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Financial Advisor Technology Trends From T3 2019

Earlier this month, I spent time at the Technology Tools for Today Conference in Texas along with more than 600 data scientists, tech experts, and advisors to learn about the current state of financial advisor technology and where it’s going next. In today’s advisor landscape, it’s vital that advisors use technology to meet changing investor needs and showcase the value of good advice, and advisors who don’t embrace it could get left in the digital dust.

How can technology empower financial advisors?

The need for great advice is rising. Technology helps advisors address major pain points, but effective modern advice requires a change in tactics. Advisors will need to:

  • More thoughtfully segment how they work with different clients.
  • Use tools, such as Morningstar ByAllAccounts, to aggregate client information. While the sheer volume of data available to today’s advisor can be daunting, it can also provide a complete view of a client’s financial picture and offer advisors more-timely and more-effective points of engagement.
  • Be clear with clients about how investment goals need to align with financial outcomes, and what the trade-offs are to successfully reach those goals. Strong advisors know, for instance, that behavioral coaching needs to be part of their toolkit.
  • Think ahead—the client of the future will be more comfortable with technology, desire more personalization in their investment portfolios, and will be thinking about impact of their investments, which we already see as sustainable investing blossoms.

How do technology trends impact financial advisors?

In my conversation with conference organizer Joel Bruckenstein, we discussed the state of the investment industry, how automation and other trends affect it, and what this means for investors and the advisors who serve them. Here are some key points for advisors:

  • The advisors who show up and hand-hold during the toughest times almost always earn their clients’ long-term trust.
  • Technology is your friend, but you need to test it and find out what works for you.
  • Data is the new oil—it’s the backbone to great advice because it powers the personalization to strategies that your clients expect and deserve.
  • Think closely about who you are partnering with. We have the opportunity to pick our partners. More than ever, we encourage advisors to not just learn about the services they use but also understand what’s behind it. Understand who you’re partnering with. You have to make sure your partners want to persist with you.

Results from the 2019 T3 financial advisor technology survey

There‘s never been a better time for great advice, and technology will be the driving force behind sharing it. My last key takeaway for advisors from my time at T3 comes in the form of the 2019 T3 Technology Survey. Bruckenstein and Bob Veres surveyed over 5,500 advisors on the software they use and their satisfaction with these products, then compiled the results to help advisors review their technology stack and see what their peers use for their practices. I’m happy to see that Morningstar did very well on the survey in multiple categories:

  • Out of the 53.25% of survey participants that use all-in-one software solutions, the majority (24.84%) use Morningstar Office and rank it a 7.35/10, which is higher than the category average rating of 6.6/10.
  • Out of the 84.19% of survey participants that use portfolio-management tools, Morningstar Office came in second with 16.92% and a 7.42/10 rating, which is higher than the category rating of 6.31/10.
  • Out of the 66.03% of survey participants that use investment data/analytics tools, Morningstar came in first with 38.82% and rank it a 7.73/10, which is higher than the category rating of 7.44/10. The next two vendors are both redistributors of our data, which we think is a strong indicator of the value our data provides to advisors.
  • Out of the 49.36% of survey participants that use economic analysis and stress testing tools, 5.99% use Morningstar Direct and rank it a 7.68/10, which is higher than the category average of 7.46/10.

Join us for a webinar with Joel Bruckenstein and Bob Veres to hear their commentary on the T3 Software Survey Report. Register Now.

Kunal Kapoor is the chief executive officer at Morningstar.

Download the 2019 T3 Software Survey Report.
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