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Financial Advice

Top Software Trends for Financial Advisors

Here’s how advisors use technology, according to the T3/Inside Information software survey.


The annual T3/Inside Information Technology Survey by industry experts Joel Bruckenstein and Bob Veres is likely the industry’s most comprehensive view of advisors’ use of software. This year’s software survey included responses by almost 4,500 advisors, representing small and large firms; fee-only, brokerage, and hybrid firms; advisors with various years of experience; and group-affiliated (FPA, NAPFA, XY Planning Network, AICPA, and so on) and nonaffiliated firms. In all, the software survey seemed to cover a good cross-section of advisors.

As opposed to focusing on the most popular software or the highest-ranked solutions, I appreciate this survey for the insights it provides on technology trends and opportunities. For example, I’m more interested in the growing adoption of particular types of software than what is the most widely used. I’m also more drawn to software that has higher satisfaction ratings even if it has a smaller market share. For an advisor, technology decisions must be made based on the needs of the firm, considering industry best practices (especially in areas easily observed by clients). So, with this perspective, let’s take at look at the 2022 survey!

CRM Software Is Number 1 for Advisors

The number-one type of software used, by almost 97% of respondents, is client relationship management, or CRM. This is up from about 92% in 2021. When used optimally, CRM can be the hub of an advisor’s business. More than just a database of clients, CRM holds documents, provides workflows and reminders, facilitates communications, documents meetings, and other key functionalities. Clearly, advisors understand the importance of CRM software. If you are an advisor among the 3% not using CRM, it’s time to get on board!

Surprisingly, the second-most-adopted software is not portfolio-management software. It is financial-planning software, used by more than 82% of advisors (up from about 79% in 2021). Not all advisors offer financial planning for clients, so it is a bit surprising to see such a high percentage of advisors with this software. Maybe more advisors have gotten the message that financial planning must go hand in hand with investing, and advisors not offering this service are becoming scarcer. This is a good trend for investors. As with CRM, if you are an advisor offering investment services without financial planning, now is the time to add this service.

The third-most-used software is portfolio-management software, used by almost 64% of advisors (about the same percentage as in 2021). From my standpoint, not using portfolio-management software seems ill-advised. This software tracks cost basis, calculates returns, produces quarterly reports, and more. How can an advisor function without portfolio-management software? Bruckenstein and Veres theorize that some advisors rely solely on what their custodian provides. Others might be part of a TAMP or outsource this part of the practice. For those relying solely on a custodian, I see two major problems:

  1. It limits the ability to manage outside accounts or accounts held at other custodians.
  2. The advisor is glued to their custodian; changing custodians would be extremely disruptive.

Automated document solutions are fairly popular; document-processing software (electronic signatures, online forms) is used by almost 59% of advisors (up very slightly from 2021), and document-management software (enterprise contact management) is used by about 47% of advisors (up by almost 7% compared with 2021). My bet is that more firms are using this technology than the survey indicates because for many of these functions, custodians and other software can fill the gap. With the increasing trends for paperless offices, remote services, and employees, and the demand for faster processing, firms not adopting automated document solutions will certainly lose ground compared with their peers.

Social Security analysis, investment data/analytics, account aggregation, and college planning software are used by about 45% of advisors: 35% of advisors use trading/rebalancing, economic analysis, and risk tolerance tools. Coming in at less than 30% are tax planning, digital marketing, cybersecurity, and all-in-one programs. Finally, only about 10% of advisors use software for estate planning or retirement-distribution planning.

What Is the Highest-Rated Software?

For each category of software solutions, advisors are generally very satisfied with their chosen solutions. According to Bruckenstein and Veres, a score of 7 or above conveys a high degree of satisfaction. All software types were rated 7 or above, with only two exceptions rated slightly lower: digital marketing at 6.98 and estate planning at 6.83. This indicates that advisors using such software will be unlikely to switch.

In most categories, the top four providers account for more than 75% of the market. These categories include (in order of concentration) college planning, estate planning, risk tolerance, all-in-one programs, cybersecurity, document processing, digital marketing, account aggregation, CRM, and financial planning. Less-concentrated software categories include tax planning, investment data/analytics, portfolio management, economic analysis, trading/rebalancing, Social Security analysis, retirement-distribution planning, and document management.

For those advisors looking to add software, it might not be advisable to go with one of the big providers. Although their users are generally happy, some smaller providers might have higher user satisfaction. According to Bruckenstein, “If you’re a good fit for those solutions, you’re going to be very happy.” For example, Redtail has almost 60% of the CRM market with a satisfaction rating of 8.17. Concenter Services XLR8 has about a 2.5% market share with a satisfaction rating of a whopping 9.16.

In the portfolio-management space, the top three providers (Albridge, Orion, and Morningstar) all have satisfaction ratings of more than 7.5. However, some smaller offerings have ratings above 8, including Advyzon, Altruist, Asset Book, Addepar, Panoramic Pro, and Blaze Portfolio. Because switching portfolio-management software can be extremely painful, when choosing a platform, the need for “staying power” might outweigh a slight improvement in functionality.

Best Software Takeaways

What was most surprising to me was the many types of software not used by advisors. While Bruckenstein believes that low-use areas could be attributable to a lack of good offerings, I believe advisors are simply missing opportunities. As I mentioned above, more than 35% of advisors are not using portfolio-management software. While relying solely on a custodian to track basis and produce reports can be effortless, the lack of flexibility might not enable servicing many clients—and could be leaving wallet share on the table.

Speaking of wallet share, it is astonishing that more than half of advisors surveyed do not use account-aggregation software. When I added ByAllAccounts to my practice, it was an instant benefit to my firm and my clients. Just focusing on 401(k)s added an additional 20% to our assets under management. And clients were thrilled because their retirement accounts would also be professionally managed.

I was also shocked that two thirds of advisors are not using trading/rebalancing software—not even their custodian’s free offering! From just a basic investment standpoint, rebalancing is not effective if done just once or twice a year. Opportunistic rebalancing ensures that trades are made when needed—and not done if not needed (just because the calendar says it’s time). Yet to attempt this process, at any time, without software requires days of work. First, the advisor must identify which portfolios require rebalancing, and then they must calculate trades. If tax management is also incorporated (tax-loss harvesting, short-term-gain avoidance, location optimization), a manual process is next to impossible. And that’s not even considering the high potential for errors.

As it becomes more and more known to investors that consistently beating the market is not realistic, one major value-add from advisors is tax management. Without offering tax management, an advisor risks not just losing clients, but also not serving their clients in the best way possible. As a potential client, I would not consider engaging an advisor who didn’t use trading/rebalancing software.

Finally, my biggest disappointment in the survey data is that more than 75% of advisors are not using cybersecurity software. With an increasing amount of online business and a corresponding increase in cyber crimes, firms of all types and sizes should be putting cybersecurity at the top of the list! Bruckenstein agrees: “To me, this is the most frightening part of the survey.”

Up Your Software Game

The 2022 T3/Insider Information Technology Survey provides a lot of useful information for advisors and the software companies that serve them. I encourage readers to dive into this study, and I also encourage advisors to up their game. To be competitive, advisors must offer comprehensive services (custodian, outside accounts, tax management, financial planning) in a safe, accessible manner.

The opinions expressed here are the author’s. Morningstar values diversity of thought and publishes a broad range of viewpoints.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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