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Tech Integration Increases Advisor Productivity

One of the hottest trends in wealth management technology is integration, and vendors are encouraging firms to adopt, and pay for, a suite of interconnected tech products. But can advisors expect a return on their investment?

Absolutely, says a new report from Envestnet, a turnkey asset management company that provides a suite of interconnected technology products. The research, based on 330 advisors surveyed by research firm Aite Group, indicates that the use of advanced integration—defined as having either automatic data sharing between business applications or functional integration across business applications—translated to deeper knowledge of client needs, more clients served and higher revenue for the practice.

Independent RIAs said an integrated tech ecosystem allowed them to produce 50 percent more financial plans and investment proposals. They were also able to spend 19 percent more time on client investment management than advisors without integrated technology.

They were able to serve 57 percent more clients, earn 46 percent more revenue, and their books of business were 78 percent larger. However, RIAs, who often have to source technology on their own, tended to have less tech products compared to their peers at brokerages.

Independent broker/dealers have access to the largest spectrum of business applications, but having those with deep integration resulted in 28 percent more time spent on client management. This allowed the IBDs to serve 44 percent more clients, double their assets and increase revenue by 73 percent.

“Our analysis shows that deep integration among technology solutions makes it possible for independent financial advisors, and bank and bank trust advisors, to run their practices more efficiently, spend more time serving and engaging with clients, and grow their client base,” Alois Pirker, research director of Aite Group’s wealth management practice, said in a statement. “Hiring more staff members isn’t enough to meet today’s greater client and regulatory expectations. For advisors, the much more far-reaching, long-term option is to evaluate their current technology setup and replace inefficient legacy systems that take time away from client-facing tasks.”

Twenty percent of advisors named fee billing as an application they would like for their business but don’t yet have. More than a quarter of RIAs and 21 percent of IBDs named account aggregation.

Envestnet has made it clear that aggregation and data analytics are a big part of its plans. The company recently acquired Wheelhouse Analytics to further improve the capabilities it acquired through Yodlee.

“Delivering data aggregation and analytics integrated with powerful financial planning capability is a strategic imperative for us,” Envestnet CEO Jud Bergman said in a statement, adding that the research validates using products like Envestnet’s to increase productivity and dedicate more time to client management and compliance. “This translates into deeper knowledge of client needs, more clients served, and higher practice revenue. These are essential elements of a successful advisory practice."

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