By their very nature, surveys tend to look backward at the action so far. But the field of advisor technology changes so fast that we expect a few more shifts to affect the landscape in the coming months.
Here are four trends that should have a significant impact on the industry in 2015. Click through to see the list, or view it as a slideshow here.
1. ROBO TECHNOLOGY
To date, most conversations about robo advisors have failed to draw a distinction between the business model and the technology. Whether you believe that the business model being pursued by many of the consumer-facing digital players is sustainable, their technology appears to be superior to the software now deployed by most traditional firms.
Now the custodians are starting to offer such tools to advisors. Schwab says it will roll out its own online platform, Schwab Intelligent Portfolios, to advisors in 2015. Fidelity has a new referral arrangement with Betterment. Jemstep, NestEgg, Trizic, Upside Advisor and other firms will be offering advisor tools via TD Ameritrades VEO platform. And Folio Institutionals Advisor Connexion platform allows advisors to create their own robo-technology experience.
2. CYBERSECURITY
Advisors can no longer remain sanguine about cybersecurity. The cyber-attack targeting JP Morgan, along with attempted hacks of Fidelity and others, made it clear that the financial services industry will continue to be targeted by hackers in 2015.
The SEC has also made it clear that it will be tightening its security-related supervision of RIAs and B-Ds, identifying a number of areas that it expects registrants to address. Expect heightened scrutiny and more enforcement action as well as an uptick in development of and spending on cybersecurity technology.
3. PLANNING REVIVAL
Another ancillary impact of the robo advisor platforms: As they commoditize asset allocation and investment advice, clients may start balking at paying 100 basis points or more for portfolio advice. Active managers will need to demonstrate alpha after taxes and expenses to justify their fees, while passive managers will need to differentiate themselves -- a difficult challenge.
A better strategy may be for advisors to redefine their value proposition in areas that have not yet been commoditized; financial planning is perhaps the most promising one. With many baby boomers entering or nearing retirement, demand for comprehensive planning should be strong in the years ahead. And planning software vendors have done a great job of streamlining the process and making it more interactive and more affordable.
4. MATURATION OF MOBILE
When custodians and B-Ds began rolling out mobile apps a few years ago, adoption was OK, but overall usage numbers were mediocre. One problem was the lack of utility; early apps had limited functionality and were not always optimized for a device. But mobile design has improved and providers are now offering functionality that adds value for advisors.
One prime example is mobile check deposit, which has proved extremely popular at virtually every institution that has made it available. Mobile money movements (such as wire transfer authorizations) have proved extremely popular, as well.
