Three-quarters of advisors flag compliance as a top tech challenge

While financial advisors have massively ramped up their tech adoption since the COVID-19 pandemic, the industry still faces many challenges with respect to technology, according to a report by Cerulli Associates.

The new report unveiled Wednesday revealed managing technology needs is one of the most pressing issues for advisors, with 29 percent flagging it as a major challenge, tied with building multigenerational client relationships.

Among many hurdles, compliance emerged as one of the most frequently cited, with 73 percent of advisors pointing to compliance restrictions that hamstring functionality or otherwise limit their ability to use their technology to the fullest.

Another 71 percent were frustrated by a lack of integration between tools and applications as a major concern, pointing to a long-running problem of fragmentation in wealth technology. Meanwhile, 70 percent said they struggle to find the time to learn and implement new systems.

Michael Rose, director at Cerulli, suggests that the industry has an opportunity to address these challenges through better education and support.

“Many of the challenges … can be overcome through knowledge-sharing efforts to educate and inform advisors about [how to effectively leverage] the technology tools already available to them,” Rose said in a statement.

The report also highlights widespread discontent among advisors, finding only half are satisfied with the training and support they currently receive.

Larger advisor practices, which typically utilize more specialized technology and offer a broader range of services to clients, are among the most critical segments to target for software vendors, broker-dealers, TAMPs and other custodians that provide technology to advisory businesses.

“[I]t is critical that B/Ds, custodians, turnkey asset management providers, and other firms that provide technology platforms to advisors elicit sufficient and ongoing feedback to ensure the technology stack they offer remains aligned with the evolving needs of the practices they serve,” Rose said.

The report also cast a spotlight on advisors’ perceptions around tech changes, particularly when it comes to switching from the software products and solutions they currently use.

For seventy-five percent, the idea of changing CRM systems was “very” or “somewhat difficult,” making it the most challenging transition. Another 68 percent agreed replacing their client portals would be a challenge, while 58 percent thought switching to a different financial planning software solution would be a medium- to -high-difficulty initiative.