Wealth firms are losing talent and up to 20% of business because of gaps in their tech, exclusive data shows. Here’s what they can do to improve.

Financial advisers are likely to switch firms in search of better tech if their current firm does not offer adequate tools, a new survey of around 250 advisers and financial planners has found.
After polling around 250 advisers in the US and Canada, the financial-technology solutions firm Broadridge found 77% of respondents said they lost business because of gaps in tech.
The findings underscore an ongoing balance as firms look to control costs during a highly uncertain economic period while investing in tech they didn’t know they would need to improve so rapidly.
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The pandemic has tested financial advisers’ typically high-touch relationships with clients — so often entailing close hand-holding during rocky markets, and attending in-person events and meetings that build trust and rapport.

With in-person engagements off the table and tech the only adviser-client lifeline, it’s also tested wealth managers’ loyalty to firms when digital tools aren’t up to snuff, according to a new report from by Broadridge Financial Solutions.

Half of some 250 US- and Canada-based financial advisers and planners Broadridge polled in June often think of leaving their wealth management firms in search of better technology, and more than three-quarters said they have lost business because of lacking tech tools to interact with clients.

Financial advisers who reported losing clients because their technology was not good enough said they lost, on average, about one-fifth of their book of business.

“Clients want high-touch, high-technology. They want a very personalized experience, and digital capabilities are core. They’re no longer a luxury. They’re core, and they’re expected,” Michael Alexander, president of wealth management at Broadridge, said in a phone interview.

“Advisers are recognizing that,” he said. “And if they don’t have those capabilities, they’re going to be willing to vote with their feet and leave.”

The findings pull wealth management firms’ pandemic-era priorities into focus. Companies are balancing controlling costs during a highly uncertain economic period with investing in tech platforms they didn’t anticipate having to improve in the short-term. Sub-par digital tech could lead to advisers leaving, already in full swing during remote work.

Gaps in adviser technology are often in areas like client onboarding processes (a typically onerous, paperwork-heavy activity advisers bemoan), electronic signature capabilities some firms have only started to upgrade in recent years and are crucial to doing transactions remotely, and the digital infrastructure to get clients into alternative investments.

Broadridge, which has some 150 wealth management clients and conducted the survey with the market and research firm Research Knowledge and Insights, did not ask respondents to specify where they worked or the type of wealth management firm that employs them.

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To keep advisers and their client bases satisfied, firms have to have “intuitive” and easy-to-use tech for their advisers and clients, Alexander said.

“A lot of processes are still very manual, for example, alternative investments or client onboarding. So they don’t have the digitization of client engagement and the digitization of client service, and they really need that,” he said, emphasizing the need to eliminate paper and offer client information aggregation.

Firms’ plans of action

Some wealth management firms are acutely aware of the need to keep advisers’ technology as updated as possible.

“To help advisers effectively operate remotely, we developed a bundle of new and enhanced capabilities,” Dan Arnold, the chief executive of independent broker-dealer LPL Financial, said last month during a call to discuss earnings.

The firm created an online calendar tool for advisers and clients to schedule time to meet virtually and an instant-messaging feature for advisers to stay connected with their staff virtually, Arnold said, according to a transcript on the investment research platform Sentieo.

“We also continue to evolve how we engage with our advisers in the new and more virtual landscape,” he said.

Financial institutions’ priorities have shifted as a result of the pandemic’s stay-at-home mandates, a recent report from Celent, the fintech-focused research and advisory firm, shows. Wealth managers have been heavily investing in onboarding processes, the report by Awaad Aamir, Andrew Schwartz, and Neil Sheehan found.

The firm expects a 3% reduction in wealth managers’ technology spend this year, and estimates overall yearly spending to come in at $21.2 billion. Between 2021 and 2023, that spending should grow at a 5% compound annual growth rate, Celent estimates.

“While we expect a gradual return to ‘normalcy,’ remote collaboration tools are here to stay,” the report’s authors wrote. “Throughout the pandemic they have proven their worth. Business has and will continue to be conducted outside of the traditional office. It is imperative firms double-down on bolstering these technologies.”

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