by Rebecca King
While technology solutions can provide a wide variety of benefits, from the ability to communicate more effectively with staff and clients to decreasing stress and worry, some key business benefits are more likely to be received by certain types of advisory practices. From a business-building perspective, financial planning software can help increase productivity, boost revenue and promote more effective client service. All of these factors are important in growing a practice, but are you likely to receive those benefits in your practice?
Increasing Productivity
In a recent survey of advisers conducted by FPA and ActiFi, an overwhelming majority of advisers who use financial planning software say it helps them be more productive (82 percent). However, certain actions increase the likelihood of the software driving productivity. In general, the more time you spend using the software on a weekly basis, the more likely you are to find that it helps you be more productive.
And, while it doesn't matter what size your practice is, the budget you have for spending on the software does have some impact. Three-quarters of advisers with a financial planning software budget under $500 say their software increases their productivity compared to 93 percent of those who spend $3,000-$4,999.
Potentially Boosting Revenue
Increasing your practice's revenues is a less common benefit of using financial planning software, reported by just over 50 percent of advisers, but there are some steps you can take to increase the likelihood of boosting your revenue. To start, become a power user. Just a third of advisers who use the software less than one hour a week say they have increased practice revenue through the use of the software compared to 65 percent of those who use it five to 10 hours a week.
If you are a practice with $200,000 to $499,000 in annual revenue, or a lower-revenue practice trying to reach the $200,000 mark, financial planning software is poised to help you. Along those same lines, if you are a practice with 30 or fewer employees, you are more likely to receive revenue benefits from the use of financial planning software.
Why are small to mid-size practices in the best position to increase revenue this way? For one thing, smaller practices have less manpower, so saving time generating reports or other actions has a huge impact on the number of clients you can serve and therefore the revenue you can generate with the level of overhead you have. Another reason may be that larger firms already have technology solutions in place and therefore when they are adding additional solutions or changing providers, the increased benefit is not as dramatic.
Creating Stellar Client Service
If more effective client service is high on your list of priorities, financial planning software deserves a closer look. Nearly 90 percent of advisers who use financial planning software say it enables them to more effectively serve their clients. So how can you use financial planning software in a way that maximizes your opportunity to positively affect client service?
Just like with increased productivity and revenue, increasing your use of the software increases the probability of gaining this benefit. The percentage of advisers who strongly agree that their software has enabled more effective client service doubles when they use the software five to 10 hours a week instead of less than one hour.
Other than that, it doesn't really matter if you have technical expertise on staff, what your software purchasing budget is or the size of your practice. You have the same likelihood of increasing client service through the use of financial planning software independent of those practice characteristics.
Whether you have been using financial planning software for years or are considering financial planning software for the first time, the information in this article can help you get the most benefit out of your technology investment. And be sure to check out the complete FPA-ActiFi Adviser Technology Report: Financial Planning Software Edition that includes functionality scores that you can use to compare multiple financial planning software solutions and determine which is best for you.
Rebecca King is the manager of the FPA Research Center. Contact her at Rebecca.King@FPAnet.org.
TD AMERITRADE participated as a custodian respondent and is the sponsor of the study. TD AMERITRADE is separate and not affiliated with FPA or ActiFi and each is not responsible for the other's policies or services, except to the limited extent that TD AMERITRADE participated in the study.
Source: The market research is part of the FPA-ActiFi Adviser Technology Series: Financial Planning Software Edition, April 2010; 422 FPA members participated in the survey.
Learn More
Download the complete FPA-ActiFi Adviser Technology Report: Financial Planning Software Edition online at www.FPAnet.org/AdviserTechnologySeries. In addition to key findings from adviser research, the report also includes in-depth functionality testing across 10 financial planning software solutions. FPA members receive this valuable report free of charge, courtesy of TD AMERITRADE Institutional.
