Desktop Convergence of Wealth Management and Retail Brokerage: Competing in a Changing Landscape
Report Summary
Desktop Convergence of Wealth Management and Retail Brokerage: Competing in a Changing Landscape
In order to create an effective wealth management operation, wealth management and brokerage functions have to be supported through a tightly integrated technology platform.
Boston, MA, November 5, 2008 – A new report from Aite Group, LLC looks at the issues and opportunities associated with merging wealth management and brokerage technology to support an agile business model required in today's wealth management industry. The report also highlights the value of integration in key areas, including account setup, client reporting, CRM, document management, and financial planning.
While business models have shifted to support a hybrid approach to financial advisement between financial advisement and traditional brokerage, the underlying technology has struggled to keep up. Based on an Aite Group survey of 201 financial advisors - an equal mix of independent Registered Investment Advisors (RIAs), registered representatives at independent broker/dealers, and captive employee brokers - and conversations with technology providers, custodians and clearing firms, the report reveals that technology is key to advisors' job performance. In fact, 72% of advisors consider technology either very important or essential in their decision to work for a given firm. There has been little integration between brokerage and wealth-management functions to date, however; slightly more than one-third of advisors have access to a bundled technology package. Recognizing the benefits of integration, however, 64% of advisors would actually prefer a bundled solution.
"Advisors have definite opinions concerning which technology plays an important role in their ability to conduct business," says Adam Honoré, senior analyst with Aite Group and co-author of this report. "Nearly half of advisors rank financial planning tools their most important application, while another 17% of advisors ranked customer relationship management their top application. In order for an effective platform to be created, wealth management and brokerage functions can no longer be distinct applications."
"With an effective integration between brokerage and wealth management platforms, areas such as customer service, account setup, general administration, compliance and portfolio maintenance can all be reduced in the amount of time an advisor spends on each task," adds Alois Pirker, senior analyst with Aite Group and co-author of this report. "Obviously, this would mean advisors have more time to focus on customer acquisition and portfolio maintenance. Further, with a majority of advisors looking at technology as a critical driver in their selection of a firm, technology laggards risk losing high-producing employees or face a lower chance of competing for the 25% of brokers considering leaving their existing firm."
This 50-page Impact Report contains 52 figures. Clients of Aite Group's Wealth Management service can download the report.