Some 67 percent of financial advisors rely on practice management support – especially to deal with the growing complexity of advising, according to a recent poll.
The most widely used value add and practice management programs last year focused on Social Security, managing portfolios in a challenging or uncertain environment, and managing shifting compliance or regulatory requirements, according to a new study called, “Value Add and Practice Management Support to Financial Advisors – Insights and Opportunities 2017.”
“Financial planners don't want purely educational materials,” said the study’s author, Howard Schneider, president of Practical Perspectives. “They want more capabilities that can be used directly with investors and which are implementation-focused and customizable like an illustration, a worksheet, a social security planning tool or interactive software."
American Funds, BlackRock and Charles Schwab are the most frequently listed providers of useful support but looking ahead advisors expressed a need for tools and programming in key areas, such as compliance.
“Advisors are requesting practice management tools and programming dedicated to developing new sources of referrals and clients, retirement and income planning, improving efficiency in their operations, managing client expectations and concerns and navigating compliance and regulatory issues especially the proposed DOL rules,” Schneider said.
A firm recently launched an investment analytics interface that helps advisors run thousands of calculations on their clients’ portfolios in just milliseconds. In real time, financial professionals can evaluate risk and performance metrics, aggregate factor exposures as well as run scenario analysis, stress testing and Monte Carlo simulations with FinRiver.
“FinRiver delivers fully customized data sets which serve to differentiate advisors from the competition in the marketplace,” said Kendrick Wakeman, chartered financial analyst and founder of FinMason, which launched FinRiver.
AdvisorEngine, a digital wealth management platform, has used FinRiver to enhance its service offerings.
“We can now deliver intuitive and simple metrics about portfolios, which is a critical element for advisors in articulating their unique value proposition,” said Rich Cancro, founder and CEO of AdvisorEngine. “It’s an easy way to win more clients during this crucial upgrade cycle.”
Schneider said the FinRiver value-add program is helpful but his polling showed advisors need much more.
“This is the kind of tool financial advisors like to have available internally but how much an advisor needs this tool depends on the capabilities that are already available on their existing platform,” Schneider said. “Financial planners may not be as interested in such performance reporting tools.”
Other providers of investment analytics include Black Diamond and Orion.
“Advisors can get access to these tools from their broker/dealer and custodians or some turn to third-party providers,” Schneider said.
Approaching wholesalers and networking with other advisors may yield more impressive results in the area of innovative products in addition to turning to asset managers, mutual fund firms or broker/dealer custodians.
"Attend industry conferences,” Schneider said. “Read industry publications and network with other advisors to discover new technologies and tools.”
Juliette Fairley is a business and finance journalist who has written four personal finance books for John Wiley & Sons and has written for major news organizations, such as The New York Times and The Wall Street Journal. She is a member of the American Society of Journalists and the New York Financial Writers Association and a graduate of Columbia University's Graduate School of Journalism. Juliette can be reached at [email protected]