One Size Does Not Fit All: Matching the Right Technology With the Right Adviser

Focus On: Wealth-Management TechAdviser Workstations

With stagnant revenue growth, flat-lined technology budgets and a growing desire to cut costs, brokerages need to abandon the one-size-fits-all approach to buying or building technology.

Rather, they need to segment their advisers - in the same way that firms stratify their customers - and develop tools and training programs according to their adviser's technological capabilities, needs and willingness to use it, suggest two studies from Forrester Research.

Until investment firms do that, they could simply be wasting their spending on wealth-management tools, suggests Jaime Punishill, author of the research. The new information may be especially valuable to IT executives responsible for deploying the technology that advisers need to compete in a tough economic climate.

"Advisers are not a homogenous lot," says Punishill. Rather, they are a complex breed, with varying degrees of optimism and acceptance of technology, which is impacted by a broad range of variables. Everything from - whether or not they are captive or independent advisers, to the amount of revenue they generate, to whether they make their money through transactions or fees - will affect their attitude toward technology.

The problem, he says, is that while firms are quick to segment their clients according to things like investment-life cycle, full service, self service, age and assets, among others, "No firm does the same with the advisers they serve."

Rather, they're classified by how long they've been in the business and how much revenue they generate. The result is that firms add functionality to their applications that don't get used and overspend or fail to maximize their technology dollars.

Based on a survey of 2,100 advisers, Punishill breaks advisers into 10 different categories and says that each firm will have a mix within their employ.

The largest category of those surveyed (27.5 percent) is what he calls the Sidelined Reps - low-revenue-generating technology pessimists, who have little time, need, or inclination to use technology.

The Conventionalists, one of the smallest categories, comprising 2.5 percent of survey participants, are high-revenue generators who earn using commissions, yet shun technology. The Grudging Adapters, 8.9 percent of the mix, are hybrids, earning through a blend of fees and transactions. While they don't like technology, they're willing to try it.

The Yellow-Pad planners, who account for 4.2 percent, are fee generators who were early to the financial-planing game and are considered the leaders among the pessimists in technology adoption.

At the other end of the scale are the optimists. Here, Punishill identifies six categories, split among high- and low-revenue earners, according to how they earn their fees.

What all this means is that each category has different expectations and desires when it comes to technology, so firms can't simply build a solution with one type of adviser in mind, says Punishill.

That impacts some of the most important technology a firm deploys, its contact-management and portfolio-management systems, he says.

For example, when it comes to portfolio-management systems, the Big Dog and Planning Rainmakers are above-average users, relying on the system for everything from analyzing performance to tracking maturity dates on securities. Contrast that to the Trading Maven, who uses it to track mature bonds and positions that they can use to contact their clients.

Punishill says the problem is that when firms design their systems, they "consult a panel of tech-savvy, high-revenue-generating advisers to gauge their technology needs and test new systems. Big mistake."

Rather, firms must understand who will use it, why and how often, and identify those who will resist and struggle.

Building technology for a wide array of adviser traits is a challenge, firms admit. Patrick Jancsy, senior vice president of product management at Fidelity Investments Institutional Brokerage, agrees with Punishill's assessment that "one size does not fit all."

To take into consideration the differing levels of acceptance and skill among advisers, Jancsy says, firms need to have the most open platform possible and provide the greatest access to books and records. That way advisers can pick and choose the functionality they need and want to use.

The company's flagship product is its adviser CHANNEL, an integrated analysis, trading and reporting system that allows fee-based advisers to communicate electronically with Fidelity. It features a range of proprietary technology from portfolio analysis to trading and reporting.

However, he says, advisers "can't rely on technology alone. Service and training play an integral role in the success of adoption." That's why Fidelity has regular training sessions to "bring advisers up to speed on how to use the technology and make it more effective," says Jancsy.

Punishill says training is "critical," but it needs to be tailored to the adviser's skill level and can't be a one-stop seminar that attempts to teach all levels.

Jancsy adds that there's an osmosis process to technology adoption that also drives usage and can't be ignored. When neophytes see other advisers "reaping the benefits," it's only a matter of time before they "become believers."

Mark Saunders, senior vice president of BMO Nesbitt Burns, says that concerns about technology adoption "are not really an issue anymore. In order to do the job, (advisers) have to figure out how to use the technology."

But there are ways to ease the learning curve and make adoption more comfortable. In some cases, he says, high earners, who are uncomfortable with technology, will hire capable assistants and "insulate themselves from having to do it."

As well, when planning for new technology, says Saunders, his firm will create an advisory group made up of advisers with "varying viewpoints and skill-set levels."

What helps, he says, is that "We find investment advisers are not shy. We get lots of feedback. We'll take the feedback and try to make sense of it and accommodate as much as possible."

As well, for every IT project, they conduct a satisfaction survey to see if it met the business needs and that score feeds back into the IT compensation pool, which encourages IT staff to "get feedback and act on it," explains Saunders.

While he doesn't establish training sessions based on skill levels, he says a help desk can go a long way to providing the extra assistance advisers need. Sometimes it's a case of them using the technology for a transaction once in a while and they simply need someone to remind them how it works, adds Saunders.

Another trick that can be used to aid in the adoption of technology is phasing in functionality. Instead of throwing it at advisers all at once, introduce new features over time as they become more attune to the technology, he says.

Jancsy adds that it's a "balancing process" where a firm must satisfy the needs of the majority, but still ensure that it's providing cutting-edge solutions for those who want them. He says that XML, and a growing array of interfaces among different applications, will make it easier to introduce a range of technologies to neophytes and those who are more advanced.

Nonetheless, Punishill says that IT executives must still account for the non-users. That means ensuring that a firm doesn't have more licenses or servers than it needs. Don't simply count advisers and deploy technology. Find out who's using it and how frequently, he says. "You can't afford to keep flowing technology out ad infinitum without it being utilized and expect to get any return on investment."

That's especially the case for financial-planning tools, he says, which are often bought in large scale deployments and then underutilized. He notes one large Wall Street firm is in the throes of a large NaviPlan deployment, which he describes as "one of the most sophisticated tools in the market. I guarantee you that they're going to have usage problems," he says. "They're going to have all these guys who love technology sitting in class with guys who hate it."