1. The most popular programs were not always the highest-rated by their users

The ratings were on a scale of 1-10, and Joel and I believe that anything over 7.0 represents a very satisfied user base. In general, the market share leaders tended to have relatively high scores between 7 and 8, which suggests that they are likely to stay at or near the top for the foreseeable future. In the CRM category, for instance, Redtail came in with an astonishing 62.26% market share (that represents the percentage of people who took the survey who are Redtail users), and also sported a remarkable 8.10 rating. The financial planning category was led by Envestnet’s MoneyGuidePro (used by 26.07% of the respondents) and eMoney Pro (18.74%), and they both sported ratings above 8.0. Portfolio management tools? Market leaders Albridge (17.55%), Morningstar Office (14.11%) and Orion Advisor Services (12.37%) all had ratings above 7.0, including Orion’s 7.84 user rating. Those are great scores, and suggest that their users aren’t going anywhere.

But if you look down the list of CRM programs, you find Concenter Services’ XLR8 program – a Salesforce overlay that customizes Salesforce to the needs of financial planning firms – sporting the very first rating over 9 (9.03) in the history of the survey. The program only enjoys a 2.32% market share, but it’s an example of a program that advisors might consider beyond the market share leaders.

Among the planning programs, Right Capital (5.49% market share) earned a sparkling 7.65 rating from its users. Among the portfolio management tools, Advyzon (1.47% market share) had a remarkable user rating of 8.30, which was actually exceeded by Panoramix (miniscule 0.62% market share), at 8.84.

You could see this same interesting pattern in other software categories. When we asked advisors what economic analysis and stress testing tools they used, we found that 14.01% were using Riskalyze Stats/Scenarios, followed by DFA Returns (7.05% of the respondents), Morningstar direct (5.57%) and FI360 (5.16%). Those software solutions probably aren’t going to lose a lot of their current users, with user ratings of, respectively, 7.72, 7.83, 7.20 and 7.61. But three other tools, further down the list, were among the few with ratings above 8.0: the Bloomberg terminal (8.47), YCharts (8.18) and Kwanti (8.26).

The relatively small number of advisors who used online portfolio management tools (robos, either in-house or external) seemed pretty satisfied with market leaders Envestnet (7.88% market share overall) and Schwab Intelligent Portfolios (3.83%); their user ratings were 7.32 and 7.28 respectively. But look down the list, and First Ascent Asset Management posted another above-9 rating: 9.13 among the raving fans who use its services.

Cybersecurity resources? True North Networks was used by just 0.79% of our respondents, but it earned an 8.54 user rating from its customers.

2. Some types of programs were surprisingly underutilized

Let’s start with financial planning software. Just 64.10% of the survey respondents told us they were using one of the 18 programs we asked about – and we included somewhat obscure programs like Advicent/Figlo, Cheshire Wealth Manager, ExecPlan and ESPlanner. Is it possible that fewer than two thirds of financial services firms use a financial planning program to model clients’ retirement and goal outcomes? We might have considered this an anomaly, except that last year’s survey (with more than 5,500 participants) reported an aggregate market share of 63.57% – which is obviously (and alarmingly) consistent with the 2020 results.

Our explanation? It may be that there is still a very large cohort (roughly a third of the marketplace) that does very perfunctory planning (if at all) while concentrating on portfolio management. If you’re simply running client portfolios, you don’t need a specialized planning tool. Until, perhaps, the next market downturn, when clients whose entire relationship is built on portfolio returns will wonder if they really need to pay their advisor to lose money for them.

We also noticed that just 57.95% of our respondents are using one of the investment data/analytics tools (think: Morningstar Advisor Workstation or YCharts) to evaluate stock and mutual fund options. This was actually down from 66.03% last year – and it’s our guess that this category would have had close to a 100% market share ten or 15 years ago.

What’s different today? The rise of ETFs may be making it less likely that advisors will subscribe to a service that evaluates actively managed mutual funds. In this context, it’s worth noting that the 17 economic analysis/stress testing tools in our survey – which focus on asset allocation-type decisions rather than the underlying investments – had nearly the same market share (52.64%) and are gaining in popularity year-over-year.

The trend? A number of advisors appear to be, for the first time, paying at least as much attention to their clients’ asset allocation decisions as the actual investments that will be used to implement them.

Perhaps the most surprising number in our survey was the market penetration for the eight document management programs in the survey. I suspect that most readers would imagine that somewhere between 70% and 80% of all advisory firms have gone paperless by this point, using one of the programs like Citrix Sharefile, Redtail Classic Imaging, DocuPace, Laserfiche or NetDocuments.

The actual market share number from our survey respondents? Just 32.97%. That’s up from the 2019 figure, but almost all of the jump is accounted for by the fact that we added a popular program to our list of questions.

Most of us remember when “paperless office” was on the tip of every advisory firm’s tongue some years back. It’s remarkable that, in this day and age, just under a third of all advisory firms are functioning in a paperless environment.

The other category which surprised us was cybersecurity resources, where we listed seven of the most popular providers. In aggregate, just 6.84% of our respondents are using one of these data protection services.

It seems impossible that advisory firms are so cavalier about the dangers of cyber bandits and pfishing expeditions that they aren’t bringing in outside expertise, but the numbers this year were consistent with last year. A major, highly-publicized security breach somewhere in the profession would drive these numbers up, but that would be closing the barn door as you watch the horses wandering off in the distance. This is extremely worrisome.

3. Some categories were universally highly-rated from top to bottom

We calculated the average rating for all the programs in each category, and in general they fell somewhere in the 6-7 range. But a few stood out. I just mentioned that very few advisory firms are using outside cybersecurity resources, but those who are using these services are very satisfied with them; the category earned a remarkable 8.11 overall rating, with only one of the seven firms falling below 8.0.

Advisors who use one of the five scheduling apps that we asked about gave the programs an aggregate category rating of 7.77, almost as high as the users of the 17 password management tools we listed (7.92).

The cloud-hosting resources would have earned a rating even higher than the 7.56 listed in the survey except that the 5.40 rating for Elevated Technologies dragged it down a bit. Advisors are delighted with their document processing tools (including DocuSign, LaserApp, etc.), giving them an aggregate 7.96 rating. The five specialized Social Security analysis tools earned an average 7.72 from their users. Finally, the investment data/analytics tools were also rated highly by their users, getting a 7.74 rating, on average.

I suspect that a lot of readers will turn immediately to the rankings of their independent custodian or broker-dealer, and check out the ratings compared with the leading competitors. Elsewhere, there are 28 specialized tools in a “miscellaneous” category (which illustrates the diversity of today’s tech marketplace), and if you need any further examples of this diversity, you’re invited to check out the write-in votes for each software category, listed in blue-shaded boxes. In all, advisors are using roughly 300 programs that most of us have never heard of (Egnyte? Trizic? EQIS? My Advice Architect? TuringTrader? Refinitiv Eikon? AlphaDroid? RetireUp Pro?).

This is all mission-critical data for advisory firms that want to stay abreast of the tech landscape. Beyond that, a lot of the charts and graphs are really interesting for the correlation (or lack thereof) between market share, user rating and each category’s ranked list of programs that advisors are considering adding to their tech stack or moving to as a replacement from what they’re already using.

We make this data available to the advisor marketplace free of charge. You can download the complete survey here: https://www.bobveres.com/amember/signup/2020softwaresurvey.

Bob Veres' Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog at: www.bobveres.com

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