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 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).
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:
Leadership and culture
Products and marketing
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.
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