our third annual survey has expanded to cover software

Welcome to annual technology survey. A number of factors have conspired to make this our best survey to date. This year, 1,550 of you responded to our questionnaire. That’s more than four times the number of respondents we had last year and roughly six and a half times the number we had for our inaugural survey. This large sample gives us a clearer picture of what you think. And now, with three years of data under our belt, we can begin to track changes over time. Over the years, we’ve tweaked existing questions and added a few new ones. We think you’ll be surprised and intrigued by the results.

The past 12 months have been an adventure in every way, and technology is no exception. Many advisory firms, confronted by a market meltdown and rapidly shrinking profit margins, immediately cut discretionary spending. While we would argue that technology spending is a necessity, many advisors delayed purchases nonetheless. A number of technology vendors we spoke with (who requested anonymity) confirmed that new sales through the first six months of 2009 were weak.

At the same time, the market meltdown exposed inefficiencies that advisory firms had overlooked when revenue growth was robust. So, while market madness in 2008 and 2009 temporarily hurt technology sales, over the long term it may help—by refocusing advisors’ attention on the bottom line and the importance of efficiency, two areas where good technology makes a huge difference.

As has been the case in every survey, some of your responses really surprised us. As you’ll see, the results offer a num

Our third annual survey has expanded to cover

software, hardware, advisory platforms and more.

See how your choices stack up against your peers’.

By Joel P. BruckensteinInfographics by Tommy McCall

52 December 2009Financial Planning

052_FPDec09 1 11/11/2009 11:50:10 AM

Welcome to Financial Planning’s third annual technology survey. A number of factors have conspired to make this our best survey to date. This year, 1,550 of you responded to our questionnaire. That’s more than four times the num-ber of respondents we had last year and roughly six and a half times the number we had for our inaugural survey. This large sample gives us a clearer picture of what you think. And now, with three years of data under our belt, we can begin to track changes over time. Over the years, we’ve tweaked existing questions and added a few new ones. We think you’ll be sur-prised and intrigued by the results.

The past 12 months have been an adventure in every way, and technology is no exception. Many advisory firms, con-fronted by a market meltdown and rapidly shrinking profit margins, immediately cut discretionary spending. While we would argue that technology spending is a neces-sity, many advisors delayed purchases nonetheless. A number of technology ven-dors we spoke with (who requested ano-nymity) confirmed that new sales through the first six months of 2009 were weak.

At the same time, the market meltdown exposed inefficiencies that advisory firms had overlooked when revenue growth was robust. So, while market madness in 2008 and 2009 temporarily hurt technology sales, over the long term it may help—by refocusing advisors’ attention on the bot-tom line and the importance of efficiency, two areas where good technology makes a huge difference.

As has been the case in every survey, some of your responses really surprised us. As you’ll see, the results offer a num-

ber of insights into which technologies work for advisors and which don’t. You will find ideas for new products to pursue and old favorites that deserve an upgrade. The survey also contains ample guidance for software developers and marketers. In some cases, there seems to be a real discon-nect between what advisors want and what vendors are selling.

SmartphoneSThis year marks our first look at smart-phone usage and satisfaction. It came as no surprise to us that more respondents use a BlackBerry (502) than any other smartphone. The iPhone placed second (305); Palm (195) and Windows Mobile (186) were in a virtual tie for third place; and Google’s Android (71), the newest entrant, brought up the rear.

When it comes to user satisfaction, however, the numbers tell a different story. The iPhone was the clear favorite, with an amazing 64% of users reporting that they were “very satisfied” with their phones. This compares with 46% of “very satisfied” BlackBerry users. Palm (20%), Google Android (18%) and Windows Mobile (18%) trailed badly here.

At the other end of the spectrum, only 5% of BlackBerry users and 7% of iPhone users called themselves “very unsatisfied,” while the others phones suffered higher dis-satisfaction grades: Google Android (24%), Palm (17%) and Windows Mobile (12%).

It’s clear that iPhone users love their phones and BlackBerry users are con-tent. Google Android’s poor showing was a surprise. Several factors may be at work here: First, at the time of the survey, T-Mobile was the only carrier offering

Android phones, and nationally T-Mobile coverage trails that of Verizon and AT&T (the only iPhone carrier). In addition, T-Mobile offered only two Android phones, neither of which is produced by a leading cellphone manufacturer.

By the time you read this article, though, T-Mobile and Verizon will both have launched Android phones manu-factured by Motorola. Verizon’s Droid, for example, will feature improved hard-ware—a more powerful chip, higher-quality camera, superior design—as well as the new Android 2.0 software. We expect other manufacturers and carriers to offer Android phones by next year, which should lead to higher satisfaction ratings.

CuStodial and B-d offeringSFor the first time, we asked you to rate custodians’ and broker-dealers’ technol-ogy offerings. Among custodians, Schwab blew away the competition, with 45% of respondents calling themselves very satis-fied and another 41% satisfied. A total positive response of 86% is very impres-sive. TD Ameritrade and Fidelity were in an almost dead heat for second place. Both had a total of 73% satisfied, but TD Ameritrade had a three percentage point lead in very satisfied advisors. Pershing had a respectable 65% total satisfaction rating.

We were fairly surprised to see that Shareholder Service Group (SSG) achieved only a 54% total satisfaction rating and a 24% very unsatisfied rating. This is all the more shocking since SSG essentially offers the same technology platform as Persh-ing—with additional enhancements. Fur-thermore, SSG touts its high-service/high-touch approach.

Our third annual survey has expanded to cover

software, hardware, advisory platforms and more.

See how your choices stack up against your peers’.

By Joel P. BruckensteinInfographics by Tommy McCall

www.Financial-Planning.com 53 Financial Planning December 2009

053_FPDec09 2 11/11/2009 11:50:28 AM

Perhaps SSG’s problem is one of per-ception. Since SSG promotes itself as providing a very high level of service, it’s possible that SSG advisors expect more than Pershing’s do. Dan Skiles, execu-tive vice president at SSG and formerly of Schwab, speculates that the dissatisfac-tion could be due to the fact that the typi-cal SSG advisor is less experienced than the typical Schwab advisor, so the SSG advisor faces a steeper learning curve. In addition, Skiles says, SSG advisors have not received the NetX360 upgrade yet—so they have not benefited from all the goodies on the new platform. It will be interesting to see if satisfaction improves next year, after the NetX360 rollout.

Only 50% of Scottrade advisors were pleased, technologically. We believe some of the same factors that hurt SSG may also have negatively affected Scottrade, which also has many new, relatively small advisory firms that need to learn the ins and outs of custodial platforms. The firm rolled out a new web platform this summer, and some advisors may be experiencing transition pains. In addition, Scottrade is still new to servicing advisors. According to Brian Davis, Scottrade Advisor Services’ business manager, “We plan regular upgrades to the platform, the first of which is scheduled for late 2009.” It will be interesting to see what effect, if any, the new platform has on next year’s rankings.

We suspect that Schwab’s high scores are attributable, to an extent, to the fact that much of their client base has been with them for years, so they are deeply familiar with Schwab’s technology. But we don’t think that’s the whole story. Clearly, Schwab is doing something right. By the same token, we think Pershing’s lower scores can be pegged to two factors: less experience in the RIA space and the fact that some of their advisors have not yet upgraded to the new NetX360 platform.

Independent reps have been telling us for years that Commonwealth leads in technology, and the survey numbers agree. Commonwealth’s 47% very satisfied rank

walloped its nearest listed competitor, LPL, which drew a 27% very satisfied rat-ing. In total satisfaction (satisfied plus very satisfied) LPL matched Commonwealth’s score of 75%, placing them at a respect-able second overall. At the other end of the spectrum, it appears that a significant number of reps are disappointed with the technology job at AIG (20% very dissat-isfied; 27% somewhat dissatisfied); HD Vest (17% very dissatisfied; 31% some-what dissatisfied); and Trade PRM (18% very dissatisfied; 32% somewhat dissatis-fied). If 40% of your advisors are unhappy, technologically speaking, you have a prob-lem. If that number is 50% or more, you have a serious problem.

Operating SyStemSFor the second time, we asked respon-dents which computer operating system they use. With the release of Windows 7 just prior to the survey’s closing, and the recent release of Apple Snow Leopard, we were interested to see if there were any major changes from last year. There was some movement, but it looks like the really big changes will come in 2010.

As expected, Windows XP, the technologically ancient O/S originally released in 2001, still led the pack, with 80% of respondents having at least one XP computer. That’s down from 87% in 2008, but remains a huge majority. Advisors’ resistance to change is clearly more of an indictment of Windows Vista than it is an endorsement of XP. Only 21% of respondents claimed they had a Vista computer, up from 19% last year. The slight increase is probably a sign that advisors merely replaced old XP machines that died in 2009.

In what looks to be a promising sign for Microsoft, 4% of respondents had already purchased a Windows 7 com-puter. Since the survey closed within a couple of days of the Windows 7 release, we would anticipate that a great many XP and Vista users will be converting to Windows 7 by next year.

A noteworthy 3% of respondents said they have at least one Apple computer, up from 2% last year. We suspect that less than 1% owned a Mac two years ago. Though these numbers are tiny, they are significant. We suspect that some people wanted a modern alternative to XP and were encouraged to try Apple by the success of the iPhone and iPod. If this trend continues, web-based applications will have to start providing native Mac compatibility, if they don’t already.

If the trend accelerates—as it seems it will—should Windows 7 disappoint, vendors will no doubt contemplate producing native apps for Mac. Currently, Mac owners will have to remain content with operating many financial applications on a Windows virtual machine.

Crm SOftwareAs we stated last year, and countless studies have concurred, client relationship management (CRM) software is probably the single most important piece of software for establishing and maintaining a successful advisory practice. On an everyday basis, successful advisors rely upon CRM for mission-critical help with time management, workflow management and workflow automation, and with the delivery of uniform services. When CRM is used to its full potential, advisory firms will record every action taken by any staff member on behalf of a client. As a history of these actions grows, managers can analyze the data to identify problems and improve overall operational performance. This in turn can lead to greater overall efficiency, which results in greater client satisfaction and improved profitability.

Over the past year, CRM more than proved its value in an extraordinary market environment. Any successful client-advisor relationship must be based on a solid foundation of trust, and as you are no doubt aware, that trust was sorely tested by the wretched financial markets in late 2008 and early 2009. As markets spiraled downward, panicked clients

How are you compensated?

Fee only37%

Fee-based47%

Commission only16%

0% 10% 20% 30% 40%

Over$1 billion

$501 millionto $1 billion

$301–$500million

$151–$300million

$76–$150million

$25–$75million

Less then$25 million

200720082009

What are your firm's assets under management?

very satisfiedsomewhat satisfiedsomewhat unsatisfiedvery unsatisfied

How satisfied are you with the smartphone you use?

Google Android

Palm

Windows Mobile

Blackberry

iPhone

18%

20%

18%

46%

64%

32%

49%

51%

43%

22%

24%

17%

12%

5%

7%

25%

14%

19%

6%

8%


054_FPDec09 3 11/11/2009 11:50:24 AM

walloped its nearest listed competitor, LPL, which drew a 27% very satisfied rat-ing. In total satisfaction (satisfied plus very satisfied) LPL matched Commonwealth’s score of 75%, placing them at a respect-able second overall. At the other end of the spectrum, it appears that a significant number of reps are disappointed with the technology job at AIG (20% very dissat-isfied; 27% somewhat dissatisfied); HD Vest (17% very dissatisfied; 31% some-what dissatisfied); and Trade PRM (18% very dissatisfied; 32% somewhat dissatis-fied). If 40% of your advisors are unhappy, technologically speaking, you have a prob-lem. If that number is 50% or more, you

For the second time, we asked respon-dents which computer operating system they use. With the release of Windows 7 just prior to the survey’s closing, and the recent release of Apple Snow Leopard, we were interested to see if there were any major changes from last year. There was some movement, but it looks like the really big changes will come in 2010.

As expected, Windows XP, the technologically ancient O/S originally released in 2001, still led the pack, with 80% of respondents having at least one XP computer. That’s down from 87% in 2008, but remains a huge majority. Advisors’ resistance to change is clearly more of an indictment of Windows Vista than it is an endorsement of XP. Only 21% of respondents claimed they had a Vista computer, up from 19% last year. The slight increase is probably a sign that advisors merely replaced old XP machines

In what looks to be a promising sign for Microsoft, 4% of respondents had already purchased a Windows 7 com-puter. Since the survey closed within a couple of days of the Windows 7 release, we would anticipate that a great many XP and Vista users will be converting to

A noteworthy 3% of respondents said they have at least one Apple computer, up from 2% last year. We suspect that less than 1% owned a Mac two years ago. Though these numbers are tiny, they are significant. We suspect that some people wanted a modern alternative to XP and were encouraged to try Apple by the suc-cess of the iPhone and iPod. If this trend continues, web-based applications will have to start providing native Mac com-patibility, if they don’t already.

If the trend accelerates—as it seems it will—should Windows 7 disappoint, vendors will no doubt contemplate pro-ducing native apps for Mac. Currently, Mac owners will have to remain content with operating many financial applica-tions on a Windows virtual machine.

CrM SOftwareAs we stated last year, and countless stud-ies have concurred, client relationship management (CRM) software is probably the single most important piece of soft-ware for establishing and maintaining a successful advisory practice. On an every-day basis, successful advisors rely upon CRM for mission-critical help with time management, workflow management and workflow automation, and with the delivery of uniform services. When CRM is used to its full potential, advisory firms will record every action taken by any staff member on behalf of a client. As a his-tory of these actions grows, managers can analyze the data to identify problems and improve overall operational performance. This in turn can lead to greater overall efficiency, which results in greater client satisfaction and improved profitability.

Over the past year, CRM more than proved its value in an extraordinary mar-ket environment. Any successful client-advisor relationship must be based on a solid foundation of trust, and as you are no doubt aware, that trust was sorely tested by the wretched financial markets in late 2008 and early 2009. As markets spiraled downward, panicked clients

called and emailed at an alarming rate. Those calls needed to be logged and

returned quickly and effectively—a task that’s tough to accomplish unless you have a good CRM system. In addition, CRM could have been used to identify common threads in client messages, which would have enabled advisors to respond en masse through bulk mailings, bulk email and their websites.

Perhaps most important, a good CRM system empowers advisors to respond quickly and proactively to changing cir-cumstances. Rather than waiting for upset clients to call, a good CRM system allows you to contact clients and reassure them. For example, if you knew that 10% of your client base was prone to panic over market gyrations, you could create a “calm them first” group. Perhaps any market decline of 5% would trigger a reassuring letter or email to that group. For the remaining clients, who require a deeper drop to get worried, you might set a higher threshold before reaching out.

By the same token, when you are busy during a crisis, you have to prioritize out-reach. With a pre-configured set of groups and a strong CRM system, you would be much better positioned to handle increased service demands on short notice.

As was the case last year, the overall outlook for CRM was mixed. Only 8% of respondents said that they do not use any CRM software at all, about the same num-ber as last year. Equally troubling is the fact that 24% of respondents say they use Microsoft Outlook for CRM (versus 25% in 2008 and 35% in 2007); this despite the fact that we’ve been informing advisors for years now that Microsoft Outlook does not fit the true definition of CRM. Out-look can’t track complex workflows, nor can it store industry-specific information.

The silver lining, if there is any, is that until this year no CRM product specifi-cally targeting advisors, nor any general purpose CRM product for that matter, approached Outlook’s market penetra-tion. This year, Junxure, a CRM prod- Other

None

WealthTec

NaviPlanStandard

SunGard

eMoney

NaviPlanExtended

Financial Profiles

MoneyTree

MoneyGuidePro

23%

19%

1%

6%

8%

9%

10%

10%

11%

20%

What financial planning software doyou use? (Multiple responses allowed)

Other

None

SalesLogix

ProTracker

Microsoft CRM

Lotus Notes

Advisor Assistant

SalesForce

Goldmine

ACT4Advisors

Redtail

ProprietarySystem

EZ-Data

ACT!

Junxure

Microsoft Outlook

11%

8%

1%

2%

3%

3%

3%

4%

4%

6%

6%

6%

10%

24%

What CRM software do you use?(Multiple responses allowed)

How many advisors does your firm employ?

11–207%

6–1016%

3–525%

1–2 advisors37%

Morethan 20

15%

To

24%

3%


055_FPDec09 4 11/11/2009 11:51:03 AM

uct developed by advisors for advisors, fell just a few votes short of MS Outlook, equaling its 24% share. The results for Advisor Assistant (3%); EZ Data (6%); Lotus Notes (3%); Microsoft CRM (3%); Redtail (6%); and Salesforce (4%) showed little if any change.

ACT! was the biggest loser, falling from 15% in 2008 to 11% in 2009. Others with declining numbers include ACT4Advisors (4% vs. 6%) and ProTracker (2% vs. 4%). Other listed applications included E*Assist, IAS, Saleslogix and Upswing, but none garnered even a 1% share. E*Assist is new, so the relatively low response rate is understandable in its case.

The “other” answers represented 11% of responses, and the write-ins in this cat-egory were widely dispersed. We saw a smattering of familiar names among the write-ins, including the Bill Good Sys-tem, Qube and Oracle CRM. One new name that caught our attention was Zoho CRM. Zoho offers three editions of their online CRM product: a free edition for up to three users; a professional edition that offers additional features for $12 per user per month and the top-of-the-line enterprise edition at $25 per user per month. In addition, Zoho offers a full line of online applications that include a word processor, spreadsheets, document management, Wiki, email, online reposi-tory and an online invoicing system. It will be interesting to see if this firm gains traction within the advisor community.

Planning SoftwareThere was some movement in the finan-cial planning category this year. We immediately noticed that 19% of respon-dents said they aren’t using financial plan-ning software, versus only 11% last year. At first glance, this was surprising. Then we looked more carefully at the sample. Last year 84% of respondents said they offered comprehensive financial plan-ning; this year, only 81% said they did. So, we have 81% of respondents who offer comprehensive financial planning

and 81% who use financial planning soft-ware—sounds about right.

As was the case last year, Money-GuidePro was the most popular single application with 21% of the votes, off a bit from last year’s 23%. EISI’s com-bined stable of financial planning prod-ucts (Financial Profiles, NaviPlan Stan-dard and NaviPlan Extended) grabbed a combined 25% share, also off a bit from last year. In fairness, more than a few respondents wrote in that they used a proprietary version of NaviPlan, such as the Ameriprise version, so EISI’s num-bers are probably somewhat understated. eMoney exhibited a significant jump to 9% from 5%, which might be attribut-able to a change in management, while MoneyTree and SunGard held their own at 11% and 8%, respectively.

Those who answered “other,” a sig-nificant 23% of the total, were all over the place. Responses included a few other com-prehensive financial products that failed to achieve enough votes to be included. They also included proprietary products, a wide range of products that offer limited plan-ning and some that are not planning prod-ucts at all. Do we need to include a defini-tion of “financial planning software” with next year’s survey? Perhaps we do!

Overall, this category appears to have weathered a difficult 2009 rather well. EMoney, MoneyGuidePro and MoneyTree have offered significant enhance-ments recently. MoneyTree expanded its product line with the addition of distri-bution solutions, which look to be prom-ising. EISI made more modest upgrades in 2009. They also released “Bear Market Plan” to help advisors and their clients better deal with market uncertainty. Look for major new releases from EISI in the first half of 2010.

Portfolio ManageMent The portfolio management category never fails to surprise us, but we are at least partly to blame for some confusion here. In 2007, we listed Morningstar Office

(formerly Morningstar Advisor Workstation Office Edition) under the portfolio management category and it grabbed the lead with 28% of the votes. Last year, we moved Morningstar Office to the multifunctional category, which significantly altered the results. With Morningstar portfolio management capabilities now established and expanded, we’ve decided to bring them back to the portfolio management category—for both Office and PrincipiaCAMS (formerly dbCAMS).

Still, we found the results somewhat surprising. Morningstar Office reclaimed the lead with 24%, edging out Schwab PortfolioCenter, with 19% (up from 18% in 2008). We’re willing to wager, though, that not everyone who chose Morningstar is using their portfolio management and accounting application. The number of Schwab users exceeds the number of Morningstar Office users who actually use the program’s portfolio management and accounting features by a factor of at least four to one. Furthermore, the number of Morningstar Office portfolio management software users is roughly equal to the number of PrincipiaCAMS users.

Clearly, some respondents use MorningstarOffice to track portfolios, but not for portfolio management and accounting. Therefore, though we believe the responses to this question were skewed in Morningstar’s favor, we nevertheless think that they are becoming a force to be reckoned with in portfolio management software.

Once you get past the two leaders, there’s a substantial drop-off to the second tier. Here, we have Albridge (14%) and Advent (11%). The number of PrincipiaCAMS users fell to 4% this year, from 10% in 2008. Some of the decline, no doubt, was caused by migrations to Morningstar Office.

Niche providers that scored in the 1% to 2% range included AssetBook, Black Diamond, Bridge Portfolio, Investigo, Orion, Portfolio Director and PowerAdvisor. The vast majority of the “other” category comprised proprietary or private-

How satisfied are you with yourexperience with each of the followingcategories of technology products?

0 20 40 60 80

somewhat satisfiedvery satisfied

Other

General OfficeProductivity

(MS, Office, etc)

DocumentManagement

PortfolioManagement

and Accounting

FinancialPlanning

CRM

9%

23%

1%

1%

1%

1%

1%

1%

1%

1%

2%

2%

4%

11%

14%

19%

24%

What portfolio management softwaredo you use? (Multiple responses allowed)

Other

None

PowerAdvisor

Portfolio Director

Orion

IAS

CapTools

Bridge Portfolio

AssetBook

Adhesion

Investigo

Black Diamond

dbCAMS/Morningstar

Advent

Allbridge

Morningstar Office

SchwabPortfolioCenter

What rebalancing software do you use?

Other

eAllocator

Total RebalanceExpert

iRebal

ASI*

Tarmarac

16%

1%

1%

2%

4%

9%

*Through TD Ameritrade or Schwab


056_FPDec09 5 11/11/2009 11:50:45 AM

and 81% who use financial planning soft-

As was the case last year, Money-GuidePro was the most popular single application with 21% of the votes, off a bit from last year’s 23%. EISI’s com-bined stable of financial planning prod-ucts (Financial Profiles, NaviPlan Stan-dard and NaviPlan Extended) grabbed a combined 25% share, also off a bit from last year. In fairness, more than a few respondents wrote in that they used a proprietary version of NaviPlan, such as the Ameriprise version, so EISI’s num-bers are probably somewhat understated. eMoney exhibited a significant jump to 9% from 5%, which might be attribut-able to a change in management, while MoneyTree and SunGard held their own at 11% and 8%, respectively.

Those who answered “other,” a sig-nificant 23% of the total, were all over the place. Responses included a few other com-prehensive financial products that failed to achieve enough votes to be included. They also included proprietary products, a wide range of products that offer limited plan-ning and some that are not planning prod-ucts at all. Do we need to include a defini-tion of “financial planning software” with next year’s survey? Perhaps we do!

Overall, this category appears to have weathered a difficult 2009 rather well. EMoney, MoneyGuidePro and MoneyTree have offered significant enhance-ments recently. MoneyTree expanded its product line with the addition of distri-bution solutions, which look to be prom-ising. EISI made more modest upgrades in 2009. They also released “Bear Market Plan” to help advisors and their clients better deal with market uncertainty. Look for major new releases from EISI in the

ent The portfolio management category never fails to surprise us, but we are at least partly to blame for some confusion here. In 2007, we listed Morningstar Office

(formerly Morningstar Advisor Worksta-tion Office Edition) under the portfolio management category and it grabbed the lead with 28% of the votes. Last year, we moved Morningstar Office to the multi-functional category, which significantly altered the results. With Morningstar portfolio management capabilities now established and expanded, we’ve decided to bring them back to the portfolio man-agement category—for both Office and PrincipiaCAMS (formerly dbCAMS).

Still, we found the results somewhat surprising. Morningstar Office reclaimed the lead with 24%, edging out Schwab PortfolioCenter, with 19% (up from 18% in 2008). We’re willing to wager, though, that not everyone who chose Morning-star is using their portfolio management and accounting application. The number of Schwab users exceeds the number of Morningstar Office users who actually use the program’s portfolio management and accounting features by a factor of at least four to one. Furthermore, the num-ber of Morningstar Office portfolio man-agement software users is roughly equal to the number of PrincipiaCAMS users.

Clearly, some respondents use Morn-ingstarOffice to track portfolios, but not for portfolio management and accounting. Therefore, though we believe the responses to this question were skewed in Morning-star’s favor, we nevertheless think that they are becoming a force to be reckoned with in portfolio management software.

Once you get past the two leaders, there’s a substantial drop-off to the sec-ond tier. Here, we have Albridge (14%) and Advent (11%). The number of Prin-cipiaCAMS users fell to 4% this year, from 10% in 2008. Some of the decline, no doubt, was caused by migrations to Morningstar Office.

Niche providers that scored in the 1% to 2% range included AssetBook, Black Diamond, Bridge Portfolio, Investigo, Orion, Portfolio Director and PowerAd-visor. The vast majority of the “other” category comprised proprietary or private-

label applications offered by broker-dealers.Finally, 23% of respondents said that they do not use any portfolio manage-ment software. This is the lowest number we’ve recorded to date, but it still strikes us as being too high.

Multifunctional SoftwareWe added the multifunctional category last year to get a read on those integrated platforms that don’t neatly fit into any one slot. We know that some of the products named here can be used either as an inte-grated solution or as a modular one, but our hope was that respondents would reply based upon how they used the product.

There was little movement among the three top players we named last year. Morningstar led the category with 23% versus 21% last year. EMoney, which grabbed a 9% market share last year, still holds second place with 8%. Tamarac, which just began selling CRM and out-sourced PortfolioCenter in addition to its core rebalancing offering, tied with eMoney for second this year, with 8%. New entrant Open Finance Network, along with BridgePortfolio, IAS and Trust Co. of America were all in the 1% range. Those answering “none” dropped to 60% from last year’s 65%.

DocuMent ManageMentAfter CRM, financial planning software and portfolio management software, document management/storage software is the next most important software appli-cation for financial advisory firms. So the continuing lack of sophistication in this area is troubling. Thirty percent of advi-sors say they don’t use any—about the same number as last year (29%), if down from 2007 (38%).

The good news: The number of advi-sors who said they use Adobe Acrobat for this purpose fell below 30% for the first time, to 28%. That’s good because not even Adobe, the developer of Acrobat, claims that it is a document management/storage solution.

Other

None

DocuXplorer

CEO Image

Pershing/iNautix

DocuPace

NetDocuments

Cabinet NG

Worldox

Redtail

Laserfiche

PaperPort

Adobe Acrobat only

16%

30%

1%

1%

2%

2%

2%

2%

4%

4%

5%

7%

28%

What document storage software,if any, do you use?(Multiple responses allowed)

0

10

20

30

40

50

60

70

80%

’09’08’07

Where do you get your research andanalytics?

WSJ.com

Other

AdvisorIntelligence

Value Line

Zachs

S&P

Morningstar

MSN

Google

Yahoo!

Reuters

What account aggregation softwaredo you use?

Other

Yodlee

CashEdge

ByAllAccounts

12%

4%

6%

8%


057_FPDec09 6 11/11/2009 11:51:04 AM

The bad news is that Adobe Acrobat responses outnumbered the next most popular product—PaperPort—by a mar-gin of four to one, and some would argue that PaperPort does not technically fit the definition of a document management/storage solution, either. Beyond Paper-Port, Laserfiche, Redtail and Worldox all fell into the 4% to 5% range. They were trailed by Cabinet NG, CEO Image Systems, DocuPace and newcomers NetDocuments and Pershing/iNautix, which all fell in the 1% to 2% range.

While the document management numbers are disappointing overall, there is still a silver lining. Last year we pointed out that although 79% of respondents thought they were using document man-agement software, most were not using a full-fledged system. And when you sub-tracted out respondents who listed Adobe Acrobat, PaperPort and the 80% of “other” answers that were not true docu-ment management software, it seemed that only 14% of respondents were using true document management software.

When we ran the same calculation this year, our adjusted document man-agement/storage user percentage rose to 25.4%, an all-time high and twice the number we got last year. So, docu-ment management usage is growing. But almost 75% of respondents are sacrific-ing productivity and efficiency by failing to capitalize on these proven performers that demonstrate highly favorable ROI characteristics. Consider, for example, that according to a study by the Gartner Group, 25% of business documents are misplaced and will never be located.

Rebalancing SoftwaReRebalancing software is slowly but steadily catching on. Last year, only 22% of respon-dents said they used rebalancing software; this year 33% said they used it. When we asked advisors which of their software products yielded significant return on investment, 12% cited rebalancing soft-ware. Since only about 12% said they were

currently using a full featured rebalancing tool, one could argue that almost 100% of those advisors who owned a capable rebal-ancing tool were satisfied with their return on investment. So we want to know: Why isn’t everybody using one?

First, until recently, rebalancing soft-ware was expensive; in fact it was pro-hibitively expensive for small and midsize firms. Prices are beginning to fall, how-ever, as new competitors enter the space. We expect this trend to continue and lead to more sales.

Second, the initial comprehensive prod-ucts required that advisors invest a great deal of time and money in set-up time and user training. As vendors refine their prod-ucts, this barrier to sales is declining.

Third, owing to those set-up and training demands, some vendors initially had capacity constraints. These too are falling. With new products in the pipe-line, lower prices, plus improved set-up and training, we expect to see a jump in rebalancing software sales during 2010.

no SatiSfaction?As was the case last year, financial planning software edged out CRM as the applica-tion that pleased the most advisors. Only 23% of financial planning software users were very satisfied this year versus 39% last year, but 45% were somewhat satisfied. As a result, overall satisfaction actually edged up by a percentage point to 79% this year. Once again, much of the credit goes to the top three vote-getters: EISI, Money-GuidePro and MoneyTree. Since eMoney and SunGard polled well this year, too, they deserve honorable mention.

CRM, which had 31% very satisfied users and 47% somewhat satisfied, bested last year’s 25% very satisfied and 45% somewhat satisfied for an overall satisfac-tion score of 78%. That’s a significant increase. At least some of it is likely due to the fact that Junxure’s market share rose from 11% to 24%. Junxure added new features and improved its training pro-grams this year, and historically satisfaction

among its users has been strong. Competitors have also been improving noticeably. All of this bodes well for 2010.

The satisfaction trends for portfolio management and document management software are also positive. Seventy- six percent of portfolio management software users are at least somewhat satisfied, up substantially from last year’s 62%. At least 74% of document management software users are at least somewhat satisfied, up sharply from last year’s 55%.

Although the overall positive satisfaction trends are encouraging, they still have a way to go. Each year, we ask a question about general office productivity software (Microsoft Office, etc.) as a benchmark, so we can gauge how industry-specific products stack up against popular general products with regard to satisfaction. Eight-eight percent of respondents said they were at least somewhat satisfied with general products; that’s well above financial planning software’s industry-leading 79%. So, we’re on the right track, but we’re not at the finish line yet.

MiSSed In the wake of the market meltdown, much has been written about the need for greater operational efficiencies. In fact, I wrote a piece in this magazine on using software to make your practice more efficient. But our survey indicates that advisors are overlooking all kinds of technological opportunities to improve the efficiency of their practices. If you look closely at the responses to the CRM questions, for example, 35% or more respondents did not use an appropriate CRM package, and at least another 15% who had one are probably not using it optimally. That is unfortunate, since 51% of respondents told us that their investment in CRM yielded a significant return.

The portfolio management software numbers tell a similar tale. Twenty-two percent of respondents said they weren’t using any portfolio management software. We think the real number is closer

Other

CPA

Bank-affiliated advisor

Insurance agent

An employee ofa broker dealer

Independent but affiliatedwith a broker-dealer

Dually registered RIAaffiliated with a b-d

An independent RIA

4%

4%

2%

4%

4%

26%

18%

37%

Are you:

0

10

20

30

40

50

60

70

80

90%

’09’08’07

Other, please specify

Annuity salesInsurance sales

Securities trading

Tax preparation

Asset management

Wealth management

Comprehensivefinancial planning

Which of the following services do youoffer? (Please choose all that apply)

What compliance software do you use?

Other

Protracker Software

ComplianceMAX

NRS ComplianceEssentials

10%

3%

6%

7%


058_FPDec09 7 11/11/2009 11:51:24 AM

currently using a full featured rebalancing tool, one could argue that almost 100% of those advisors who owned a capable rebal-ancing tool were satisfied with their return on investment. So we want to know: Why

First, until recently, rebalancing soft-ware was expensive; in fact it was pro-hibitively expensive for small and midsize firms. Prices are beginning to fall, how-ever, as new competitors enter the space. We expect this trend to continue and lead

Second, the initial comprehensive prod-ucts required that advisors invest a great deal of time and money in set-up time and user training. As vendors refine their prod-ucts, this barrier to sales is declining.

Third, owing to those set-up and training demands, some vendors initially had capacity constraints. These too are falling. With new products in the pipe-line, lower prices, plus improved set-up and training, we expect to see a jump in rebalancing software sales during 2010.

As was the case last year, financial planning software edged out CRM as the applica-tion that pleased the most advisors. Only 23% of financial planning software users were very satisfied this year versus 39% last year, but 45% were somewhat satisfied. As a result, overall satisfaction actually edged up by a percentage point to 79% this year. Once again, much of the credit goes to the top three vote-getters: EISI, Money-GuidePro and MoneyTree. Since eMoney and SunGard polled well this year, too, they deserve honorable mention.

CRM, which had 31% very satisfied users and 47% somewhat satisfied, bested last year’s 25% very satisfied and 45% somewhat satisfied for an overall satisfac-tion score of 78%. That’s a significant increase. At least some of it is likely due to the fact that Junxure’s market share rose from 11% to 24%. Junxure added new features and improved its training pro-grams this year, and historically satisfaction

among its users has been strong. Competi-tors have also been improving noticeably. All of this bodes well for 2010.

The satisfaction trends for portfolio management and document manage-ment software are also positive. Seventy- six percent of portfolio management soft-ware users are at least somewhat satisfied, up substantially from last year’s 62%. At least 74% of document management soft-ware users are at least somewhat satisfied, up sharply from last year’s 55%.

Although the overall positive satisfac-tion trends are encouraging, they still have a way to go. Each year, we ask a question about general office productivity software (Microsoft Office, etc.) as a benchmark, so we can gauge how industry-specific products stack up against popular gen-eral products with regard to satisfaction. Eight-eight percent of respondents said they were at least somewhat satisfied with general products; that’s well above finan-cial planning software’s industry-leading 79%. So, we’re on the right track, but we’re not at the finish line yet.

MiSSed opportuNitieSIn the wake of the market meltdown, much has been written about the need for greater operational efficiencies. In fact, I wrote a piece in this magazine on using software to make your practice more efficient. But our survey indicates that advisors are overlooking all kinds of tech-nological opportunities to improve the efficiency of their practices. If you look closely at the responses to the CRM ques-tions, for example, 35% or more respon-dents did not use an appropriate CRM package, and at least another 15% who had one are probably not using it opti-mally. That is unfortunate, since 51% of respondents told us that their investment in CRM yielded a significant return.

The portfolio management software numbers tell a similar tale. Twenty-two percent of respondents said they weren’t using any portfolio management soft-ware. We think the real number is closer

to 32%; yet 35% of respondents say portfolio management software yielded significant ROI for their firms. Whatever the real numbers are, the fact is that port-folio management software users reported good ROI and high satisfaction. Some of you are clearly missing out.

The extent of missed opportunities in document management is staggering. Sat-isfaction ratings are up, and many studies have shown the benefits and ROI available from document management. Yet 75% of you aren’t cashing in on this opportunity. Over the last several years, entry-level costs have dropped and satisfaction is up. What are you waiting for?

The case for rebalancing software is compelling as well. There were real barri-ers to entry for many advisors in the past, but they are slowly crumbling. The ROI is undeniable. We are bullish on rebalanc-ing software. You should be too.

Advisors are not the only ones who are missing technology opportunities. Advi-sors have numerous needs that vendors are not adequately addressing. If there is one single area where vendors need to improve, it is in the area of usability. Soft-ware is easier to use than it was a few years ago, but it is still not good enough.

When we ask advisors how satisfied they are with documentation and training for the products they own, a moderately acceptable 72% are at least somewhat sat-isfied; however when we ask them how difficult the products are to use and learn, only 5% find them very easy while at least 49% find them somewhat difficult. Note to vendors: If half of your users find your software at least somewhat difficult to use, you have a major problem that’s hurting your sales. You need to do better.

Contrast the statistics mentioned above with the iPhone’s scores. Sixty-four percent of advisors who have an iPhone are very satisfied! Granted, it’s not a fair comparison, but it is an indication of what good design and great ease of use can do for your customers. They become your advocates. If you are a vendor who

Other

Don’t do ROIevaluation

Formal ROIanalysis

Staff feedback

Cost

Time saving

3%

29%

8%

35%

55%

64%

In what ways do you evaluate the ROI of the technology you purchase?(Multiple responses allowed)

Other

Mobility solutions

Outsourcing portfoliomanagement

Web conferencingsolution

Rebalancingsoftware

Documentmanagement software

Portfoliomanagement software

Financial planningsoftware

CRM

5%

8%

8%

9%

12%

20%

35%

43%

51%

What type of technology investmenthas yielded a significant ROI?(Multiple responses allowed)

No

Notsure

Yes

Would you be willing to spend moremoney on software to improve the efficiency of your practice?

’09’08’07

64%63%50%

28%27%

33%

8%10%16%


059_FPDec09 8 11/11/2009 11:51:44 AM

wants to excel, don’t measure your prod-uct against your competitor’s satisfaction score; measure it against the iPhone’s. That’s where you want to be.

What’s more, when we asked advisors how they evaluate their return on invest-ment for technology purchases, 64% said “time savings.” If products are being evalu-ated on this basis, and advisors must com-mit a great deal of time to learning how to use the product, the vendor has lost the battle before he or she has even started!

Usability issues could be depress-ing the document management soft-ware rankings. We used to assume that advisors were using Adobe Acrobat and PaperPort out of ignorance; now we’re not sure. Perhaps a portion of our reader-ship does not understand the benefit of a true document management system. We suspect that some do, but are neverthe-less willing to trade away a measure of functionality for better usability. There is a huge untapped market for document management software, but vendors have to educate advisors more and further enhance the usability of their programs.

Real gains in account aggregation remain elusive. This may be due to unreal-istic expectations on the part of some advi-sors, as well as intermittent service gaffes on the part of providers. There is a lot of promise here, but the question is, “When will it be fully realized?” We just don’t know. Overall, progress is being made, but there are still opportunities for advisors and vendors to do a much better job.

What ElsE?Commentators have been predicting a migration away from commissions and toward fees. Among our readers at least, it looks like the experts were right. In our 2009 survey, the percentage of fee-based advisors was 47%, exactly where it stood in 2007. But the percentage of fee-only advi-sors jumped to 37% in 2009, from 25% in 2007, while the number of commission-only advisors fell to 16% from 28%.

In a similar vein, back in 2007, 13%

of respondents were employees of a bro-ker-dealer; in 2009 that number fell to 4%. In 2007, 27% of respondents clas-sified themselves as independent RIAs; by 2009, 37% of respondents classified themselves as independent RIAs.

While not strictly technology related, the business model numbers indicate a growing demand for technology going for-ward. Our working theory is that the fee-based advisors are mostly those associated with an independent broker-dealer. Typi-cally, these folks get substantial technology support through their broker-dealer, and they often have the opportunity to pur-chase prepackaged technology solutions through their broker-dealer as well.

The rise of truly independent RIAs signals a growth opportunity for vendors who serve this niche. It also suggests that if historical patterns hold, and independent RIAs purchase their technology indepen-dently as opposed to through a consolida-tor (whether a custodian or an indepen-dent third party), some technology firms will have to alter their sales strategies in order to reach these new independents.

When we asked advisors what their next technology purchase was likely to be, 55% said hardware; up sharply from 44% last year. We assume much of this gain is attributable to pent-up demand for new PCs. We know that the majority of advisors are still running Windows XP machines and that they were reluctant to purchase Vista. Now, it appears they will be buying new PCs with Windows 7 pre-installed. If so, it is really a combined hard-ware/software purchase. The upgrade cycle is long overdue, so this is a positive.

The only negative will be if software vendors are not ready to support Win-dows 7. Early indications are that most are ready, but since new machines are likely to include the 64-bit version of Windows 7and many upgraders may end up with the 32-bit version, we assume that there will be sufficient issues with compatibility, peripherals, drivers and the like to keep tech support staffs busy.

MorE intThe survey provided ample evidence that advisors want more integration. For example, 23% of respondents said they changed software providers because of problems with integration. When we invited respondents to “tell us your thoughts on your current technology products and any improvements you’d like to see,” the most common answers exhibited frustration with some aspect of integration.

Clearly advisors want more integration, but they are not sure how to get it—particularly in the case of independent RIAs. With a few notable exceptions, single-solution providers have struggled to gain traction. More recently, custodians such as Fidelity (WealthCentral) and Pershing (NetX360) are attempting to devote their technical expertise and economies of scale to tackling this problem. We thought it premature to gauge the results this year, but we will most likely ask about them next year.

a Call to This article contains a wealth of data. The challenge for readers will be to create actionable items. Here’s what we suggest: Begin by reviewing findings that have almost universal applicability. Respondents told us that they looked to technology to save time, most of all. In addition, only about half of advisors were satisfied with the overall usability of their technology. For advisors, this implies that when you’re evaluating any technology product, you should look carefully at usability in your due diligence process. The most feature-rich product in the world is not going to do you any good if you and your staff cannot figure out how to use it. While vendors deserve credit for some improvement in this area, it is clear that they still have more to do, particularly in the document management and rebalancing categories.

Many of you are using an old operating system. There’s evidence that advisors will upgrade their computers and operating systems in 2010. If so, it’s long overdue.

The all-inclusive cost of yourtechnology setup is:

Very reasonable14%

About right57%

Too high29%

Verysatisfied

10%

Somewhat satisfied

47%

Somewhat unsatisfied

33%

Very un-satisfied

11%

How satisfied are you with the integration of your various programs?

Very difficult

Somewhat difficult

45%

Somewhateasy46%

Very easy

5%4%

How difficult has it been for you and yourstaff to learn to use your software?


060_FPDec09 9 11/11/2009 11:51:45 AM

of respondents were employees of a bro-ker-dealer; in 2009 that number fell to 4%. In 2007, 27% of respondents clas-sified themselves as independent RIAs; by 2009, 37% of respondents classified themselves as independent RIAs.

While not strictly technology related, the business model numbers indicate a growing demand for technology going for-ward. Our working theory is that the fee-based advisors are mostly those associated with an independent broker-dealer. Typi-cally, these folks get substantial technology support through their broker-dealer, and they often have the opportunity to pur-chase prepackaged technology solutions through their broker-dealer as well.

The rise of truly independent RIAs signals a growth opportunity for vendors who serve this niche. It also suggests that if historical patterns hold, and independent RIAs purchase their technology indepen-dently as opposed to through a consolida-tor (whether a custodian or an indepen-dent third party), some technology firms will have to alter their sales strategies in order to reach these new independents.

When we asked advisors what their next technology purchase was likely to be, 55% said hardware; up sharply from 44% last year. We assume much of this gain is attributable to pent-up demand for new PCs. We know that the majority of advisors are still running Windows XP machines and that they were reluctant to purchase Vista. Now, it appears they will be buying new PCs with Windows 7 pre-installed. If so, it is really a combined hard-ware/software purchase. The upgrade cycle is long overdue, so this is a positive.

The only negative will be if software vendors are not ready to support Win-dows 7. Early indications are that most are ready, but since new machines are likely to include the 64-bit version of Windows 7and many upgraders may end up with the 32-bit version, we assume that there will be sufficient issues with compatibility, peripherals, drivers and the like to keep

More integration, pleaseThe survey provided ample evidence that advisors want more integration. For exam-ple, 23% of respondents said they changed software providers because of prob-lems with integration. When we invited respondents to “tell us your thoughts on your current technology products and any improvements you’d like to see,” the most common answers exhibited frustration with some aspect of integration.

Clearly advisors want more integra-tion, but they are not sure how to get it—particularly in the case of independent RIAs. With a few notable exceptions, single-solution providers have struggled to gain traction. More recently, custodi-ans such as Fidelity (WealthCentral) and Pershing (NetX360) are attempting to devote their technical expertise and econ-omies of scale to tackling this problem. We thought it premature to gauge the results this year, but we will most likely ask about them next year.

a Call to aCtionThis article contains a wealth of data. The challenge for readers will be to cre-ate actionable items. Here’s what we sug-gest: Begin by reviewing findings that have almost universal applicability. Respon-dents told us that they looked to technol-ogy to save time, most of all. In addition, only about half of advisors were satisfied with the overall usability of their technol-ogy. For advisors, this implies that when you’re evaluating any technology product, you should look carefully at usability in your due diligence process. The most fea-ture-rich product in the world is not going to do you any good if you and your staff cannot figure out how to use it. While ven-dors deserve credit for some improvement in this area, it is clear that they still have more to do, particularly in the document management and rebalancing categories.

Many of you are using an old operating system. There’s evidence that advisors will upgrade their computers and operating systems in 2010. If so, it’s long overdue.

The survey clearly demonstrates that if you are in the market for a smartphone, the iPhone should be your benchmark. Your colleagues who have them love them. But you may also want to check out the new Google Android phones.

If you are not using a true CRM prod-uct, or if you are unsatisfied with the one you have, go out and buy a good one. Start your search among the products that ranked well in this year’s survey. We’d also take a look at some of the newer offerings. Clearly, advisors who use good CRM are satisfied, and the reported ROI is good, so there’s much to be gained by acquiring appropriate CRM software.

If you’re satisfied with your current financial planning and portfolio man-agement software, we see little reason to change; however, if you’re not, there is no reason to prolong your suffering. Most of your colleagues have found a product that meets their needs; you should as well. Again, we would start a search with some of the higher-ranked products and contrast them with some of the newer offerings. In the case of portfolio management software, outsourcing data downloads and reconcili-ation often makes sense.

Document management and rebalanc-ing software are both ripe for rapid growth if vendors can educate advisors about their benefits and continue to improve usability. In both cases the ROI story is compelling.

Only 20% of advisors have a writ-ten technology plan. If you’re part of the majority, this is a deficiency you should address. Only 29% feel the cost of tech-nology is too high, further supporting our thesis that factors such as ease of use are holding back adoption in some areas. Sixty-four percent are willing to spend more on technology if you can be per-suaded that it will improve the efficiency of your practice. Hopefully, vendors will do a better job of convincing you in the future that this is the case. FP

Joel P. Bruckenstein, CFP, is publisher of Virtual Office News.

Very unsatisfied

Verysatisfied

15%

Somewhatsatisfied

57%

Somewhat unsatisfied

24%

How satisfied are you overall with the level of documentation and technical support for the productsyou currently use?

4%

Client vault software

Account aggregationsoftware

General officesoftware*

Rebalancing software

Documentmanagement software

Portfolio managementsoftware

CRM software

Financial planningsoftware

Hardware (computers,printers, scanners, etc)

12%

11%

15%

13%

16%

14%

16%

21%

55%

Your next major technologypurchase is likely to be: (Multiple responses allowed)

*MS Office, accounting software, etc.

What is the single greatest businesschallenge you would like technologyto solve for you?

Data entry errors

Locating data outsidethe organization

Locating data withinthe organization

Client communication

Time management

Improved workflow

4%

4%

8%

19%

25%

40%


061_FPDec09 10 11/11/2009 11:52:04 AM