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Our third annual survey has expanded to cover software, by wgk91289


									                                                      Our third annual survey
                                                       has expanded to cover
                                                software, hardware, advisory
                                                         platforms and more.
                                                        See how your choices
                                                 stack up against your peers’.
                                                       By Joel P. Bruckenstein
                                              Infographics by Tommy McCall

52	   December 2009						Financial Planning
             Welcome to Financial Planning’s third         ber of insights into which technologies        Android phones, and nationally T-Mobile
             annual technology survey. A number of         work for advisors and which don’t. You         coverage trails that of Verizon and AT&T
             factors have conspired to make this our       will find ideas for new products to pursue     (the only iPhone carrier). In addition,
             best survey to date. This year, 1,550 of      and old favorites that deserve an upgrade.     T-Mobile offered only two Android
             you responded to our questionnaire.           The survey also contains ample guidance        phones, neither of which is produced by a
             That’s more than four times the num-          for software developers and marketers. In      leading cellphone manufacturer.
             ber of respondents we had last year and       some cases, there seems to be a real discon-      By the time you read this article,
             roughly six and a half times the number       nect between what advisors want and what       though, T-Mobile and Verizon will both
             we had for our inaugural survey. This large   vendors are selling.                           have launched Android phones manu-
             sample gives us a clearer picture of what                                                    factured by Motorola. Verizon’s Droid,
             you think. And now, with three years of       SmartphoneS                                    for example, will feature improved hard-
             data under our belt, we can begin to track    This year marks our first look at smart-       ware—a more powerful chip, higher-
             changes over time. Over the years, we’ve      phone usage and satisfaction. It came as       quality camera, superior design—as well
             tweaked existing questions and added          no surprise to us that more respondents        as the new Android 2.0 software. We
             a few new ones. We think you’ll be sur-       use a BlackBerry (502) than any other          expect other manufacturers and carriers to
             prised and intrigued by the results.          smartphone. The iPhone placed second           offer Android phones by next year, which
                 The past 12 months have been an           (305); Palm (195) and Windows Mobile           should lead to higher satisfaction ratings.
             adventure in every way, and technology is     (186) were in a virtual tie for third place;
             no exception. Many advisory firms, con-       and Google’s Android (71), the newest          CuStodial and B-d offeringS
             fronted by a market meltdown and rapidly      entrant, brought up the rear.                  For the first time, we asked you to rate
             shrinking profit margins, immediately cut         When it comes to user satisfaction,        custodians’ and broker-dealers’ technol-
             discretionary spending. While we would        however, the numbers tell a different          ogy offerings. Among custodians, Schwab
 y           argue that technology spending is a neces-    story. The iPhone was the clear favorite,      blew away the competition, with 45% of
  r          sity, many advisors delayed purchases
             nonetheless. A number of technology ven-
                                                           with an amazing 64% of users reporting
                                                           that they were “very satisfied” with their
                                                                                                          respondents calling themselves very satis-
                                                                                                          fied and another 41% satisfied. A total
 y           dors we spoke with (who requested ano-        phones. This compares with 46% of “very        positive response of 86% is very impres-

e.           nymity) confirmed that new sales through
             the first six months of 2009 were weak.
                                                           satisfied” BlackBerry users. Palm (20%),
                                                           Google Android (18%) and Windows
                                                                                                          sive. TD Ameritrade and Fidelity were
                                                                                                          in an almost dead heat for second place.
 s               At the same time, the market meltdown
             exposed inefficiencies that advisory firms
                                                           Mobile (18%) trailed badly here.
                                                               At the other end of the spectrum, only
                                                                                                          Both had a total of 73% satisfied, but TD
                                                                                                          Ameritrade had a three percentage point
 ’.          had overlooked when revenue growth was        5% of BlackBerry users and 7% of iPhone        lead in very satisfied advisors. Pershing had
n            robust. So, while market madness in 2008
             and 2009 temporarily hurt technology
                                                           users called themselves “very unsatisfied,”
                                                           while the others phones suffered higher dis-
                                                                                                          a respectable 65% total satisfaction rating.
                                                                                                              We were fairly surprised to see that
 ll          sales, over the long term it may help—by      satisfaction grades: Google Android (24%),     Shareholder Service Group (SSG) achieved
             refocusing advisors’ attention on the bot-    Palm (17%) and Windows Mobile (12%).           only a 54% total satisfaction rating and a
             tom line and the importance of efficiency,        It’s clear that iPhone users love their    24% very unsatisfied rating. This is all the
             two areas where good technology makes a       phones and BlackBerry users are con-           more shocking since SSG essentially offers
             huge difference.                              tent. Google Android’s poor showing            the same technology platform as Persh-
                 As has been the case in every survey,     was a surprise. Several factors may be at      ing—with additional enhancements. Fur-
             some of your responses really surprised       work here: First, at the time of the survey,   thermore, SSG touts its high-service/high-
             us. As you’ll see, the results offer a num-   T-Mobile was the only carrier offering         touch approach.

                                                                      Financial Planning      December 2009      53

      053_FPDec09 2                                                                                                                         11/11/2009 11:50:28 AM
       How are you compensated?

                             Fee only

                                                                 Perhaps SSG’s problem is one of per-        walloped its nearest listed competitor,                         A
                                                             ception. Since SSG promotes itself as           LPL, which drew a 27% very satisfied rat-                   they
                                                             providing a very high level of service, it’s    ing. In total satisfaction (satisfied plus very             up fr
                               47%                           possible that SSG advisors expect more          satisfied) LPL matched Commonwealth’s                       less th
                                                             than Pershing’s do. Dan Skiles, execu-          score of 75%, placing them at a respect-                    Thou
                                                             tive vice president at SSG and formerly         able second overall. At the other end of                    signif
                                                             of Schwab, speculates that the dissatisfac-     the spectrum, it appears that a significant                 want
                          Commission only
                              16%                            tion could be due to the fact that the typi-    number of reps are disappointed with the                    were
                                                             cal SSG advisor is less experienced than        technology job at AIG (20% very dissat-                     cess o
                                                             the typical Schwab advisor, so the SSG          isfied; 27% somewhat dissatisfied); HD                      conti
                                                             advisor faces a steeper learning curve. In      Vest (17% very dissatisfied; 31% some-                      have
      What are your firm's assets under                       addition, Skiles says, SSG advisors have        what dissatisfied); and Trade PRM (18%                      patib
                                                             not received the NetX360 upgrade yet—           very dissatisfied; 32% somewhat dissatis-                       If
                      0%      10%   20%        30%    40%
                                                             so they have not benefited from all the         fied). If 40% of your advisors are unhappy,                 it wi
        Less then                                            goodies on the new platform. It will be         technologically speaking, you have a prob-                  vend
       $25 million                                           interesting to see if satisfaction improves     lem. If that number is 50% or more, you                     ducin
         $25–$75                                             next year, after the NetX360 rollout.           have a serious problem.                                     Mac
           million                                               Only 50% of Scottrade advisors were                                                                     with
         $76–$150                                            pleased, technologically. We believe some       Operating SyStemS                                           tions
           million                                           of the same factors that hurt SSG may also      For the second time, we asked respon-
                                                             have negatively affected Scottrade, which       dents which computer operating system                       Crm
            million                              2007        also has many new, relatively small advisory    they use. With the release of Windows 7                     As we
                                                 2008        firms that need to learn the ins and outs of    just prior to the survey’s closing, and the                 ies h
           million                               2009        custodial platforms. The firm rolled out a      recent release of Apple Snow Leopard, we                    mana
                                                             new web platform this summer, and some          were interested to see if there were any                    the s
      $501 million                                           advisors may be experiencing transition         major changes from last year. There was                     ware
       to $1 billion
                                                             pains. In addition, Scottrade is still new      some movement, but it looks like the                        succe
                 Over                                        to servicing advisors. According to Brian       really big changes will come in 2010.                       day b
             $1 billion                                      Davis, Scottrade Advisor Services’ business         As expected, Windows XP, the                            CRM
                                                             manager, “We plan regular upgrades to the       technologically ancient O/S originally                      mana
       How satisfied are you with the                         platform, the first of which is scheduled       released in 2001, still led the pack, with                  and w
       smartphone you use?                                   for late 2009.” It will be interesting to see   80% of respondents having at least one                      delive
                                                             what effect, if any, the new platform has       XP computer. That’s down from 87%                           is use
         very satisfied                                       on next year’s rankings.                        in 2008, but remains a huge majority.                       will r
         somewhat satisfied                                       We suspect that Schwab’s high scores        Advisors’ resistance to change is clearly                   mem
         somewhat unsatisfied                                 are attributable, to an extent, to the fact     more of an indictment of Windows Vista                      tory o
         very unsatisfied                                     that much of their client base has been         than it is an endorsement of XP. Only                       analy
                                                             with them for years, so they are deeply         21% of respondents claimed they had a                       impr
       iPhone                                                familiar with Schwab’s technology. But we       Vista computer, up from 19% last year.                      This
                                  64%       22%      8% 7%   don’t think that’s the whole story. Clearly,    The slight increase is probably a sign that                 effici
                                                             Schwab is doing something right. By the         advisors merely replaced old XP machines                    satisf
                                                             same token, we think Pershing’s lower           that died in 2009.                                              O

                           46%                 43%
                                                             scores can be pegged to two factors: less           In what looks to be a promising sign                    prove
       Palm                                                  experience in the RIA space and the fact        for Microsoft, 4% of respondents had                        ket e
          20%                       49% 14%           17%    that some of their advisors have not yet        already purchased a Windows 7 com-                          advis
       Windows Mobile                                        upgraded to the new NetX360 platform.           puter. Since the survey closed within a                     solid
         18%                        51%         19%   12%
                                                                 Independent reps have been telling          couple of days of the Windows 7 release,                    no d
                                                             us for years that Commonwealth leads in         we would anticipate that a great many                       tested
       Google Android                                        technology, and the survey numbers agree.       XP and Vista users will be converting to                    in lat
         18%                32%          25%         24%     Commonwealth’s 47% very satisfied rank          Windows 7 by next year.                                     spira

       54	     December 2009						Financial Planning

054_FPDec09 3                                                                                                                                   11/11/2009 11:50:24 AM
                                                                                                                    What CRM software do you use?
                                                                                                                    (Multiple responses allowed)
                                                                                                                        Microsoft                            24%
                                                                                                                         Junxure                             24%

                                                                                                                            ACT!             10%

                                                                                                                        EZ-Data  6%
 titor,              A noteworthy 3% of respondents said         called and emailed at an alarming rate.
d rat-           they have at least one Apple computer,              Those calls needed to be logged and                 System
s very           up from 2% last year. We suspect that           returned quickly and effectively—a task                 Redtail 6%
 alth’s          less than 1% owned a Mac two years ago.         that’s tough to accomplish unless you                    ACT4 4%
 pect-           Though these numbers are tiny, they are         have a good CRM system. In addition,                  Advisors
nd of            significant. We suspect that some people        CRM could have been used to identify                  Goldmine 4%
ficant           wanted a modern alternative to XP and           common threads in client messages,                   SalesForce        3%
 h the           were encouraged to try Apple by the suc-        which would have enabled advisors to                    Advisor        3%
 issat-          cess of the iPhone and iPod. If this trend      respond en masse through bulk mailings,               Assistant
  HD             continues, web-based applications will          bulk email and their websites.                      Lotus Notes        3%
ome-             have to start providing native Mac com-             Perhaps most important, a good CRM                Microsoft        3%
(18%             patibility, if they don’t already.              system empowers advisors to respond
                                                                                                                      ProTracker        2%
 satis-              If the trend accelerates—as it seems        quickly and proactively to changing cir-
appy,            it will—should Windows 7 disappoint,            cumstances. Rather than waiting for                  SalesLogix    1%
prob-            vendors will no doubt contemplate pro-          upset clients to call, a good CRM system                   None               8%
 , you           ducing native apps for Mac. Currently,          allows you to contact clients and reassure
                                                                                                                           Other                   11%
                 Mac owners will have to remain content          them. For example, if you knew that 10%
                 with operating many financial applica-          of your client base was prone to panic
                 tions on a Windows virtual machine.             over market gyrations, you could create
 pon-                                                            a “calm them first” group. Perhaps any             How many advisors does your firm
ystem            CrM SOftware                                    market decline of 5% would trigger a               employ?
ows 7            As we stated last year, and countless stud-     reassuring letter or email to that group.                       More
 d the           ies have concurred, client relationship         For the remaining clients, who require a                       than 20
 d, we           management (CRM) software is probably           deeper drop to get worried, you might set                        15%
e any            the single most important piece of soft-        a higher threshold before reaching out.                11–20
                                                                                                                                                1–2 advisors                 To
e was            ware for establishing and maintaining a             By the same token, when you are busy                                           37%
e the            successful advisory practice. On an every-      during a crisis, you have to prioritize out-
 .               day basis, successful advisors rely upon        reach. With a pre-configured set of groups              6–10
   the           CRM for mission-critical help with time         and a strong CRM system, you would be                   16%
 nally           management, workflow management                 much better positioned to handle increased
  with           and workflow automation, and with the           service demands on short notice.                                         25%
t one            delivery of uniform services. When CRM              As was the case last year, the overall
 87%             is used to its full potential, advisory firms   outlook for CRM was mixed. Only 8% of
ority.           will record every action taken by any staff     respondents said that they do not use any
 early           member on behalf of a client. As a his-         CRM software at all, about the same num-           What financial planning software do
 Vista           tory of these actions grows, managers can       ber as last year. Equally troubling is the         you use? (Multiple responses allowed)
 Only            analyze the data to identify problems and       fact that 24% of respondents say they use
had a            improve overall operational performance.        Microsoft Outlook for CRM (versus 25%               MoneyGuidePro                         20%
 year.           This in turn can lead to greater overall        in 2008 and 35% in 2007); this despite                  MoneyTree                   11%
n that           efficiency, which results in greater client     the fact that we’ve been informing advisors
                                                                                                                    Financial Profiles                10%
 hines           satisfaction and improved profitability.        for years now that Microsoft Outlook does
                                                                                                                           NaviPlan                  10%
                     Over the past year, CRM more than           not fit the true definition of CRM. Out-                  Extended
  sign           proved its value in an extraordinary mar-       look can’t track complex workflows, nor                    eMoney                  9%
  had            ket environment. Any successful client-         can it store industry-specific information.
                                                                                                                            SunGard                8%
com-             advisor relationship must be based on a             The silver lining, if there is any, is that
                                                                                                                           NaviPlan             6%
hin a            solid foundation of trust, and as you are       until this year no CRM product specifi-                   Standard
lease,           no doubt aware, that trust was sorely           cally targeting advisors, nor any general                WealthTec       1%
many             tested by the wretched financial markets        purpose CRM product for that matter,
                                                                                                                                None                     19%
ng to            in late 2008 and early 2009. As markets         approached Outlook’s market penetra-
                 spiraled downward, panicked clients             tion. This year, Junxure, a CRM prod-                          Other                          23%

                                                                               Financial Planning        December 2009        55

          055_FPDec09 4                                                                                                                                  11/11/2009 11:51:03 AM
       What portfolio management software
       do you use? (Multiple responses allowed)
       Morningstar Office                           24%
                 Schwab                      19%
               Allbridge               14%
                 Advent              11%
               dbCAMS/                              uct developed by advisors for advisors,             and 81% who use financial planning soft-                  (form
             Morningstar                            fell just a few votes short of MS Outlook,          ware—sounds about right.                                  tion
          Black Diamond          2%                 equaling its 24% share. The results for                 As was the case last year, Money-                     mana
                 Investigo       2%                 Advisor Assistant (3%); EZ Data (6%);               GuidePro was the most popular single                      lead w
                                                    Lotus Notes (3%); Microsoft CRM                     application with 21% of the votes, off                    move
                 Adhesion 1%
                                                    (3%); Redtail (6%); and Salesforce (4%)             a bit from last year’s 23%. EISI’s com-                   funct
               AssetBook 1%                         showed little if any change.                        bined stable of financial planning prod-                  altere
         Bridge Portfolio 1%                            ACT! was the biggest loser, falling from        ucts (Financial Profiles, NaviPlan Stan-                  portf
                                                    15% in 2008 to 11% in 2009. Others                  dard and NaviPlan Extended) grabbed                       estab
                 CapTools 1%
                                                    with declining numbers include ACT4                 a combined 25% share, also off a bit                      to br
                       IAS 1%                       Advisors (4% vs. 6%) and ProTracker                 from last year. In fairness, more than a                  agem
                     Orion 1%                       (2% vs. 4%). Other listed applications              few respondents wrote in that they used                   Princ
                                                    included E*Assist, IAS, Saleslogix and              a proprietary version of NaviPlan, such                       St
       Portfolio Director 1%
                                                    Upswing, but none garnered even a 1%                as the Ameriprise version, so EISI’s num-                 surpr
           PowerAdvisor 1%                          share. E*Assist is new, so the relatively low       bers are probably somewhat understated.                   the le
                     None                    23%    response rate is understandable in its case.        eMoney exhibited a significant jump to                    Portf
                                                        The “other” answers represented 11%             9% from 5%, which might be attribut-                      in 20
                     Other               9%
                                                    of responses, and the write-ins in this cat-        able to a change in management, while                     that
                                                    egory were widely dispersed. We saw a               MoneyTree and SunGard held their own                      star i
       What rebalancing software do you use? smattering of familiar names among the                     at 11% and 8%, respectively.                              and a
                                                    write-ins, including the Bill Good Sys-                 Those who answered “other,” a sig-                    of Sc
              Tarmarac                  9%
                                                    tem, Qube and Oracle CRM. One new                   nificant 23% of the total, were all over the              Morn
                    ASI*     4%                     name that caught our attention was Zoho             place. Responses included a few other com-                use th
                  iRebal       2%                   CRM. Zoho offers three editions of their            prehensive financial products that failed to              and a
      Total Rebalance                               online CRM product: a free edition for              achieve enough votes to be included. They                 least
                 Expert                             up to three users; a professional edition           also included proprietary products, a wide                ber o
             eAllocator 1%                          that offers additional features for $12 per         range of products that offer limited plan-                agem
                   Other                        16% user per month and the top-of-the-line              ning and some that are not planning prod-                 to the
       *Through TD Ameritrade or Schwab
                                                    enterprise edition at $25 per user per              ucts at all. Do we need to include a defini-                  C
                                                    month. In addition, Zoho offers a full              tion of “financial planning software” with                ingsta
                                                    line of online applications that include a          next year’s survey? Perhaps we do!                        for po
        How satisfied are you with your              word processor, spreadsheets, document                  Overall, this category appears to have                Ther
        experience with each of the following       management, Wiki, email, online reposi-             weathered a difficult 2009 rather well.                   to thi
        categories of technology products?
                                                    tory and an online invoicing system. It             EMoney, MoneyGuidePro and Money                           star’s
           very satisfied          somewhat satisfied will be interesting to see if this firm gains       Tree have offered significant enhance-                    are b
          General Office                             traction within the advisor community.              ments recently. MoneyTree expanded its                    in po
           Productivity                                                                                 product line with the addition of distri-                     O
        (MS, Office, etc)
                                                         Planning Software                              bution solutions, which look to be prom-                  there
                Financial                                There was some movement in the finan-          ising. EISI made more modest upgrades                     ond
                                                         cial planning category this year. We           in 2009. They also released “Bear Market                  and A
                                                         immediately noticed that 19% of respon-        Plan” to help advisors and their clients                  cipia
                                                         dents said they aren’t using financial plan-   better deal with market uncertainty. Look                 from
              Portfolio                                  ning software, versus only 11% last year.      for major new releases from EISI in the                   no d
          Management                                     At first glance, this was surprising. Then     first half of 2010.                                       Morn
        and Accounting
                                                         we looked more carefully at the sample.                                                                      N
               Document                                  Last year 84% of respondents said they         Portfolio ManageMent                                      to 2%
                                                         offered comprehensive financial plan-          The portfolio management category never                   Diam
                                                         ning; this year, only 81% said they did.       fails to surprise us, but we are at least                 Orio
                                                         So, we have 81% of respondents who             partly to blame for some confusion here.                  visor
                            0   20     40    60     80   offer comprehensive financial planning         In 2007, we listed Morningstar Office                     categ

       56	   December 2009						Financial Planning

056_FPDec09 5                                                                                                                            11/11/2009 11:50:45 AM
                                                                                                                  What document storage software,
                                                                                                                  if any, do you use?
                                                                                                                  (Multiple responses allowed)
                                                                                                                    Adobe Acrobat
  soft-          (formerly Morningstar Advisor Worksta-          label applications offered by broker-dealers.
                                                                                                                        PaperPort             7%
                 tion Office Edition) under the portfolio        Finally, 23% of respondents said that
oney-            management category and it grabbed the          they do not use any portfolio manage-                   Laserfiche            5%
 ingle           lead with 28% of the votes. Last year, we       ment software. This is the lowest number                     Redtail     4%
s, off           moved Morningstar Office to the multi-          we’ve recorded to date, but it still strikes
                                                                                                                              Worldox     4%
 com-            functional category, which significantly        us as being too high.
prod-            altered the results. With Morningstar                                                                   Cabinet NG      2%
Stan-            portfolio management capabilities now           Multifunctional Software                           NetDocuments         2%
 bbed            established and expanded, we’ve decided         We added the multifunctional category
                                                                                                                          DocuPace       2%
 a bit           to bring them back to the portfolio man-        last year to get a read on those integrated
han a            agement category—for both Office and            platforms that don’t neatly fit into any one     Pershing/iNautix       2%
  used           PrincipiaCAMS (formerly dbCAMS).                slot. We know that some of the products                 CEO Image       1%
  such               Still, we found the results somewhat        named here can be used either as an inte-
num-             surprising. Morningstar Office reclaimed        grated solution or as a modular one, but               DocuXplorer      1%
 ated.           the lead with 24%, edging out Schwab            our hope was that respondents would reply                      None                          30%
mp to            PortfolioCenter, with 19% (up from 18%          based upon how they used the product.                         Other                   16%
 ibut-           in 2008). We’re willing to wager, though,           There was little movement among
while            that not everyone who chose Morning-            the three top players we named last year.
  own            star is using their portfolio management        Morningstar led the category with 23%
                                                                                                                  Where do you get your research and
                 and accounting application. The number          versus 21% last year. EMoney, which
a sig-           of Schwab users exceeds the number of           grabbed a 9% market share last year, still
er the           Morningstar Office users who actually           holds second place with 8%. Tamarac,             80%                                Morningstar
com-             use the program’s portfolio management          which just began selling CRM and out-
 ed to           and accounting features by a factor of at       sourced PortfolioCenter in addition to           70
They             least four to one. Furthermore, the num-        its core rebalancing offering, tied with
 wide            ber of Morningstar Office portfolio man-        eMoney for second this year, with 8%.            60
plan-            agement software users is roughly equal         New entrant Open Finance Network,
prod-            to the number of PrincipiaCAMS users.           along with BridgePortfolio, IAS and              50
efini-               Clearly, some respondents use Morn-         Trust Co. of America were all in the 1%
 with            ingstarOffice to track portfolios, but not      range. Those answering “none” dropped
                 for portfolio management and accounting.        to 60% from last year’s 65%.
  have           Therefore, though we believe the responses                                                                                          S&P
 well.           to this question were skewed in Morning-        DocuMent ManageMent
 oney            star’s favor, we nevertheless think that they   After CRM, financial planning software                                              Reuters
ance-            are becoming a force to be reckoned with        and portfolio management software,               20
ed its           in portfolio management software.               document management/storage software                                                Value Line
distri-              Once you get past the two leaders,          is the next most important software appli-        10                                Advisor
 rom-            there’s a substantial drop-off to the sec-      cation for financial advisory firms. So the
 rades           ond tier. Here, we have Albridge (14%)          continuing lack of sophistication in this         0
                                                                                                                        ’07        ’08         ’09
 arket           and Advent (11%). The number of Prin-           area is troubling. Thirty percent of advi-
lients           cipiaCAMS users fell to 4% this year,           sors say they don’t use any—about the
 Look            from 10% in 2008. Some of the decline,          same number as last year (29%), if down
n the            no doubt, was caused by migrations to           from 2007 (38%).                                 What account aggregation software
                 Morningstar Office.                                 The good news: The number of advi-           do you use?
                     Niche providers that scored in the 1%       sors who said they use Adobe Acrobat for
                 to 2% range included AssetBook, Black           this purpose fell below 30% for the first        ByAllAccounts                           8%
 never           Diamond, Bridge Portfolio, Investigo,           time, to 28%. That’s good because not                  CashEdge                     6%
  least          Orion, Portfolio Director and PowerAd-          even Adobe, the developer of Acrobat,
                                                                                                                           Yodlee              4%
 here.           visor. The vast majority of the “other”         claims that it is a document management/
Office           category comprised proprietary or private-      storage solution.                                            Other                           12%

                                                                             Financial Planning       December 2009         57

          057_FPDec09 6                                                                                                                                11/11/2009 11:51:04 AM
                                                             The bad news is that Adobe Acrobat           currently using a full featured rebalancing                 amon
                                                         responses outnumbered the next most              tool, one could argue that almost 100% of                   tors h
       Are you:                                          popular product—PaperPort—by a mar-              those advisors who owned a capable rebal-                   All of
              An independent RIA                   37%
                                                         gin of four to one, and some would argue         ancing tool were satisfied with their return                    T
                                                         that PaperPort does not technically fit the      on investment. So we want to know: Why                      mana
       Independent but affiliated                         definition of a document management/             isn’t everybody using one?                                  ment
           with a broker-dealer              26%
                                                         storage solution, either. Beyond Paper-              First, until recently, rebalancing soft-                six pe
             Dually registered RIA
              affiliated with a b-d            18%        Port, Laserfiche, Redtail and Worldox            ware was expensive; in fact it was pro-                     ware
                   An employee of
                                                         all fell into the 4% to 5% range. They           hibitively expensive for small and midsize                  up su
                                        4%               were trailed by Cabinet NG, CEO Image            firms. Prices are beginning to fall, how-                   least 7
                   a broker dealer
                                                         Systems, DocuPace and newcomers                  ever, as new competitors enter the space.                   ware
                   Insurance agent      4%
                                                         NetDocuments and Pershing/iNautix,               We expect this trend to continue and lead                   up sh
                                                         which all fell in the 1% to 2% range.            to more sales.                                                  A
                              CPA       4%
                                                             While the document management                    Second, the initial comprehensive prod-                 tion t
         Bank-affiliated advisor        2%                numbers are disappointing overall, there         ucts required that advisors invest a great                  a way
                                                         is still a silver lining. Last year we pointed   deal of time and money in set-up time and                   abou
                            Other       4%               out that although 79% of respondents             user training. As vendors refine their prod-                (Mic
                                                         thought they were using document man-            ucts, this barrier to sales is declining.                   so w
                                                         agement software, most were not using a              Third, owing to those set-up and                        prod
                                                         full-fledged system. And when you sub-           training demands, some vendors initially                    eral p
       Which of the following services do you            tracted out respondents who listed Adobe         had capacity constraints. These too are                     Eight
       offer? (Please choose all that apply)
                                                         Acrobat, PaperPort and the 80% of                falling. With new products in the pipe-                     they
       90%                       Comprehensive           “other” answers that were not true docu-         line, lower prices, plus improved set-up                    gener
                                 financial planning       ment management software, it seemed              and training, we expect to see a jump in                    cial p
       80                                                that only 14% of respondents were using          rebalancing software sales during 2010.                     79%
                                 Asset management
                                                         true document management software.                                                                           we’re
       70                                                    When we ran the same calculation             no SatiSfaction?
                                 Wealth management
                                                         this year, our adjusted document man-            As was the case last year, financial planning               MiSS
                                 Insurance sales         agement/storage user percentage rose             software edged out CRM as the applica-                      In th
                                 Annuity sales           to 25.4%, an all-time high and twice             tion that pleased the most advisors. Only                   much
                                 Securities trading      the number we got last year. So, docu-           23% of financial planning software users                    great
       40                                                ment management usage is growing. But            were very satisfied this year versus 39% last               wrote
                                                         almost 75% of respondents are sacrific-          year, but 45% were somewhat satisfied. As                   softw
       30                                                ing productivity and efficiency by failing       a result, overall satisfaction actually edged               effici
                                                         to capitalize on these proven performers         up by a percentage point to 79% this year.                  advis
       20                        Tax preparation         that demonstrate highly favorable ROI            Once again, much of the credit goes to                      nolog
                                                         characteristics. Consider, for example,          the top three vote-getters: EISI, Money-                    effici
       10                        Other, please specify   that according to a study by the Gartner         GuidePro and MoneyTree. Since eMoney                        closel
                                                         Group, 25% of business documents are             and SunGard polled well this year, too,                     tions
             ’07    ’08    ’09                           misplaced and will never be located.             they deserve honorable mention.                             dents
                                                                                                              CRM, which had 31% very satisfied                       packa
                                                         Rebalancing SoftwaRe                             users and 47% somewhat satisfied, bested                    had o
                                                         Rebalancing software is slowly but steadily      last year’s 25% very satisfied and 45%                      mally
      What compliance software do you use?               catching on. Last year, only 22% of respon-      somewhat satisfied for an overall satisfac-                 respo
              NRS Compliance
                                                         dents said they used rebalancing software;       tion score of 78%. That’s a significant                     in CR
                                             7%          this year 33% said they used it. When            increase. At least some of it is likely due to                  T
              ComplianceMAX              6%              we asked advisors which of their software        the fact that Junxure’s market share rose                   numb
                                                         products yielded significant return on           from 11% to 24%. Junxure added new                          perce
        Protracker Software        3%
                                                         investment, 12% cited rebalancing soft-          features and improved its training pro-                     using
                          Other                    10%   ware. Since only about 12% said they were        grams this year, and historically satisfaction              ware.

       58	    December 2009						Financial Planning

058_FPDec09 7                                                                                                                                11/11/2009 11:51:24 AM
                                                                                                                   In what ways do you evaluate the
                                                                                                                   ROI of the technology you purchase?
                                                                                                                   (Multiple responses allowed)

                                                                                                                     Time saving                           64%
 ncing            among its users has been strong. Competi-      to 32%; yet 35% of respondents say
                                                                                                                             Cost                      55%
 0% of            tors have also been improving noticeably.      portfolio management software yielded
 rebal-           All of this bodes well for 2010.               significant ROI for their firms. Whatever         Staff feedback                    35%
  eturn               The satisfaction trends for portfolio      the real numbers are, the fact is that port-
  Why             management and document manage-                folio management software users reported           Don’t do ROI
                  ment software are also positive. Seventy-      good ROI and high satisfaction. Some of
                                                                                                                      Formal ROI
   soft-          six percent of portfolio management soft-      you are clearly missing out.                            analysis
   pro-           ware users are at least somewhat satisfied,        The extent of missed opportunities in
  dsize           up substantially from last year’s 62%. At      document management is staggering. Sat-                    Other    3%
  how-            least 74% of document management soft-         isfaction ratings are up, and many studies
  pace.           ware users are at least somewhat satisfied,    have shown the benefits and ROI available
 d lead           up sharply from last year’s 55%.               from document management. Yet 75% of
                      Although the overall positive satisfac-    you aren’t cashing in on this opportunity.       What type of technology investment
 prod-            tion trends are encouraging, they still have   Over the last several years, entry-level costs   has yielded a significant ROI?
  great           a way to go. Each year, we ask a question      have dropped and satisfaction is up. What        (Multiple responses allowed)
 e and            about general office productivity software     are you waiting for?
 prod-            (Microsoft Office, etc.) as a benchmark,           The case for rebalancing software is                            CRM                     51%
                  so we can gauge how industry-specific          compelling as well. There were real barri-           Financial planning
  and             products stack up against popular gen-         ers to entry for many advisors in the past,                    software
 tially           eral products with regard to satisfaction.     but they are slowly crumbling. The ROI                       Portfolio
o are             Eight-eight percent of respondents said        is undeniable. We are bullish on rebalanc-        management software
 pipe-            they were at least somewhat satisfied with     ing software. You should be too.                           Document
                                                                                                                   management software
et-up             general products; that’s well above finan-         Advisors are not the only ones who are
mp in             cial planning software’s industry-leading      missing technology opportunities. Advi-                                          12%
10.               79%. So, we’re on the right track, but         sors have numerous needs that vendors                 Web conferencing
                  we’re not at the finish line yet.              are not adequately addressing. If there                                         9%
                                                                 is one single area where vendors need to          Outsourcing portfolio
 nning            MiSSed opportuNitieS                           improve, it is in the area of usability. Soft-           management
 plica-           In the wake of the market meltdown,            ware is easier to use than it was a few years         Mobility solutions       8%
  Only            much has been written about the need for       ago, but it is still not good enough.
  users           greater operational efficiencies. In fact, I       When we ask advisors how satisfied                              Other     5%
% last            wrote a piece in this magazine on using        they are with documentation and training
  d. As           software to make your practice more            for the products they own, a moderately
 edged            efficient. But our survey indicates that       acceptable 72% are at least somewhat sat-
  year.           advisors are overlooking all kinds of tech-    isfied; however when we ask them how             Would you be willing to spend more
  es to           nological opportunities to improve the         difficult the products are to use and learn,     money on software to improve the
 oney-            efficiency of their practices. If you look     only 5% find them very easy while at least       efficiency of your practice?
Money             closely at the responses to the CRM ques-      49% find them somewhat difficult. Note
   too,           tions, for example, 35% or more respon-        to vendors: If half of your users find your                        10%          8%        No
                  dents did not use an appropriate CRM           software at least somewhat difficult to use,
 isfied           package, and at least another 15% who          you have a major problem that’s hurting                            27%         28%        Not
 ested            had one are probably not using it opti-        your sales. You need to do better.                  33%
  45%             mally. That is unfortunate, since 51% of           Contrast the statistics mentioned
 isfac-           respondents told us that their investment      above with the iPhone’s scores. Sixty-four
 icant            in CRM yielded a significant return.           percent of advisors who have an iPhone
                                                                                                                                    63%         64%        Yes
 ue to                The portfolio management software          are very satisfied! Granted, it’s not a fair        50%
   rose           numbers tell a similar tale. Twenty-two        comparison, but it is an indication of
   new            percent of respondents said they weren’t       what good design and great ease of use
  pro-            using any portfolio management soft-           can do for your customers. They become
 ction            ware. We think the real number is closer       your advocates. If you are a vendor who              ’07           ’08          ’09

                                                                              Financial Planning         December 2009       59

           059_FPDec09 8                                                                                                                               11/11/2009 11:51:44 AM
       How difficult has it been for you and your
       staff to learn to use your software?
         Very difficult                 Very easy     wants to excel, don’t measure your prod-         of respondents were employees of a bro-                     Mor
                            4% 5%                    uct against your competitor’s satisfaction       ker-dealer; in 2009 that number fell to                     The
                                                     score; measure it against the iPhone’s.          4%. In 2007, 27% of respondents clas-                       advis
                                                     That’s where you want to be.                     sified themselves as independent RIAs;                      ple, 2
                                                         What’s more, when we asked advisors          by 2009, 37% of respondents classified                      softw
                                                     how they evaluate their return on invest-        themselves as independent RIAs.                             lems
                Somewhat            Somewhat         ment for technology purchases, 64% said              While not strictly technology related,                  respo
                 difficult             easy
                                                     “time savings.” If products are being evalu-     the business model numbers indicate a                       your
                  45%                 46%
                                                     ated on this basis, and advisors must com-       growing demand for technology going for-                    impr
                                                     mit a great deal of time to learning how to      ward. Our working theory is that the fee-                   comm
                                                     use the product, the vendor has lost the         based advisors are mostly those associated                  with
                                                     battle before he or she has even started!        with an independent broker-dealer. Typi-                       C
                                                         Usability issues could be depress-           cally, these folks get substantial technology               tion,
                                                     ing the document management soft-                support through their broker-dealer, and                    partic
                                                     ware rankings. We used to assume that            they often have the opportunity to pur-                     RIAs
                                                     advisors were using Adobe Acrobat and            chase prepackaged technology solutions                      single
                                                     PaperPort out of ignorance; now we’re            through their broker-dealer as well.                        to ga
       How satisfied are you with the
       integration of your various programs?         not sure. Perhaps a portion of our reader-           The rise of truly independent RIAs                      ans su
                                                     ship does not understand the benefit of a        signals a growth opportunity for vendors                    Persh
                                                     true document management system. We              who serve this niche. It also suggests that if              devot
                     Very un- Very
                     satisfied satisfied               suspect that some do, but are neverthe-          historical patterns hold, and independent                   omie
                       11%      10%                  less willing to trade away a measure of          RIAs purchase their technology indepen-                     We t
                                                     functionality for better usability. There        dently as opposed to through a consolida-                   result
                                                     is a huge untapped market for document           tor (whether a custodian or an indepen-                     ask ab
             Somewhat                                management software, but vendors have            dent third party), some technology firms
             unsatisfied          Somewhat            to educate advisors more and further             will have to alter their sales strategies in                a Ca
               33%                satisfied           enhance the usability of their programs.         order to reach these new independents.                      This
                                                         Real gains in account aggregation                When we asked advisors what their                       The
                                                     remain elusive. This may be due to unreal-       next technology purchase was likely to                      ate ac
                                                     istic expectations on the part of some advi-     be, 55% said hardware; up sharply from                      gest:
                                                     sors, as well as intermittent service gaffes     44% last year. We assume much of this                       almo
                                                     on the part of providers. There is a lot of      gain is attributable to pent-up demand                      dents
                                                     promise here, but the question is, “When         for new PCs. We know that the majority                      ogy t
                                                     will it be fully realized?” We just don’t        of advisors are still running Windows XP                    only
      The all-inclusive cost of your                 know. Overall, progress is being made,           machines and that they were reluctant to                    with
      technology setup is:
                                                     but there are still opportunities for advisors   purchase Vista. Now, it appears they will                   ogy.
                                                     and vendors to do a much better job.             be buying new PCs with Windows 7 pre-                       you’r
                                                                                                      installed. If so, it is really a combined hard-             you s
                                                     What ElsE?                                       ware/software purchase. The upgrade cycle                   your
                            Too high                 Commentators have been predicting a              is long overdue, so this is a positive.                     ture-r
                              29%                    migration away from commissions and                  The only negative will be if software                   to do
                                                     toward fees. Among our readers at least,         vendors are not ready to support Win-                       canno
                                                     it looks like the experts were right. In our     dows 7. Early indications are that most are                 dors d
                                                     2009 survey, the percentage of fee-based         ready, but since new machines are likely to                 in th
                        About right                  advisors was 47%, exactly where it stood in      include the 64-bit version of Windows 7                     more
                           57%                       2007. But the percentage of fee-only advi-       and many upgraders may end up with the                      mana
                                                     sors jumped to 37% in 2009, from 25% in          32-bit version, we assume that there will                       M
                                                     2007, while the number of commission-            be sufficient issues with compatibility,                    system
                      Very reasonable                only advisors fell to 16% from 28%.              peripherals, drivers and the like to keep                   upgra
                            14%                          In a similar vein, back in 2007, 13%         tech support staffs busy.                                   system

       60	   December 2009						Financial Planning

060_FPDec09 9                                                                                                                            11/11/2009 11:51:45 AM
                                                                                                                Your next major technology
                                                                                                                purchase is likely to be:
                                                                                                                (Multiple responses allowed)
                                                                                                                 Hardware (computers,
                                                                                                                printers, scanners, etc)                           55%

                                                                                                                      Financial planning
 bro-            More integration, please                             The survey clearly demonstrates that                 CRM software                 16%
ell to           The survey provided ample evidence that          if you are in the market for a smartphone,
 clas-           advisors want more integration. For exam-        the iPhone should be your benchmark.                    Document
                                                                                                                 management software
RIAs;            ple, 23% of respondents said they changed        Your colleagues who have them love
                                                                                                                           General office
sified           software providers because of prob-              them. But you may also want to check                        software*
                 lems with integration. When we invited           out the new Google Android phones.             Portfolio management
lated,           respondents to “tell us your thoughts on             If you are not using a true CRM prod-                                            14%
 ate a           your current technology products and any         uct, or if you are unsatisfied with the one
                                                                                                                  Rebalancing software                 13%
 g for-          improvements you’d like to see,” the most        you have, go out and buy a good one.
e fee-           common answers exhibited frustration             Start your search among the products that       Client vault software                12%
ciated           with some aspect of integration.                 ranked well in this year’s survey. We’d
Typi-               Clearly advisors want more integra-           also take a look at some of the newer           Account aggregation
ology            tion, but they are not sure how to get it—       offerings. Clearly, advisors who use good
 , and           particularly in the case of independent          CRM are satisfied, and the reported ROI       *MS Office, accounting software, etc.
   pur-          RIAs. With a few notable exceptions,             is good, so there’s much to be gained by
  tions          single-solution providers have struggled         acquiring appropriate CRM software.
                 to gain traction. More recently, custodi-            If you’re satisfied with your current
                                                                                                                What is the single greatest business
 RIAs            ans such as Fidelity (WealthCentral) and         financial planning and portfolio man-         challenge you would like technology
ndors            Pershing (NetX360) are attempting to             agement software, we see little reason to     to solve for you?
 hat if          devote their technical expertise and econ-       change; however, if you’re not, there is no
ndent            omies of scale to tackling this problem.         reason to prolong your suffering. Most           Improved workflow                             40%
 epen-           We thought it premature to gauge the             of your colleagues have found a product
olida-           results this year, but we will most likely       that meets their needs; you should as well.       Time management                            25%
 epen-           ask about them next year.                        Again, we would start a search with some
                                                                                                                Client communication                         19%
 firms                                                            of the higher-ranked products and contrast
  es in          a Call to aCtion                                 them with some of the newer offerings. In      Locating data within
 ts.             This article contains a wealth of data.          the case of portfolio management software,        the organization
  their          The challenge for readers will be to cre-        outsourcing data downloads and reconcili-     Locating data outside
                                                                                                                     the organization
  ly to          ate actionable items. Here’s what we sug-        ation often makes sense.
  from           gest: Begin by reviewing findings that have          Document management and rebalanc-              Data entry errors          4%
 f this          almost universal applicability. Respon-          ing software are both ripe for rapid growth
mand             dents told us that they looked to technol-       if vendors can educate advisors about their
 jority          ogy to save time, most of all. In addition,      benefits and continue to improve usability.   How satisfied are you overall with the
ws XP            only about half of advisors were satisfied       In both cases the ROI story is compelling.    level of documentation and
  nt to          with the overall usability of their technol-         Only 20% of advisors have a writ-         technical support for the products
 y will          ogy. For advisors, this implies that when        ten technology plan. If you’re part of the    you currently use?
7 pre-           you’re evaluating any technology product,        majority, this is a deficiency you should
                                                                                                                                           Very unsatisfied
 hard-           you should look carefully at usability in        address. Only 29% feel the cost of tech-
  cycle          your due diligence process. The most fea-        nology is too high, further supporting                              4%
                 ture-rich product in the world is not going      our thesis that factors such as ease of use                                  Very
tware            to do you any good if you and your staff         are holding back adoption in some areas.                                      15%
Win-             cannot figure out how to use it. While ven-      Sixty-four percent are willing to spend              Somewhat
 st are          dors deserve credit for some improvement         more on technology if you can be per-                   24%
 ely to          in this area, it is clear that they still have   suaded that it will improve the efficiency
ows 7            more to do, particularly in the document         of your practice. Hopefully, vendors will
 h the           management and rebalancing categories.           do a better job of convincing you in the                                Somewhat
e will               Many of you are using an old operating       future that this is the case.            FP
bility,          system. There’s evidence that advisors will
  keep           upgrade their computers and operating            Joel P. Bruckenstein, CFP, is publisher of
                 systems in 2010. If so, it’s long overdue.       Virtual Office News.

                                                                            Financial Planning           December 2009            61

          061_FPDec09 10                                                                                                                                     11/11/2009 11:52:04 AM

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