Tech tools fall flat among advisers: J.D. Power survey

While firms are investing heavily in technology, many have missed the mark on delivering the best experience

Financial advisers’ expectations for core tech tools are still outpacing what’s available at most wealth management firms, despite heavy investments in technology, according to J.D. Power’s 2020 U.S. Financial Advisor Satisfaction Study.

There has been a strategic shift to reallocate investments away from massive recruiting initiatives and toward improving the experience and productivity of existing advisers by investing in their technology platforms, said Mike Foy, senior director at J.D. Power.

Yet, there is still a disconnect between the 92% of advisers who say they rely heavily on technology and the value that current technologies are providing, Foy said. In fact, just 48% of advisers say the core technology their firm currently provides is “very valuable,” which shows there’s still a level of dissatisfaction, Foy said.

“That needs to change if firms want to win the talent war,” he said.

The study measures satisfaction among six factors: compensation; leadership and culture; operational support; products and marketing; professional development; and technology. The findings are based on responses from 3,262 employee and independent financial advisors that was fielded from January through April 2020.

Leveraging technology to deliver a financial adviser experience that maximizes both loyalty and productivity is critical for success, Foy said, particularly given the risk of dissatisfied advisers taking clients to a competitor. According to the J.D. Power study, 19% of wirehouse advisers intend on leaving their firms within the next two years. Meanwhile, one in 10 independent advisers have considered leaving their firm within the next two years.

According to InvestmentNews Research 2020 Adviser Technology Study firms spent a record 3.69% of revenue on technology, a significant increase from the 3.22% of revenue that was spent in 2018, which was the average of spending, on a percentage of revenue basis, for the previous six years.

“Firms have to ensure that the core technology is really strong, all while bringing on new tools that are critical for advisers’ success in the future,” Foy said. “On top of that, there are so many different tools advisers need in order to succeed in managing their practice. You have to be able to deliver those to them in a way that’s integrated and allows them to move in and out of these tools easily as their needs dictate.”

When it comes to integration, currently just 21% of advisors in both the employee and independent channels say their tech platform is “completely integrated” with features such as single sign-on, data-synching and workflow, according to the study. Further, just 9% of advisers are currently using innovative tools like artificial intelligence, although advisor satisfaction with technology is 95 points higher, on a 1,000-point scale, when they use AI tools.

Edward Jones took the top spot with highest overall satisfaction among employee advisers with 920 points out of 1,000, a score that Foy said is rare. Despite coming in second overall with a score of 867, Raymond James & Associates was ranked as the most attractive firm for employee advisers if they had to move elsewhere. Fidelity ranked best in terms of technology satisfaction, according to the study.

However, the study does not include the recent enhancements in tech workstations many major firms have implemented lately, like Merrill Lynch’s new tech-driven workstation, Client Engagement Workstation, Foy said.

“The rollout of these new workstations were after our survey,” he said. “It’ll be interesting to see how some of the newer workstations move the needle on this over time.”