Technology Woes Cause Advisor Flight

Nearly 50 percent of advisors surveyed had left firms due to bad technology, according to a new report.


Illustration by RIA Intel

Bad technology is likely to cause financial advisors to leave their firm, according to a new survey by fintech firm Advisor360°.

Technology helps advisors manage assets, communicate with clients, create financial plans, and more. Unfortunately, bad technology can create more problems than it solves.

Advisor360° found that nearly 92 percent of those surveyed would switch firms because of a poor technology setup — and 44 percent already had.

In addition, 58 percent of advisors said they had lost new business over bad tech, while 93 percent of advisors who rated their technology as state of the art said they had gained new customers because of competitors’ bad technology.

“Advisors are increasingly aware that gaps in technology can affect their livelihood,” the report states. “They are no longer interested in waiting for their firms to catch up — and are willing to vote with their feet to access the tools they need to boost their business.”

Justin Heller, founder of Heller Private Wealth, a Florida-based RIA with about $60 million in AUM, was just such a case. Heller, formerly a vice president at Merrill Lynch, said that access to better technology was one of the reasons he left Merrill to form his own RIA.

“Once I started to really dive into the independent space, I was shocked at how advanced the tools are, how much money and resources have started flowing into the independent space,” said Heller. “When you’re at one of these massive wirehouses, if they want to update something, that’s gonna take a long time for rollout.”

Heller said that going independent allows him to be much more nimble with his technology. He can add new tech, get rid of tech, or even pay for two different types of technology to test out which is the better fit.

“Some clients just do not care about the tech at all,” said Heller. “But several clients have gone out of their way to say, ‘Wow, this is really easy, and we really liked it.’ So that was really positive feedback and definitely helped reassure my decision.”

Thirty-eight percent of advisors said front-office technologies, like client portals or SMSs, contributed to a loss of business; 41 percent said back-office technologies, like e-signatures, contributed to a loss of business; and 22 percent said both contributed.

All told, 61 percent of financial advisors said that bad data was the “primary obstacle they face.” Advisors identified new client onboarding as the part of their business that was most in need of an efficiency improvement, according to the report.

Advisors’ sentiment on their technology has drastically changed over the past year.

According to the report, only 39 percent of advisors said their technology needed an upgrade while 61 percent thought it was modern or state of the art in 2022. Comparatively, 65 percent of advisors said their tech needed improvement in 2023, with 20 percent calling their tech “very outdated.”

“This shift in thinking is a warning sign indicating that firms that fail to invest in technology solutions that make their advisors more productive — and better able to satisfy their clients — run the risk of being left behind,” wrote Advisor360°.

The company surveyed 300 financial advisors and executives at large RIAs, broker-dealers, and banks about their perspectives on the impact of technology on their business and the industry. Advisors surveyed managed on average $40 million. The survey was conducted in September and October 2023.

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