Over the past 10 years, independent advisory firms have slowly integrated new technology solutions into their business models. Most firms now have their core tech stack in place: 85% are using a CRM system to manage customer relationships; 83% are using
financial planning software to devise investment plans that meet their clients' needs; and 69% are using portfolio management tools.
While these investments are nearing universal adoption rates, many firms are increasingly thinking about products used less frequently, particularly digital marketing solutions.
InvestmentNews fields a biannual benchmarking study measuring technology management, spending, usage and strategy trends among independent advisory firms. This year, our focus is on best practices for building a better client experience through improved digital touch points and a sound technology strategy.
For the first time, we gauged usage and spend projections for
digital marketing products. The results are interesting and indicative of expenditures that firms plan to make this year.
While less than a third (29%) of firms currently use stand-alone digital marketing technology, a quarter (25%) plan to add a solution soon. In fact, digital marketing is the top new solution that firms plan to add in 2019.
Source: 2019 InvestmentNews Adviser Technology Study
While these rosy projections are partially a result of low current usage rates, they also speak to the utility advisers have found in these tools and the perceived role they play as part of a firm's long-term growth strategy.
The optimism is also apparent among firms that currently use digital marketing tools. Half of these firms plan to increase these budgets in 2019, and hardly any plan to cut spending. While firms plan net increases in spending across every category measured, no other category has projected increases in spending as drastic as those for digital marketing.
Source: 2019 InvestmentNews Adviser Technology Study
So why the optimism? Well, according to advisers, it could be the fact that few other expenses more closely relate to the bottom line. When firms match technology solutions with their perceived benefits, 43% say the top benefit they get from digital marketing solutions is "increased profitability/add value to the business." No other tech solution has "profitability" as a top benefit. And of course it's easier to justify an expense that improves financial performance.
Tech Solution Used |
Top Benefits |
Digital marketing |
Increased profitability/add value to the business (43%), Enhanced client experience (28%) |
Compliance |
Freed up professionals' time (49%), Improved workflows (23%) |
Portfolio management |
Productivity gains (28%), Improved client outcomes (18%) |
Financial planning |
Enhanced client experience (49%), Improved client outcomes (29%) |
CRM |
Improved workflows (43%), Productivity gains (23%) |
Account aggregation |
Enhanced client experience (35%), Productivity gains (24%) |
Risk analytics |
Improved client outcomes (42%), Enhanced client experience (40%) |
Portfolio rebalancing |
Productivity gains (36%), Freed up professionals' time (23%) |
Document management |
Improved workflows (32%), Productivity gains (30%) |
Source: 2019 InvestmentNews Adviser Technology Study
Advisers are also likely coming around to the fact that communicating with prospects and clients online is critical in sustaining momentum built over the last decade and achieving long-term growth.
After all, the
younger investing generation is reaching their peak earning years and they are used to interacting with brands much differently than are customers to whom advisers have traditionally marketed.