3 December 2020

Industry Trends and Research

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Tech Investment Key to Securing Financial Advisor Talent

Technology investments play a key role in winning the war for adviser talent, but there appears to be a disconnect in the value, according to J.D. Power’s 2020 “U.S. Financial Advisor Satisfaction Study.”

The firm observes that wealth management firms have been making huge investments in new advisor workstation technologies designed to coalesce market data, client information, account servicing tools and AI-powered analytics into a single interface. The successful execution of that investment, however, will be key to firms’ ability to attract and retain advisor talent, the study suggests.

“Advisor reliance on technology to manage all aspects of their practice has been growing for many years, but it has been accelerated considerably during the COVID-19 pandemic,” notes Mike Foy, J.D. Power’s senior director of wealth and lending intelligence. And he adds that, while firms are investing heavily, many have been “missing the mark” on delivering technologies that meet advisor needs. 

In fact, whether advisors perceive their firm’s technology is improving has become the most significant indicator of advisor satisfaction among both employee and independent advisors, the study emphasizes.

Most advisors (92%) say they currently rely on core planning, portfolio allocation, portfolio management and customer relationship management technologies provided by their firm. The study found, however, that just 48% of advisors say that technology is “very valuable.” “That needs to change if firms want to win the talent war,” Foy says.

Predictive Analytics

Predictive analytics tools, such as AI-driven technologies to predict client needs or identify at-risk clients, still have relatively low levels of adoption among advisors. J.D. Power notes, however, that when they are used, they have a powerful positive effect on advisor satisfaction.

Just 9% of advisors currently use AI tools, for example, but advisor satisfaction with technology is 95 points higher (on a 1,000-point scale) when they use AI tools and find them valuable than when they rely only on basic planning tools.

Moreover, as the number of advisor tools and technologies continues to expand, the importance of integration becomes more critical for usability, the firm notes. Currently, just 21% of advisors in both the employee and independent channels say their platform is “completely integrated” with features such as single sign-on, data-synching and workflow.

Those platforms with complete integration score significantly higher on technology satisfaction vs. those that do not have it (276-point increase among employees and 193-point increase among independents).

Study Rankings

The U.S. Financial Advisor Satisfaction Study was redesigned for 2020, the firm notes. It now measures satisfaction among both employee advisors (those employed by an investment services firm) and independent advisors (those affiliated with a broker-dealer but operate independently). The findings are based on six key factors:

Compensation

Leadership and culture

Operational support

Products and marketing

Professional development

Technology

Among employee advisors, J.D. Power reports that Edward Jones ranks highest in overall satisfaction with a score of 920, followed by Raymond James & Associates (867), Ameriprise (743), Merrill (718) and Morgan Stanley (713), rounding out the top five.

For independent advisors, Commonwealth Financial ranks highest in overall satisfaction with a score of 942. They were followed by Cambridge (866), Raymond James Financial Services (850), Northwestern Mutual (831) and Ameriprise (811).

The study is based on responses from 3,262 employee and independent financial advisors and was fielded from January through April 2020.

Click here for the original article.

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