Financial Advisor Practices that Embrace Technology Surge in Productivity and Efficiency

April 25, 2024 — Boston

Advisors considered heavy users of technology tend to outperform other advisory practices

Advisor practices that are more extensively incorporating the use of technology within their practice are growing at faster rates than practices that are not, according to The Cerulli Report—State of U.S. Wealth Management Technology 2024.

Cerulli’s research finds advisors considered heavy users of technology tend to outperform other practices in terms of new client growth rates and assets under management (AUM) growth rates. Nearly 30% of heavy technology users are identified as being higher-growth practices over the most recent three-year period, compared to just 9% of light users.

Enhanced efficiency and productivity are undeniable outcomes of technology usage. Cerulli data finds heavy technology users average materially better performance than light users across practice productivity metrics. These improved metrics include higher numbers of clients served per staff member across the practice—the number of clients per producing advisor, the number of clients served per professional staff, and the number of clients per senior advisor.

The tools advisors attribute most to improving operational efficiency include e-signature (65%), CRM (44%), and video conferencing (29%). These technologies also happen to be among the most frequently utilized within advisor practices, ranking first, second, and fourth most widely utilized technologies among advisors, respectively.

“When used effectively, technology is a valuable growth driver,” says Michael Rose, director. “However, more tech is not necessarily better for practices. Simply incorporating more technology within an advisor’s practice can have the opposite desired effect.” According to Cerulli, the challenges to the effective use of technology that advisors most frequently identify are compliance restrictions that limit functionality or impose other limitations on advisors’ ability to use the technology (73%), followed by a lack of integration between tools/applications (71%) and insufficient time to learn and implement (70%).

“Advisor practices should use a technology strategy that closely aligns with the types of clients that they serve, the specific services they offer, and how they offer them,” says Rose. “Understanding how to utilize the tools available to advisors in a way that is going to have the greatest positive impact on their practice is critical. Educating advisors on best practices and enabling them to collaborate and learn from their peers is likely to have as much, if not more of, an effect than rolling out the next generation of an existing set of tools and technologies.”

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