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Advisors Yearn for Better Technology Marriage

The competition for talent among wealth management firms often turns on the struggle between financial advisors and their technology.

Firms that have successful adoption-management strategies are luring the best advisors - and their lucrative portfolios - away from other companies, often because stale, ineffective technology keeps them from doing their best work.

Yet many firms have been slow to embrace technology, and even when they do, many are not involving their advisors in the testing process. The result is that firms are developing systems based on management requirements and what their perception is of what their advisors need. Unfortunately, this perception is often far from the reality of what their advisors want and need.

Consider this: greater than 80% of advisors consider quality of technology an important criteria when deciding for which firm to work. (Forrester Research) They want something already in place. Advisors are revenue generators, and do not see how spending time providing requirements and spending time in focus groups will produce new clients and revenue.

It is an “Advisor is From Mars, Company is From Venus” trap. And in many cases, this frustration results in the best and brightest advisors taking their portfolios to firms that make their lives easier and their wallets fatter.

“There's a lot of movement among financial advisors,” says Logan Allin, Program Manager of the Wealth Management Group at BusinessEdge Solutions (www.businessedge.com), an industry-focused business and technology consulting firm offering strategy, process optimization and solution integration to clients in the financial services, communications, media and content (CMC) and life sciences industries.

“The industry has long been affected by technology, and this will only increase. In our experience, firms that have not invested relative to their peers have less advisor and client satisfaction, and consequently lose assets to competitors. Advisors are looking at the level of sophistication and breadth in product platform and how the firm is supporting that product platform (e.g., technically and operationally).

“Many firms are simply developing applications and pushing them out to advisors. There is an "ivory tower" syndrome among most Wall Street firms — they develop systems based on management requirements and their perception of what advisors need. Most often these systems are not what advisors need, not supportive of their business model, and do not address their key pain points across the enterprise.

“This happens because they are not involving the advisors in the end-to-end application design, development or selection, implementation, and roll-out processes. There are a number of firms these days that really seem to forget what business they're in. They are in the wealth management business, not the technology business; they should be buying increasingly commodity capabilities and taking as much off the advisor’s plates as possible, from proposal generation to overlay portfolio management.”

BusinesEdge is a NorthStar partner, and has implemented NorthStar’s software because of its ability to be the single source for all daily advisor tasks, streamline workflows for advisors and their teams, and its ease of advisor adoption.

According to a BusinessEdge Solutions report, Wealth Management: Ensuring Financial Advisors’ Support of New Technology, financial advisors do not easily adopt new wealth-management technologies because:

• They wish to keep client information private from the company
  
  
• Solutions are not integrated and contain duplicative functionality
  
  
• Advisors are often not technically savvy
  
  
• The solution is either too complex for the task at hand, or does not adequately address the advisor's needs
  
  
• The advisor considers the solution irrelevant to his or her business
  
  
• The solution has poor usability or navigation.

Companies almost invariably underestimate the time and budget necessary to ensure that a new system is properly adopted. Due to such constraints, development activities usually receive the lion's share of proposed funding, and user adoption is combined with user testing or training and must wait until the very end of the development lifecycle.

These statistics are alarming:

• For every dollar that such a company invests in technology, it must later spend between $3 and $10 to retrofit it to the culture (Gartner Group).
  
  
• Nearly half of all major technical initiatives fail because of fear and anxiety in the organization, and resistance from key managers (Computer World).
  
  
• Forty percent of companies that deployed portals reported adoption rates of less than 50%.

The BusinessEdge Solutions report says a select few firms are implementing end-to-end adoption strategies to move advisors from forced technology compliance - and eventual rebellion - to genuine system adoption. Firms are focusing on four major areas to increase user adoption:

• User Experience: Designing the system with the end user not only in mind, but involved in the process from the beginning
  
  
• Process Redesign: Foreseeing and designing changes to business processes that will be required by the new system.
  
  
• Training: Providing customized training that is useful to individual user groups rather than one-size-fits-all
  
  
• Marketing and Communications: introducing a new system to advisors in a way that demonstrates tangible benefits to the way they run their businesses.

“Without advisor adoption (that is, advisors actually using tools and using them correctly) there is no return on investment or lift from the technology,” Allin says. “Firms must ensure advisors understand the business benefit to the firm and their practice and are rigorously trained using e-learning, train-the-trainer, and one-on-one training strategies. Furthermore, firms should decommission other similar legacy applications in their portfolio (so there are no other tools to choose from), to foster use of only one set of tools, while concurrently decreasing total cost of ownership (TCO).”

Involving advisors throughout the process — from beginning to end — is critical to gain their buy-in.

“Advisors are not adequately involved in the envisioning (surveys, focus groups, prototype reviews), testing (production demonstration feedback sessions, usability testing), User Acceptance Testing (UAT), proof of concepts (POC), pilots, or user training (power users, user groups, train-the-trainer) of the application.”

Billions of dollars are spent on wealth-management technologies intended to improve productivity and more efficiently provide information to financial advisors and their teams. Too often, the rollout of such systems to the field results in grudging compliance or outright rejection.

To avoid a costly revision later on, firms should focus on advisors and branch adoption near the beginning of the process. Early successes with the advisor community will help create a good reputation and generate support for future initiatives.

Still, the trend in the industry is to minimize or ignore adoption-management programs, often with disastrous results:

• A large Canadian bank spent three and a half years redesigning their advisor workstation, only to have user adoption of less than 50% during the first year of release. An additional year and a complete training program overhaul were necessary to address the problem
  
  
• A major Wall Street brokerage spent five years and $1 billion to implement a new financial advisor workstation that was poorly received because it had an awkward user experience and business processes that were not redesigned to fit the application. The entire effort was eventually scrapped.

“At the end of the day firms put front-end technology in place to both help advisors and ensure prescription around advisor business process,” Allin says. “When you have 10,000 advisors and they are all running their own business and giving unique client services, you have a lack of turnkey client experience. This precipitates poor customer service, client satisfaction and risk management.

“Technology, when used properly, is in place to ensure a turnkey client experience. Using the same tool set to drive the same outputs results in a controlled quality and compliance environment, all of which benefits the client and firm.”

“Usually, firms have a mix of proprietary and 3^rd party applications — all serving some component of the wealth management value chain,” says Allin. “In this way, there’s potentially a dearth of functionality but little usability or advisor optimization. Advisors cannot leverage data across platforms, and they are constantly jumping in and out of applications. NorthStar’s workflow framework mimics actual advisor business processes. It drives an intuitive process that leads advisors through the wealth management value chain on a single integrated front end. This is key for advisors; their number one complaint is that their applications are cumbersome to use and not intuitive.”

“Advisors talk about high-value activities - prospecting, financial planning, portfolio administration, cross selling, client reviews, etc. If the average advisor is toggling among seven to twenty applications to get their job done (CRM to financial planning to portfolio construction to new account opening to trade order management to client reporting), it becomes overwhelming, eating up time on low-value administrative activities, and translating into less business benefit (e.g., net new AUM and clients).

“NorthStar’s value is so compelling because it's one application for all of these functions. I've implemented NorthStar at a major U.S. private bank. The Holy Grail of wealth management is having a single window for both financial advisors and clients that are managed through entitlements. NorthStar bundles everything you need in a single place - CRM, financial planning, performance measurement, client reporting, etc. I refer to NorthStar as the "coat rack" of wealth management — you've got all of these needed, disparate applications ‘hung’ in a single integrated place.”

And that leads to the desired end result – a long-lasting marriage between an advisor and technology.

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