2019 - t3 Technology Hub

2019

S O F T WA R E

SURVEY

AUTHORS

JOEL BRUCKENSTEIN BOB VERES

SPONSORS

ORION ADVISOR SERVICES MORNINGSTAR, INC.

Contents

Methodology and Disclaimer ............................................................... 1

Demography of the Survey Participants ............................................... 3 All-In-One Software Programs .................................................. 5 CRM Tools ................................................................................. 7 Risk Tolerance Instruments ...................................................... 11 Portfolio Management Tools .................................................... 13 Investment Data/Analytics Tools ............................................. 15 Economic Analysis and Stress Testing Tools ............................17 Trading/Rebalancing Tools ...................................................... 19 TAMP Service Providers .......................................................... 21 Online/Automated Portfolio Management Tools ..................... 22 Financial Planning Software .................................................... 23 Tax Planning Software ............................................................. 25 Social Security Analysis Tools ................................................. 26 College Planning Tools ............................................................ 27 Document Management Resources .......................................... 28 Document Processing Tools ..................................................... 29 Cloud Hosting and Cybersecurity Resources ........................... 30 Digital Marketing Tools/Resources .......................................... 31 Miscellaneous Tools ................................................................. 32 Custody Platforms .................................................................... 33 Broker-Dealer Platforms .......................................................... 34

Bonus: What is Your Most Valuable Software? ................................. 35 Bonus: Tech Spending Trends ............................................................ 37 Bonus: Should the CFP Board Grant CE Credits? ............................. 39 Final Thoughts ......................................................................... 40

Methodology and Disclaimer

Keeping up with the financial services professional technology sector is no easy task, and one could say the same for tech companies trying to adapt to the changing landscape of the financial planning profession. Advisors are evolving, and they readily acknowledge that they are struggling to stay ahead of the technology knowledge curve. Of those surveyed, over 85% believe that the CFP Board should grant continuing education credit for technology, as they do for other core competencies. Many advisors are moving from investment-centric value propositions (relying primarily on portfolio management and investment data tools) to planning-centric (relying primarily on a different set of software), while others are making a further evolution toward service-centric, where increasingly sophisticated CRM may be the heart of the business.

Each year, different options, deeper integrations, new entrants and custodial adaptations create a dynamic marketplace. Our third annual T3/Inside Information Software Survey is our attempt to provide a snapshot of the state of the industry. Once again, it serves a dual function: first, to help advisory firms evaluate their options. In an effort to be more comprehensive, we've expanded the survey to include 20 different industry categories. Any potential buyer or user of advisor technology is likely to get an education simply by being exposed to the more than 500 tools and resources rated, categorized or reader-added in the course of the survey.

Once again, we collected user satisfaction ratings, so advisory firms would be able to see how satisfied existing users were with each software program they may be using. And in some categories, we broke down the market share information more finely, according to years in the business, business model and size of the firm, so that readers could see which programs are most popular with firms and advisors who look like them.

Of course, the survey was also created for the software community itself. It provides an opportunity to evaluate market share and changes in market share, and in some cases to see where their tools and services

are most popular. They can evaluate their own user satisfaction scores, and perhaps use them to poll their users, to find out where they excelled and where there is room for improvement between now and the next survey.

For each software category, we provided two metrics that we believe would be useful both to the industry and to the professional consumers of financial services technology. The first is an overall market penetration for each category. That is: what percentage of all the respondents are using one (or sometime more) tool/service in this category? The other is the average rating of all the software programs in this category where we collected data. One of the most interesting findings of the survey is that, in general, advisors seem to be pretty happy with the tools and services they're using. Seldom is an average rating below 6.5 on a scale of ten, and many of the most popular programs have overall ratings of 7.0 or better.

In addition, we provided an "other" field, so participant advisors could tell us (and you) the names of less mainstream solutions they're using which didn't appear the survey. Every year, this uncovers a surprising number of unfamiliar tools and services, and provides insight into the remarkable diversity of software providers in our professional marketplace. More importantly, it gives the reader an opportunity to do a bit more research into tools that have not yet achieved "mainstream" status.

Finally, we asked participants to name those programs and services that they are thinking about switching to. Since these decisions are seldom made lightly and without significant consideration, we believe these lists, provided in the form of a ranking, gives us at least a glimpse into future shifts in market share. You will see cases where a program is currently less popular than some of its peers, but leads the list of tools that advisors are considering switching to. That suggests that there will be a rise in market share by the time the next survey rolls around. Similarly, programs with high market share may not appear high on the "thinking about adding" ranking, which might hint at the opposite shift in market share.

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Once again, we made every effort to provide an accurate representation of advisor responses. This always requires a degree of hands-on evaluation and judgment, and is perhaps the most labor-intensive activity in the entire process of producing this report.

The reader should understand that not every vote was counted. Once again, we encountered spurious or inconsistent results which could only be viewed as an attempt to sabotage the survey--for reasons we are unable to explain.

Our best efforts may not always have yielded prefect or precise results. For instance, it's clear that some advisors are stricter in their grading than others; many didn't give a single program in their software suite a perfect "10" rating, or even any "9"s. Two identically satisfied users might give different responses in the satisfaction rating.

A bigger problem, whose magnitude is hard to assess, is the demographics of the respondents. As the reader will see in the next section, the subset of advisors who responded to our survey is broader and more closely matches the industry averages than, we believe, any extant survey of advisor technology. But clearly our representation in the fee-only advisor community is higher than the industry at large, and it is lower in the wirehouse community. We strongly suspect that

the survey participants are very highly concentrated in the fiduciary end of the planning community, and may be at least one step more sophisticated than the average advisory firm.

Nevertheless, we had a much larger sample size this year, which provides us with the ability to do some additional analysis that was simply not possible before. Moreover, for the first time, we had a roughly even split of business model responses (fee-only and dually-registered), so we were able to perform some analysis as to differences across the two segments.

We want to express our gratitude to the more than 5,500 members of the financial planning/investment advisory community for their willingness to participate in this effort, and provide us with priceless data on the ever-evolving professional technology sector.

And we also want to express our gratitude to the sponsors of this year's survey: Orion Advisor Services and Morningstar, Inc.

We believe that our 2019 Technology Survey represents a significant improvement over last year's version, and that we're collecting the best and most useful data to be found anywhere in our professional space.

We hope you agree.

Joel Bruckenstein

BobVeres

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