Concept of digital workflows / Axllll

When Sam Lichtman became an independent financial advisor in 2020, he had to sharpen his knowledge of technology in order to launch his business.

“I needed to have my own framework in order to make [the transition] successful for myself and for clients,” Lichtman said.

Lichtman, who works out of London, Ont., enjoys near-total business autonomy aside from some back-office and compliance requirements from his affiliate dealer, Calgary-based Portfolio Strategies Corp.

“I [could] find tools that worked for me,” Lichtman said. He monitored the industry to see what technology other successful advisors were using and then tested some of those products himself. He researched and invested in tools that could deliver what he and his clients wanted, such as good financial planning software.

Other essential components included onboarding and client relationship management (CRM) software, and investment management dashboards. Websites and back-end business tracking systems also are important elements of an advisor’s practice, Lichtman said.

Making the right choices often involved trial and error.

For example, Lichtman began with Morningstar Premium for investment analysis, which costs about $25 per month, and then briefly tried CapIntel, but then switched back to Morningstar. He also uses portfolio tools offered by Vanguard Investments Canada Inc. free of charge.

Economy is always a consideration, but Lichtman chose not to base decisions solely on price. He chose Winnipeg-based Conquest Planning Inc.’s software, for which he pays about $3,000 per year, rather than tools that might be less expensive. But he also selected Wealthbox CRM, paying about $150 per month, over a customized CRM from California-based Salesforce Inc. which would have cost “a lot more money.” Wealthbox CRM’s setup includes all the features he needs, he said, including tools that help save time.

Advisors working independently must closely follow technological developments, Lichtman warned. Through attending conferences, listening to podcasts, connecting with other professionals and sampling various tools, Lichtman has had to learn how to integrate evolving systems and understand complex security issues.

Robert Vokes, senior managing director, Canada, with consulting firm Accenture in Toronto, said bespoke tech packages built by individual advisors can help improve service to clients. But, he added, “the [other] side of that is ensuring that security and controls are in place to make sure no bad actors get into the system.”

Policies vary by firm

Each dealer firm takes its own approach to advisors’ digital independence. For example, executives with iA Private Wealth Inc.(iAPW) want to allow as much advisor choice as possible.

“Our vision is to have the most open architectural technology platform across all the dealers,” said Liz Lepore, iAPW’s vice-president, advisor and client experience and practice management.

“We’ve decided that CRM and financial planning tool[s] are the two [areas] where we say, ‘[Free choice] allows you to run your practice and your business the way you want to run it,’” LePore said.

This policy requires that the firm assess the capabilities and security of well-established tools that are chosen often by advisors, such as those from Salesforce. iAPW has been testing the ability to transfer data between its systems and those of Salesforce. Other platforms in the testing queue include NaviPlan by InvestCloud, RazorPlan and Maximizer CRM — with Lepore noting that a chosen platform’s ability to securely connect with other software programs is a key consideration.

IG Wealth Management is more prescriptive with its base technology package. Advisors can choose their hardware, said Brent Allen, head of strategy and business operations with IG Wealth, but “when we get to our core tools, there is not a lot of optionality there.”

The firm’s investment in tools such as Conquest Planning and CapIntel has been “significant,” Allen said. IG Wealth can more handily meet know-your-client, know-your-product and privacy regulations when a single core set of tools is used, he added.

While this policy limits advisors’ freedom, “it would not be possible to create a best-in-class advisor or client experience if we had to solve for multiple CRM solutions or multiple financial planning tools,” Allen said. “And then, for the advisors, pricing and pressure [would be] an issue.”

Allen said a dealer firm can make large-scale deals with vendors, which allows for subsidized subscription costs and more flexible terms than advisors could negotiate individually. IG Wealth reviews its pay grid and technology fees each year. It announced in November that its monthly tech platform fee of up to $390 would be reduced as of Feb. 1, 2024 to a flat fee of $270.

As a result of the new fee arrangement, the digital subscription costs for the technology used by the firm will be evenly split between IG Wealth and its advisors, with “all of the technology work we do beyond that, [such as] development, integration, maintenance, all 100% corporately paid.”

The firm also is eliminating rentable workstation fees for its offices, Allen said, accommodating the increase in advisors choosing remote work and shared offices. All costs considered, he added, “advisor practice fees charged directly by IG Wealth Management will decrease by approximately 15% in 2024.”

Both iAPW and IG Wealth closely monitor cybersecurity. Allen noted that security and fraud weaknesses can affect the insurance rates of firms and advisors.

Lepore said offering advisors digital freedom requires a rigorous review process for any requested tools: “The last thing any of us wants is to be on the cover of a magazine that says we didn’t do [security] checks.”

Mix and match

Firms also can offer advisors choice within a limited ecosystem, similar to how product shelves are managed.

“We have several financial planning [tools] and several CRMs,” said Sybil Verch, executive vice-president and head of private client solutions with Raymond James Ltd. in Victoria, B.C. “However, for efficiency, integration and simplicity, we will pick one main one [for] each that we will invest in.”

Raymond James fields requests for new tools, but increasingly invests in its preferred systems, agreed Scott Hudson, executive vice-president and head of wealth management, private client group.

“Think about advisor teams today [with] that swivel desk. [They’ve] got to toggle between 10, 15 apps during the day. [Can] you get that down to three, four, five core systems?” Hudson said. The firm focuses on tools such as those from Laval, Que.-based Croesus Finansoft Inc., New York-based Broadridge Financial Solutions Inc. and Salesforce.

Richardson Wealth Ltd. takes a similar approach. Advisors can choose from a variety of hardware options for themselves and their support team. The firm then offers a “fulsome” digital suite as well as a tech credit system tied to advisors’ revenue, said Scott Stennett, chief operating officer and director, operations and information technology, with Richardson Wealth.

That suite includes systems such as those from Croesus and Pennsylvania-based Envestnet Inc. While some “book of record” tools are required, the firm is flexible.

Where advisors most often want to deviate from that suite is with new financial planning tools that come on the market, Stennett said. However, efficiency must be considered. “If [advisors] pick the products that we put on our shelf today, we can ensure that the experience is optimized,” he said. “Those are the only things we’re going to integrate laterally.”

The shared goal of the industry is indeed a more productive advisor who can efficiently and safely serve clients, Vokes said. Firms with scale can often automate tasks more easily, reduce risk, streamline services and improve transaction turnarounds.

This article appears in the December issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.