technology the first thing they cut in their budget," said Craig DuVarney, an adviser in Concord, Mass., who echoed the sentiments of many advisers and industry experts.
Some firms, such as Thoma Capital Management LLC of Towson, Md., which can no longer afford to buy new software, plan to make better use of technology that it owns. The firm has cut its capital expenditures for at least the next six months.
Thoma Capital will rely on features that it hasn't used in the past but which are included in Junxure, its customer relationship management software from CRM Software of Beach Gardens, Fla., said the firm's principal, Tom Taylor, who is a fee-only financial planner and certified public accountant. The firm manages about $17 million in assets.
Junxure automates tasks and enables managers to delegate responsibilities to other employees. In addition, it lets the firm create processes that are repeatable and predictable, such as making sure that an account is opened the most efficient way each time.
A focus on CRM and getting the most out of applications is likely to be a theme among advisers this year, said Robert Ellis, senior analyst of Celent Communications LLC of Boston.
"The work flow and tracking features built into those systems are going to be key for maintaining regular contact for purposes of client retention," he said.
For its part, CMC Advisers in Portland, Ore., will focus on automating trading and re-balancing systems, a manual process for many firms.
"Advisers that manually perform trades and lack a robust trading platform will struggle to service clients profitably," said operations manager Bill Winterberg.
Based on increased demand, Mr. Winterberg expects that prices will drop for re-balancing software or services, such as iRebal, owned by TD Ameritrade Inc. of Omaha, Neb., and Tamarac Advisor, from Tamarac Inc. of Seattle.
CMC manages about $170 million of client assets
In another effort to cut costs, advisers will look to their broker-dealers for better trading tools.
"Advisers need better portfolio management and performance-reporting tools to improve customer service and increase their book of business," said James Penman, whose Penman Consulting of Charlotte N.C., serves the managed-account sector.
On the brokerage side, the acquisition or demise of major players will mean new technology needs.
"All the shotgun weddings in the brokerage industry are necessitating consolidation projects, which consume a great deal of technology resources," Mr. Penman said. Most importantly, look for a great number of unplanned regulatory, compliance and risk management projects that will be forced on broker-dealers, custodians, brokerages and banks in 2009.
"We are going to be entering into a whole new world of regulation and oversight," Mr. Ellis said.
Investors want more real-time, hands-on, online access to their portfolios than in the past, said Blaine Maxfield, chief operating officer for the wealth management business at SunGard Data Systems Inc., a Wayne, Pa., software provider.
"There's more of a shift to a validation type of model, one that includes self-directed what-if-ing," he said, basing his comments on surveys the firm has conducted. "While this wasn't really looked at favorably by advisers in the past because they were afraid of being replaced, a collaborative approach is seen as more acceptable now."
E-mail Davis D. Janowski at [email protected].
