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Weekend Reading for Financial Planners (Dec 15-16)

Posted by Michael Kitces on Friday, December 14th, 7:02 pm, 2012 in Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition is a technology extravaganza! We start off with a writeup of Financial Planning magazine's 2012 Tech Survey, and Bill Winterberg's picks for 2012's "Best Tech for Advisors" from Morningstar Advisor. From there, we look to a number of recent technology developments, including whether advisors should jump on board with Windows 8, how advisors can get their own privately branded "app" for mobile devices, a new online site for advisors to search for new jobs and contact prospective firms privately and anonymous, how investment custodians are evolving to meet rising technology demands from RIAs, and a discussion of why more advisors should look to conduct online meetings with clients. We also have a look at the rising trend of email fraud (where thieves pretend to be clients to convince the advisor to transfer money), and an interview with David Drucker and Joel Bruckenstein regarding their upcoming new book about technology tools for advisors. We wrap up with two interesting articles: one that looks at the only 5 things you need on your website to communicate with clients (and a suggestion that you should trim the fat off your website to focus on those items), and the other providing a neat list of statistics for financial advisors about use and adoption of social media by both advisors and their clients. Enjoy the reading!

Weekend reading for December 15th/16th:

Financial Planning 2012 Tech Survey - This article provides a summary of Financial Planning magazine's annual Technology Survey of advisors, which looks not only at the most popular software advisors use in categories ranging from CRM to planning software, but also broader trends in advisor technology use. In terms of mobile devices, iPhones are the most popular (no surprise), although BlackBerry devices still have a strong presence, and overall about 80% of advisors use/have a smartphone for business. Tablet use has also exploded, as half of all advisors now own a tablet (they didn't exist just 3 years ago!) with iPads by far being most popular, but notable advisors seem to struggle with effective tablet use (and/or with the lack of integration from tablets to most industry-specific software), as advisors generally rated tablets as lower ROI than smartphones. For CRM software, the leaders are Redtail, Salesforce, and Junxure, although none of them dominates the advisor marketplace. For portfolio management, Morningstar Office took the lead, followed by Allbridge (amongst hybrid advisors but almost no presence with RIAs), Schwab PortfolioCenter, and Advent. In terms of custodians and B/Ds, TD Ameritrade and Commonwealth Financial scored the best respectively. The leading planning software was MoneyGuidePro, followed by NaviPlan, MoneyTree, and SunGard. Amongst other notable trends, advisors are increasingly using social media, with LinkedIn being most popular, and file-sharing services like DropBox are also gaining popularity.

2012's Best Tech For Advisors - Continuing the "Best of" technology theme, this article highlights technology consultant Bill Winterberg's selections for the best back-office technology, best client-facing technology, and innovation of the year for 2012. In the back-office category, Winterberg's selection is Sharefile by Citrix, which is a document sharing application similar to DropBox, SugarSync, and similar competitors - but with better integrations from email to tablets to third-party providers, and some stronger security and compliance benefits, too. The honorable mention in the category went to Smarsh Web Archiving for their social media archiving tools. In the client-facing technology category, Winterberg's selection was Google+ Hangouts On Air, an online web conferencing tool that allows Google+ users to conduct video conference sessions with up to 9 other Google+ users simultaneously, and more importantly also allows the user to broadcast the session live over the internet via YouTube integration - allowing for remarkably easy recording of videos and webinars for advisors to use with clients. For the Innovation of the Year category, the winner is inStream, a free, web-based software program that provides a goal-based financial planning software tool that is integrating data from across the marketplace and exploring how crowdsourcing can help advisors craft better planning recommendations. 

Should Your Firm Upgrade to Windows 8? - Technology consultant Joel Bruckenstein in Financial Planning magazine discusses whether firms should upgrade to Windows 8, the latest operating system from Microsoft. What's most notable about Windows 8 is not just that it's intended as an upgrade to Windows 7, but that it's an operating system designed to work across desktop computers, and laptops, and tablets, and smartphones - which means the potential for a far tighter integration across platforms and devices. Although Windows 8 has been criticized for some of its big changes, especially regarding the user interface - the famous "Start" button in the lower left corner of the Windows desktop for more than a decade is now gone - Bruckenstein notes several important positives, including: security is much better; using office software will be easier (as compared to the struggles for those using less-than-full versions of Microsoft Office on Macs/iPads); greater customization and flexibility than other platforms (albeit with a slower learning curve); integrated contact management that will likely connect to CRM applications in the future. Notwithstanding some of the user interface frustrations, and the fact that apps for Windows 8 are still light so far, Bruckenstein predicts that Windows 8 adoption will ultimately be strong amongst advisors.

Stake Your Claim in the App Store - This article from Morningstar Advisor looks at some mobile apps for smartphones and tablets that can be privately branded to give advisors their own app for clients. Although Orion Advisor Services has been offering a similar service for since early 2011, new offerings are now available from Finance Logix and Boulevard R. With Finance Logix, advisors can get a custom version of the app, which provides basic retirement and education planning software, along with advisor visibility and contact information, allowing prospects to try out the app and then be prompted to contact the advisor for further help. Boulevard R offers a similar service, allowing prospects who download the app to create their own "Starter Roadmap" basic plan, and if the advisor's code is entered when the app is used, the user is prompted to contact the advisor for further help after completing the process and the advisor receives an alert to follow up further. Both apps can potentially be recommended and shared, too, creating the potential that app users generate referrals for the advisor in the process. 

Financial Advisors Have New Site For Cyberspace Job Hunting - This article announces the launch ofThe Advisor Center, a new online offering for advisors that are job hunting. Firms that are hiring create pages on the site where those interested can reach out for contact, but unlike a job board alone the site allows for some interaction between the candidate and the firm on a private, anonymous basis. The Advisor Center notes that any firms can use the platform for hiring, from wirehouses and regional firms, to independent and insurance broker-dealers, to custodians and financial institutions, to independent RIAs. As a new program, it remains to be seen which firms (and/or prospective advisors) gravitate towards this kind of hiring direction, but it certainly represents an interesting potential alternative (or complement?) for advisors and/or firms who don't want to work with a recruiting firm.

Custodians Evolve - This article provides a nice overview for RIAs of how the major custodians are evolving in the technology offerings and support their provide to advisors, as the trend towards RIAs continues to heat up. The largest custodian continues to be Schwab, with roughly 25% of the marketplace (more than double their closest competitor), which has rolled out its Intelligent Integration initiative to help make Client Relationship Management (CRM) software a better central hub for the advisor. Fidelity differentiates on the fact that it is privately owned, and consequently is able to take a longer-term view than its publicly traded competitors that are more beholden to markets and short-term shareholder requests, and the way the related Fidelity businesses - such as its Family Office Services division or capital markets groups - can support advisors. TDAmeritrade, on the other hand, has launched RIA Connect to help smaller firms join existing RIAs, and its Open Access technology to integrate with software that advisors use. Pershing Advisor Services is now the fourth biggest custodian, with a focus on reaching professional managed, growth-oriented firms. Notably, some broker-dealers that provide hybrid RIA solutions have recently launched their own custodial platforms as well.

Why You Should Consider Online Meetings With Clients - This article from RIACentral makes the case for why more advisors should conduct online meetings with clients. Highlights include: it lets you serve a more geographically diverse client base, either clients who have moved away, or perhaps even prospects who are referred to you from out of the area to begin with; technology integrations such as live and interactive financial planning software make it easier to provide effective client education; opportunity to more easily assemble meetings with lots of people, such as the client(s), and their children, and their attorney and CPAs; and the sheer convenience (no more traffic and parking woes!) and flexibility. 

Email Fraud—Protect Your Clients And Your Firm - This article from Dan Skiles in Investment Advisor discusses a trend also previously discussed on this blog - the rise of email fraud as thieves contact advisors, pretending to be clients, to request transfers that amount to theft. In some cases, the email appears legitimate, because the thief has actually gotten access to the client's email account (through a virus, for instance), and copies the exact format and style of the client's typical emails. Skiles recommends being vigilant about protection email login credentials and having virus software (and making sure clients do the same, such as activating Gmail's two-step verification process), and training staff about how to spot these potential theft attempts. And remember, confirming requests by email doesn't help if the thief has already broken into the client's email account; follow up with a direct phone call to confirm wire transfers.

Meet The Wealth Management Firm Of The Future - This article is actually an interview with David Drucker and Joel Bruckenstein regarding their upcoming book "Technology Tools for Today's High-Margin Practice" due out in 2013. The interview covers a lot of territory, including: the value of cloud-based solutions, both for the reliability of having a dedicated firm maintaining the hardware, but also the benefits of third-party support if there's a natural disaster; that firms should spend at least 4% of revenue on technology (and that it can still pay for itself many times over); the importance when going paperless to use content management software that indexes the documents and makes them searchable (not just capturing a picture); and the shift towards mobile for both accessibility and the potential to stay more connected and alert to both client and market developments. 

The Only 5 Things You Need on Your Website - This article from Kristin Harad on the Financial Planning Association's Practice Management Center blog highlights the only 5 things you need on your website to reach and communicate to clients: a clear distinction of your target audience ("Am I in the right place?"; a list-building mechanism ("How can I get to know you?"; the ability to request a consult ("How can I start right now?"; a biography that is relatable (Do I trust you, like you, think you care, and that you have the expertise I need?"; and a description of clear services that are easy to understand ("What's available, how does this work, and where do I fit in?"). The bottom line - not only is it crucial to cover this information, but it might be a good idea to trim some of the fat on your website as well, so clients can find this information and the answers to their real questions faster.

25 Mind-Blowing Social Media Stats for Financial Advisors - These stats might not all be totally mind-blowing, but there are some pretty interesting statistics around social media use and adoption by both advisors and clients. For instance, 26% of ultra-high-net-worth investors use "the professional-focused networking site" (i.e., LinkedIn); 50% of small business owners reported gaining new customers through social media; more than 3 in 5 advisors who have leveraged LinkedIn to cultivate client prospects in the past year have successfully gained new clients as a result; 30% of ultra-high-net-worth individual investors say they do read or would read blogs by trusted financial advisors; and perhaps most painful, 525% of investors say they would interact with financial advisors on social media, but only 4% actually do so!

I hope you enjoy the reading! Let me know what you think, and if there are any articles you think I should highlight in a future column! And click here to sign up for a delivery of all blog posts from Nerd's Eye View - including Weekend Reading - directly to your email!

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    As we close the books on 2012 and begin to look forward to 2013, a number of significant issues are looming that will shape financial ... Kitces | Nerd's Eye View

Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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