In one of my periodic e-messages to my mailing list (more than 8,000 advisors currently) I repeated a complaint that I constantly hear from Joel Bruckenstein and other leading tech consultants. They have told me that one of the major dysfunctions in the advisor community is that tech adoption tends to be slow and cautious. This (they believe) is increasingly dysfunctional today, as powerful new tech capabilities (some of them made possible by AI) are coming to market faster than ever before.
His concern is that rapid tech evolution is meeting slow adoption, and the combination is not healthy.
The impression you get from these complaints is that many advisor offices are being held back by an elderly founder who whines about so much darned change whenever the staff recommends replacing archaic legacy software with something new and better. But a number of readers got back to me with a reality check.
The problem, they said, isn’t a decision-making bottleneck. Slow adoption goes much deeper than that.
Ayasha Jones, partner and Director of Operations at BlueSky Wealth Advisors in New Bern, NC said that she and other ops professionals are inundated with new fintech options all the time, and the IT percentage of the operating budget is larger than it ever was. At the same time, the increasing list of tools the firm HAS adopted are starting to become operationally overwhelming for the staff.
“Depending on a firm’s tech strategy,” she wrote, “advisors may have to log in to the CRM, custodian, portfolio accounting, planning software, tax planning software, estate planning software, social security maximizer software, etc., etc.”
And, she says, a lot of these tools still don’t integrate well with each other, so data flow is limited or non-existent. I thought it was interesting that she didn’t mention some of the additional tools that are housed in the back office, like Calendly, whatever tools are used for compliance, investment data research, risk tolerance solution(s), DocuSign, document management software, a client portal, and whatever is used to encrypt sensitive client data sent and received through the internet pipes. And now, here comes this wonderful new AI-driven software solution that you just have to start using…
Another problem is what might be called the ‘leap of faith’ issue. Jones says that it’s hard to take a chance and commit to a brand new tool, at full price for a year or more, when you aren’t sure whether it will really work as intended and what adoption will look like.
Jones added that for larger firms, adopting new tech is not a trivial exercise. Introducing a new tool into the workflows of a staff of 300 people is a large, significant undertaking, not to be made lightly. Another advisor raised this issue in detail, having moved from a smaller (nimble) firm to become director of operations at a much larger one.
“Given that I’m now with a mega-RIA,” this person wrote, “I see the fintech adoption problem from the perspective of having to implement it across hundreds of employees. The cost of training, testing and installation is significant. And new product adoption comes on top of all their other initiatives like acquisition integration, repricing, employee turnover, etc.”
Finally, Jones and Jeffrey George of Tao Financial in Orlando, FL note that today’s heated tech M&A environment means that you have to be cautious about going all-in on a solution that might be purchased, a year or two in, by one of the larger platforms, which could lead to higher prices and slower feature evolution down the road.
Most of you know these things already: you live them. My take is that it’s become too easy for the software companies and consultants to complain about slow tech adoption in the advisor marketplace. There are valid reasons why firms might be cautious about adding to an already complicated tech stack. If the industry consultants want to speed up adoption in the industry, then they are going to have to address—and somehow remove—some of those obstacles that nobody is talking about.