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Fidelity: Tech Gap Widens Between Haves, Have-Nots

By Murray Coleman June 20, 2017

The gap between independent RIAs who are keeping up with evolving technologies and those who aren’t is widening. And that’s stunting growth for advisors who aren’t acting proactively to keep on top of a rapidly evolving marketplace.

At least that’s what Fidelity finds in a new study published Tuesday looking at industry trends in high-tech adoption. As part of its research into firms using the latest electronic tools – including everything from interactive website software to advanced CRM programs and integrated back-office systems – the custodian has developed a list of tech-savvy “eAdvisors.”

In its latest survey of more than 600 broker-dealers and indie RIAs, Fidelity finds the ranks of advisors regularly reviewing and refreshing their tech platforms still growing – up to 40% from 30% in 2014.

Meanwhile, such leading RIAs are realizing “significantly” higher growth rates in areas such as assets under management and average client assets, says Tricia Haskins, vice president of practice management and consulting for Fidelity’s clearing and custody services group.

By contrast, those who aren’t upgrading their software on a regular basis seem to be growing at a much slower pace, Haskins tells FA-IQ.

She points out, however, that firms who are “technology savvy” aren’t just setting up regular review processes for their platforms. According to her team’s research, they’re also actively monitoring key innovations involving data aggregation tools, video conferencing software, social media services and cloud-based “vaults” to share reports and documents with clients.

“We’re finding that the gap is widening in terms of how firms are performing as businesses,” Haskins says. These leading "eAdvisors," she adds, are proving proficient at “leveraging cutting edge technologies to fuel better bottom-line growth.”

But creating an ongoing tech review process and dedicating staff to consider different implementation strategies can also pay off in attracting referrals, says Chris Schiffer, head of strategic planning and operations at AEPG Wealth Strategies in Warren, N.J.

At the indie RIA, which manages $850 million, he’s been tasked with checking with strategic tech vendors to get their input on major changes taking place in the market. “Change is so constant that it’s very easy to get whipsawed by technology,” Schiffer says.

If a new software suite or cloud-based service looks appealing, he sets up a demo for the firm’s IT committee. That group includes senior advisors, support staffers and outsourced IT professionals used by AEPG’s managers on an ongoing basis. Currently, his team is working on completing a major upgrade of the firm’s email security and document sharing systems.

Coming next year, Schiffer says, should be a new cloud-based CRM application. “We’re focusing now on enhanced security and productivity tools that will allow our advisors and their clients to work more collaboratively online,” he adds.

David Edwards

The cost of not keeping ahead of the technology curve, Schiffer argues, is greater than falling behind. “We try to stay very disciplined in assessing which new systems will actually create a more fulfilling experience for our clients,” he says, “and which are just adding more bells and whistles.”

By upping his tech game, New York-based advisor David Edwards says he’s seen asset growth at his indie RIA jump more than 360% in the past six years. “The single biggest transition for me was going from doing everything myself to using technology to empower my staff to operate without me,” says the president of Heron Financial Group, which manages $295 million.

With a team of five support staffers, he’s making "a 100% commitment” to delegating responsibilities through greater use of a Redtail CRM suite.

For example, the veteran FA says he can now take notes on client orders and send them directly to his operations manager. After transactions are complete, Edwards and his crew automatically have a paper trail documenting their moves. So does the investor.

“I’m easily saving 10 hours a week by more effectively integrating this type of technology across our entire operations,” Edwards says. “And that’s giving me more time to talk to clients.”

Another productivity enhancer he’s implementing is greater use of his main financial planning software, eMoney, to aggregate data for new clients who might hold their assets at different brokerages. “We used to spend anywhere from two to four hours just entering various portfolio data – much of which could be obsolete a month later,” Edwards says.

Clients are telling him they really appreciate such a high-tech system. “What they’re judging us against these days,” Edwards says, “are the online experiences they’ve become used to at interactive service providers like Uber and Amazon.”