Why Advisor Software Feels so Outdated

Walk into an average advisor’s office today and you might see technology that reminds you of a set from a 1960′s science-fiction show – incomprehensible blinking lights and systems that don’t really seem to do anything.

What do all these pretty lights do?

It’s not because advisors are nostalgic about the 1960’s view of the future. It’s because, for the most part, their primary technology systems were either developed or purchased over a decade ago.

Remember how “cool” Microsoft Outlook 97 was? Seriously, who didn’t like (or love to hate) Clippy? A lot of advisors still use Outlook today, and its core functionality is largely the same as it was 14 years ago.

And what about portfolio management software? There are multiple culprits here, but again, these programs started out as glorified spreadsheets with complicated reporting menus. This still describes most advisors’ systems today.

The past decade of consumer and business software has delivered huge advances — especially in web applications — with unprecedented power, reliability, and above all, ease-of-use. Shouldn’t advisors demand the same characteristics from their tools?

So how do we get advisor technology into the modern era?

When new technology comes out, advisors are slow to adopt it. The reasons are many, but I believe advisors simply don’t want to risk making the wrong move into a new program. Common excuses include: “What if the new system doesn’t do 100% of what my existing system does?” “I don’t want to make a mistake by choosing the wrong system,” and “I  just don’t have the time to try it out.”

Vendors share some of the blame as well. Unfortunately, the market for advisor technology is challenging (remember how slow many advisors are to adopt new tools?). It’s fragmented and largely made up of small firms and solo practitioners, so few vendors are successful at effectively marketing to and servicing this channel. This causes many vendors to hold off product improvements until they reach a critical mass of users, further delaying product innovation.

Do these advisor complaints about technology sound familiar?

What do you mean it doesn’t work on my smart phone?

Why can’t I access my CRM/portfolio software/client documents securely from home without setting up a complicated VPN?

Why does it take so many mouse clicks to look up my client’s net worth?

Where do advisors go from here?

Certainly vendors can refresh their current tools, but most will avoid incurring the expense until there’s demand for updated tools.

But advisors don’t want to invest in new tools until there are new features that are so compelling there’s no way they would want to run their business without the tools.

It’s a stalemate. Who will be the first to blink?

Bill is a CFP® professional and is a technology consultant to financial advisors. He writes the monthly technology column for Morningstar Advisor, provides technology commentary for the Journal of Financial Planning, and blogs at his own website, FPPad.com
  • Bill, welcome aboard @blueleaf:twitter we’re thrilled to have your perspectives and contributions! 

    It seems pretty clear to me that it is vendor who will need to “blink” as you put it and innovate. Advisor software is too hard to try, too hard to buy, too hard to use, and once you’ve made it through all the vendor hoops and try to make it part of your work, it screams for attention like a colicky baby. Vendors own the burden here. 

    All advisors need to do is stay engaged in the conversation, the vendors you want to work with will do the rest.

    John Prendergast
    Co-founder & CEO
    Blueleaf

  • Perhaps there’s a bit of chicken & egg thing going on here.
    Most advisors are a notoriously cautious bunch, especially when it comes to technology – Bill points this out above. And I also agree with Bill’s comment than vendors share some of the responsibility as well.

    I think as more technology solutions move to “the cloud” and more companies, large and small, grow comfortable with cloud computing infrastructure, this will become the widely accepted IT channel for advisors.

    Combine cloud computing with tested & accepted technologies like account aggregation, and you have companies like @blueleaf:twitter who can successfully iterate and provide new variations and flavors of proven technology. This lowers adoption risk for advisors and shortens the learning curve significantly as well.

    Of course, there is also ample opportunity for solutions providers to break new ground in providing new and interesting approaches to both advisor and client needs, but perhaps they’ll always have to plan on a longer adoption cycle among advisors.

    Personally, I’ve found many technology solutions I use every day and rely on have come from non-financial industry vendors. Combined with solutions like BlueLeaf or @Arkovibackups:twitter and I have a flexible, primarily cloud based solution that works well for my business.This is a thought provoking topic – thanks, Bill, for putting this out there. I hope it will lead to a health discussion on this important part of all our businesses.