An Inside Look at the Technology Advisors Like

What You Need to Know

More than 800 applications, services, platforms and software tools were listed, showing just how big the advisor technology industry has grown.
The backers of investment platforms continue to expand capabilities with new features, functionality, and by acquisition.
The authors conclude that the industry may be falling victim to its own success due to too many choices.

Every year, the industry gets an in-depth look at all of the software tools, platforms, applications and innovation that is driving the growth in the independent wealth space. Its form? The annual T3/Inside Information Advisor Technology survey. 

The survey polls the advisory community to see what tools and applications they are using, how satisfied they are with them, and what they are looking to invest in as their businesses continue to expand and grow. The survey, done by Joel Bruckenstein and Bob Veres, this year had 4,500 respondents who answered nearly 100 questions, making it one of the most robust in the industry. Over 800 applications, services, platforms and software tools were listed, showing just how big and diverse the advisor technology industry has grown.

The survey has basically become the “buyers guide” for advisors to see how the tools they are using are being adopted as well as how satisfied other advisors are with them. The survey also tracks what tools, applications and platforms are emerging based on the general sentiment of advisors looking to switch to or adopt various platforms. This is a leading indicator of what new technologies are gaining traction in an extremely fragmented industry.

“The goal of this annual survey is, and has always been, to help advisors and members of the fintech community answer the most basic questions about technology in the financial advisory space,” Bruckenstein and Veres say in the introduction.

For the software vendor community, the survey provides an important look at where they stand versus their competitors and how their users feel about their products. And for newer advisor tech companies, the pressure to lobby Bruckenstein and Veres to be listed on the survey is immense so that they can gain visibility in the industry, even if they have tiny market shares. 

This year, the survey covered 36 different categories showing the tremendous growth in the technology space, as newer technologies are being adopted to support myriad business models that advisors are deploying to best serve their target clients.

Key Takeaways

Rise of Oligopoly

One of the key takeaways from the survey is that an oligopoly is forming around the most popular application categories (CRM, financial planning). In other words, the top three vendors in each make up the majority of market share as consolidation is happening and the backers of these platforms continue to expand capabilities with new features, functionality and, of course, by acquisition.

For example, in the financial planning category, eMoney and MoneyGuidePro each have roughly 33% market share (when you add up their various versions), with RightCapital around 12%. The remaining 22% of the market is made up of 17 other products, with most of those having less than 1% market share.

The leaders beyond the big three here are Orion (which acquired Advizr three years ago) and Asset-Map. Interestingly, the survey found that nearly 70% of Asset-Map users also use another planning application as well, again showing how the financial planning software industry is trending toward an oligopolistic structure.

In addition, when looking at the CRM category, we see a similar top-heavy concentration with Redtail by far the market leader at 59%, followed by the various iterations of Salesforce, including overlay vendors, at a combined 11%, and Wealthbox at 9%. After these big three, no one else has a market share over 5%.

Growth of All-in-One Solutions

Another key trend is the growth of the “all-in-one” solution or a “unified platform” that has multiple components and functionality (CRM, reporting, rebalancing, planning, etc.) embedded into one application versus stand-alone components that need to be integrated to minimize data entry and simplify workflows.

According to the authors, 20% of the industry is now using an all-in-one solution. The authors hedge this growth analysis, however, by pointing out that many firms using a unified solution also bring in additional third-party technologies to supplement functionality.