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Advisory Firms Prioritize Technology Spending

Advisory Firm Prioritize Technology

Advisory Firms Prioritize Technology Spending

Advisory firms prioritize technology spending each year and this year is no exception.  How retirement advisory firms prioritize technology spending is definitely top of mind for executives at some of the country’s largest advisory firms.

This is the third year in a row BNY Mellon Pershing at its annual Elite Advisor Summit has conducted the survey at its annual conference. Conducted in real-time via mobile phone, the survey’s purpose was to gauge advisory firm executives’ views on talent and technology strategies, along with challenges and opportunities they’re eyeing for 2019.

Here are some of the key findings from the 2019 Elite Advisor Summit survey:

Eighty percent of advisory firm executives plan to increase their investment in technology in 2019. According to BNY Mellon Pershing, “… advisory firms are increasingly recognizing the importance of technology in driving business and are allocating more funds to it.” The number one goal of advisory firms when it comes to technology? Creating a better client experience (35%) on and offline. Nearly 30% say creating more capacity/efficiency for advisors is their firm’s top technology goal, while 23% want to create more capacity/efficiency in their firm’s operations. Ten percent want to create an online experience designed to attract new clients, and just 3% are looking at technology as a play to reduce overall operating expenses.

In addition, growing numbers of advisory firm executives are opting to integrate best-of-breed technology solutions vs. out-of-the-box ones, or they are choosing to build their own solutions. When it comes to their primary focus for tech investments in 2019, according to the advisory firm executives BNY Mellon Pershing surveyed:

  • 62% are focused on integrating technology (CRM, custodian, workflow, account opening)
  • Their firm’s client portal/website is a primary area of focus for 27% of executives
  • 8% are eyeing new technologies, such as artificial intelligence, voice recognition, robotics, etc.
  • Security infrastructure (i.e., cybersecurity and cloud technology) is a top priority for just 4% of advisory firm executives

Interestingly, none of the executives BNY Mellon Pershing surveyed said they planned to invest in technology for financial planning tools, such as cash flow planning, goals-based planning, etc. I(f we had to speculate, we might presume that advisory firms aren’t investing any dollars in this category in 2019 because they have previously invested in such tools, and thus, they don’t currently have a need to double down on their investment in these solutions.

In addition, the BNY Mellon Pershing survey found that with increasing numbers of firms adopting technology at a higher rate, there is a growing need to engage advisors with and entice them to adopt that technology if the firms are going to achieve a return on their investments. As such, the biggest technology challenges facing advisory firm executives include:

  • Adoption of technology among advisors (44%)
  • Identifying the right technology stack (28%)
  • Using technology to deliver the optimal client experience (16%)
  • Adoption of technology among clients (12%)
  • Keeping up with advances in technology (0%)

There has been much discussion in the industry about the need for advisors to move toward and adopt technology solutions in order to keep up with the evolving service models in financial services. Those who choose not to will likely get left behind, lose clients and perhaps even have to leave the financial advisory business altogether. One thing is certain, technology is on the rise in the advisory business and across the financial services industry, and it is a trend that no one can afford to ignore. Technology is only going to become more pervasive as time goes by. As such, it is time we embrace technology, like it or not.

Plan sponsors can use the BNY Mellon Pershing Elite Advisor survey results to initiate an important conversation around how advisory firms prioritize technology for their clients’ experiences. Is your advisor using technology? Do they have plans to integrate technology into their practice in 2019 and beyond? If so, what kind of technology? How will they use it going forward? How will that technology benefit your participants? These are all questions plan sponsors can use as a starting point to discuss technology with their plan advisor and determine if that advisor is embracing technology and all of the innovation and client service improvements it brings with it. Retirement plan advisors who choose not to embrace technology do so at their peril.

Steff Chalk

Steff Chalk

Managing Editor at 401kTV
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.
Steff Chalk

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