LIVE FROM FPA EXPERENCE: Tech integration adds ROI

Financial advisers who integrate technologies will pay more than those who buy separate software solutions, but they stand to gain in annual income as well as future positioning. Liz Skinner reports live from FPA Experience in Florida.

Financial advisers who integrate technologies will pay more than those who buy separate software solutions, but they stand to gain in annual income as well as future positioning.
“You’re going to pay more for integration because you get more,” said Cameron Sheehan, director of adviser services for Tamarac AdvisorServices, at the Financial Planning Association’s national conference in Orlando on Saturday. “All changes are synchronized among all the systems when they are integrated.”
Advisers who integrated technology, or linked their software to communiate with each other, earned an extra 20% in income per adviser, about $181,000 compared to $151,000 for those with standalone systems, Mr. Sheehan said, quoting an April study by Aite Group.
The systems that advisers increasingly are connecting include portfolio accounting, customer relationship management systems and most recently a client portal for investors can see their aggregated accounts, Mr. Sheehan said.
This type of client portal is the industry’s answer to clients who want the functionality that some online financial advisers offer, a sort of Mint.com, he said. About 60% to 70% of employees with access to such a client portal log in at least once in the months following its availability.
With integrated technologies, clients can see dynamic reports, not just static performance PDFs that advisers prepare. Clients increasingly want such real time reports.
“Things are moving away from what did I have last month to what do I have now,” Mr. Sheehan said.
Full integration and training for these different systems takes about a year, he told advisers at the conference.
Integrating these systems, as well as automating workflow and efficient and electronic document manaagement adds to the annual bottom line and leads to greater value when it becomes time to consider a business sale or other succession plan, said Tim Welsh, founder of Nexus Strategy LLC, at the FPA conference on Sunday morning.
“Look at technology as an investment, as opposed to an expense,” Mr. Welsh said.
Automating workflow has been shown to save about 5% on back office costs and document mangement systems can save advisers about 9% in overhead, he said.