4 Questions Advisors Should Ask About Digital Client Experience

“Most RIAs surveyed believe that a digital experience is core to their competitive advantage, but only 30-40% are working on one.”  

— Rich Cancro, CEO and founder of AdvisorEngine 

A recent study sponsored by Franklin Templeton found that 60% of RIAs strongly agree that Gen-X and Millennial clients will expect advisors to provide digital technology for communicating and making investment decisions.

Why this number isn’t 100% is beyond me, but AdvisorEngine is building out their digital offering to be ready when the other 40% of RIAs realize that they need an all digital channel.

Since their acquisition by Franklin Templeton in 2020, AdvisorEngine has been investing heavily in both technology and marketing.  The technology upgrades include a revamp of Junxure CRM, both back end and UI as well as tight integration with Smartleaf for portfolio rebalancing and tax management.

Cancro made his comments during the opening keynote session at the combined T3 Advisor & Enterprise Conferences.  This year was the first time the in-person event was held since February 2020.

AdvisorEngine made a huge investment in sponsorship and it was visible almost everywhere you looked. From their full wall spread in the main lobby (right behind the registration desk) to their triple-length booth in the exhibit hall to Cancro owning the first session on Monday morning.

They also spent significant development effort on improving the back end technology powering Junxure. Cancro noted that they realized when they acquired Junxure that they needed to “transform the experience”.  This was painfully obvious as their market share has been declining for the past few years.  The reengineered the code to increase performance by 7-10X, he reported.

This will be welcome news to longtime Junxure clients who had been complaining about response time for a while.

Cancro recommended that wealth management firms should look at their technology from a platform mindset and verify that everything connects and compliment each other. Too many firms that Ezra Group works with manage to function even though much of their data is disconnected and siloed. (See 3 Deadly Sins that Will Kill Financial Advisors’ Business Growth)

Could better application integration in wealth management platforms make technology consultants obsolete, Cancro asked?  This comment generated some discussion on Twitter.

Gavin Spitzner commented, “Cancro says he wants to make technology consultants obsolete by integrating the platform. Fortunately, I’m a strategy consultant.”

Michael Kitces retweeted this with the addition of: He did say “No offense to the consultants” first.

Of course, we don’t take offense because we know how difficult the task will be to eliminate the extensive effort required to integrate most advisortech applications. There’s a wide range of functionality offered as well as different levels of breadth, depth and ease of use, all of which are parameters that Ezra Group uses to evaluate vendor integration capabilities.

We like to joke that if every vendor’s software integrated as well as they promised, we would be out of a job!  But they never do, which is a major part of the problem that our industry has to manage to build heterogeneous infrastructures 

For advisors to increase productivity they must drive internal accountability with clear objectives and a focus on data to deliver measurable results in all key business areas, Cancro insisted.  A Capgemini report found that low advisor productivity results from non-integrated processes and technology tools silos.  They also found that advisors spend 34% of their time on administrative tasks and portfolio management, neither of which increase internal productivity. (See Digitizing the Back Office of Wealth Management Firms)

The Franklin Templeton study also found that 45% of consumers have eliminated an advisor from consideration based on their digital presence (or lack thereof) before ever reaching out. This even includes consumers who were referred in. 

You would think that this stat would encourage a good portion of those 40% of RIAs to jump on the digital bandwagon!

Cancro also chided the marketing efforts of most RIAs when he pointed out that he has lived in Manhattan for over twenty years, yet no independent advisors have ever contacted him. This includes all communication channels: email, phone, text or physical mail.

52% of RIAs with over $500 million in AUM reported being heavy technology users, reported George Tamer, AdvisorEngine’s new Head of Sales. These RIAs collectively manage $5.5 trillion. But how are the other 48% running their business?  Are they light on technology and still relying on yellow legal pads?  

One area that is seeing a lot of investment and attention from startups is new account opening.  Cancro shared stats that showed a 40% NIGO rate for manual data entry during account opening while automated processes had NIGO rates in the low single digits.

Tamer also showed off screenshots from their performance reporting that showed the ability to drill down and view performance by asset category, asset class and individual securities. All of these are table stakes for performance reporting functionality, so it’s good to see that they have it.

A quick demo of the new Junxure (rebranded as AdvisorEngine CRM) user interface showed a drag-and-drop configurable design. This will enable advisors to change their CRM interface the way they want it.  We hear a lot of vendors throw around the “personalization” buzzword but only a few are delivering in tangible ways. AdvisorEngine seems to be on the right track with this refresh of their long-maligned CRM. (See 5 Foolproof Tactics for a Successful CRM Implementation)

“The fewer clicks, the better,” Cancro stated.  This rule of thumb is valid across all advisor and client workflows and configurations.  We often point out to vendors the number of clicks it takes them to complete a task when they are demoing their latest software.  Did you even consider how many times an advisor has to run this process each day?  Multiply those clicks by this number and you see the scope of the problem.

One of Ezra Group’s most popular consulting services is managing request for proposals (RFPs), platform evaluations and vendor selection projects.  Tamer provided some good advice to the audience of RIA’s and broker-dealers that included properly vetting technology partners on their reputation and stability.

These are included in our proprietary vendor evaluation methodology under non-functional requirements that also include accuracy, response time and cost.  These requirements must be discussed and prioritized before the vendor evaluation process starts to ensure that all stakeholders are on the same page before getting in too deep.

Remember that selecting a vendor is like getting married. You’re going to be connected at the hip and dependent on each other for 5, 7 or 10 years or longer.  Do not enter these agreements lightly or without proper vetting.

Trust is also an important component of the decision to select a new technology provider, Tamer stated.  We measure trustability via a number of related measurements including product history, market share, and verified client referrals. If a vendor can not (or will not) provide at least three verifiable client referrals of similar size and complexity to your business, then their trust score would not be high on our scale.

Tamer showed a graphic that projected a 5% year over year increase in IT costs across financial services firms.  This sounds small until you realize that after the seventh year your IT spend would be 40% higher!  This is unsustainable for any but the largest advisory firms.

Realizing that much of this IT spending is not going to the technology itself but to maintain legacy applications, Tamer noted.  This is often classified as “tech debt” and becomes a major drain on resources and limits the ability to innovate.

One study found that, on average, businesses spend approximately one-third of their IT budget addressing technical debt – this jumps to 41% for enterprise sized firms.  A strong majority (69%) of IT leaders say technical debt poses a fundamental limit on their ability to innovate, along with 61% saying it is a drag on their company’s performance.

Where do wealth management firms store their client data? In their portfolio management system or CRM? Cancro had the answer that it’s both! But can firms consolidate it to obtain a 360-degree view of their clients?  (See 4 Benefits of a 360-Degree Client View)



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com