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Executive Summary for Redtail's 2018 Gen Tech Survey results

ABOUT THE SURVEY: 

In May 2018, Redtail Technology conducted the 2018 Gen Tech Survey to better understand how financial advisors and their staff are using practice management technology solutions. Redtail surveyed more than 2,300 wealth management professionals across the United States on the types of software their firms currently use, how they access information, and how succession planning figures into the future of their practices. 

Based on data collected from the survey, Redtail set out to draw conclusions around:

  • Generational trends among wealth management professionals regarding the use of technology
  • How technology usage is dispersed across various practice management functions
  • Advisors’ preparedness for the inevitable “aging” of the industry 

METHODOLOGY: 

Redtail surveyed 2,255 wealth management employees across the United States, with managed client assets ranging from under $1 million to more than $1 billion. Among the 2,349 respondents, the breakdown of roles was as follows:

  • 47% financial advisors or financial planners
  • 44% administrative employees of financial advisory firms
  • 9% technical support within financial advisory firms 

To compare generational differences, respondents provided their age and were divided into three groups: Baby Boomer, Generation X and Millennial. Of the respondents, the generational breakdown was as follows:

  • 343 Millennials
  • 874 Gen-Xers
  • 1,038 Baby Boomers 

KEY FINDINGS: 

Generational trends among wealth management professionals regarding the use of technology include: 

Baby Boomer advisors are more mobile and technologically savvy than many might think.

  • More than half of Baby Boomer (52%) and Gen-Xer (58%) advisory employees access their company CRM via mobile or tablet devices, more than Millennial advisory firms’ employees (50%)

The use of technology systems in an advisor’s business correlates with age.

  • Millennial respondents were found to be the biggest users of technology systems, followed by Gen-Xers and then Baby Boomers. 

Trends discerning how technology usage is dispersed across various practice management functions include: 

Digital trading software and compliance technology are lacking in usage.

  • Financial planning software (79%) is the most commonly used technology followed by client portal (57%) and risk profiling and analysis technology (51%), across all three generations
  • Only 9% of wealth management firms reported using digital trading software, and 31% reported using compliance technology, across all generations 

Regarding advisors’ preparedness for the inevitable “aging” of the industry

77% of those surveyed are not part of a succession plan, neither as a successor nor impending predecessor

  • While 16% of those surveyed across generations are successors, only 7% indicated they are retiring and have a succession plan in place. 

FURTHER ANALYSIS: 

Mobile Accessibility

More than half (54%) of all respondents use mobile devices and tablets to access their CRM. Additionally, most Gen-Xers (89%) and Baby Boomers (86%) had little hesitation around adopting a CRM. Two conclusions can be drawn: the wealth management community is more tech savvy than the industry has previously acknowledged, and the CRM is occupying a more established position within the fintech space. 

While the results show wealth management employees are using tablets and phones to access their CRM as needed, across every generation, mobile usage still lags behind desktop and laptop usage. This indicates CRM mobility needs improvement across the industry. The breakdown is as follows:

  • Mobile:
    • Baby Boomer - 31%
    • Gen-Xer - 37%
    • Millennial -33%
  • Tablet:
    • Baby Boomer - 21%
    • Gen-Xer - 22%
    • Millennial - 17%
  • Desktop:
    • Baby Boomer -78%
    • Gen-Xer -78%
    • Millennial - 82%
  • Laptop
    • Baby Boomer 45%
    • Gen-Xer - 48%
    • Millennial – 42% 

Technology for compliance and digital trading use

Regarding other software used, the survey found roughly 1 in 3 wealth management offices are using technology specifically geared toward compliance. While there are compliance features present in other technology tools (e.g., documentation within their CRM tool, investment objective review, email archiving/reporting, etc.), the 33% statistic appears low, considering the importance of compliance in the industry. 

Digital trading software is similarly underutilized, with only 9% of offices incorporating it into their technology stack. Advisors may not be taking advantage of a tool that helps address the needs of less affluent clients without cutting into time reserved for more profitable clients. 

Succession Planning

Wealth management firms are not addressing succession planning as proactively as they should be. Having a clearly defined succession plan in place, where younger advisors and staff are contributing toward the firm’s ongoing future success, can positively affect hiring and retention later down the road. A succession plan that addresses this is key to both new client acquisition and client retention. 

Baby Boomers vs. Gen-Xers

As observed through these findings, while advisors and their staff have access to mobile versions of their CRMs, that hasn’t necessarily correlated to an untethering from the office to the extent that one might expect. Additionally, although Millennials are more likely to incorporate technology tools into their practice than their colleagues in the two older generations, Boomers and Gen-Xers are more technology-empowered than they are given credit for industry-wide. 

While compliance and digital trading software usage is uniformly low across generations, those technologies that are frequently used are consistent across generations. Financial planning, client portal, and risk profiling and analysis technologies all made strong showings in the survey with Boomers, Gen-Xers and Millennials.

CONCLUSION: 

In the rapidly evolving financial services and the fintech industries, providers should keep a close eye on the technology needs of advisors, and their responsiveness to existing technology solutions. The desire to implement further efficiencies into an advisory business via technology is not limited to millennials. Older advisors are adopting and utilizing technology at a similar frequency as younger advisors, and technology firms can no longer afford to overlook aging firms as a target market – particularly those that need help formulating succession planning strategies. 

“It’s no secret that our industry is evolving at lightning speed. That said, as members of the advisor fintech community, it’s Redtail’s responsibility to keep our fingers on the pulse of which technologies advisory firms are either keen or slow to adopt. We set out to uncover the technology disconnect across generations, however the results really surprised us. 

“Our research shows that Gen-Xers, Baby Boomers and Millennials in the industry are more technology empowered than we think. The biggest eye opener for us was all generations are seeing eye-to-eye on technology. It’s apparent that the industry can no longer afford to overlook ageing advisors as a target market, particularly those who need assistance on their succession planning strategies.”

~Brian McLaughlin, CEO of Redtail Technology

 

ABOUT REDTAIL TECHNOLOGY

Founded in 2003, Redtail Technology is a leading provider of web-based Client Relationship Management (CRM), compliant text messaging solutions (Redtail Speak), paperless office, and email archiving solutions in the financial services industry. The company is dedicated to helping advisors efficiently grow their firms by providing them with the core technologies that drive their day-to-day operations.

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