For decades, platforms for advisors have been differentiated by the quality of their technology. Focusing on “technology” was the natural evolution of Advisor’s platform away from its roots. This was to differentiate through the quality of their own shelf, which was the primary means by which brokerage and insurance companies attracted advisors in the 1960s and ’70s. , and the 80s. As product shelves became more and more open architectures in the 1990s and 2000s, what mattered wasn’t the specific products made available to advisors (because the answer was increasingly “everything you want is out there”). ”), which was the technology used by the advisor platform. We implement these products to help advisors run their businesses better.
But the reality is that technology is very expensive to build and maintain. Especially when you consider all of the subcategories of CRM, portfolio management, financial planning, and a dozen other technologies that financial advisors use in their companies. So the technology that most advisor platforms today (broker-dealers, RIA aggregators, TAMP, etc.) are touting is not really proprietary technology, but a selection of third-party technology tools they weave together. It becomes the “tech stack” that you provide to your advisors. This is usually one out of a list of just three major providers in a given category. Ultimately, the result is that advisor platforms increasingly all offer the exact same technology tools, marking the end of technology differentiating advisor platforms.
So what are the alternatives for advisor platforms to differentiate themselves in the future? In a nutshell: service. Advisory firms continue to need team members to deliver services and handle more tasks than technology alone can automate.
In practice, support services from the advisor platform may include a wide range of consulting services, from compliance to advanced planning teams, operations to technology, that advisors can pay for as needed. Arguably, an even bigger opportunity is advisor platforms that provide ongoing staff support services in key areas where advisory firms need ongoing support. From (virtual) assistants for administrative tasks, to ongoing compliance support, bookkeeping, financial reporting, paraplanning, trading and financial reporting. investment research, etc. His staffing needs already consume over 15% of the revenues of a typical advisory firm today. Compared to just 4% of revenues typical advisory firms spend on technology.This means that the provision of services is actually far more The economic opportunity to serve advisors is more important than “just” solving their technical needs!
In the long term, the growth of advisor platforms as service providers rather than “technology” platforms will also create additional opportunities for differentiation. A specific type of advisor they can specialize in. This also gives the most successful serving advisor platforms more pricing power in an increasingly commoditized payout-centric competitive landscape. By reinvesting in technology, we have the opportunity to generate greater returns by better serving our advisors, not for themselves, but for themselves. To Advisor as a “Technical Enabled Service Provider”.
Importantly, however, advisor platforms are not large enough to build all their own technology from the ground up, increasingly by offering the same suite of technology solutions that other advisor platforms offer. It’s about recognizing that you can’t continuously differentiate. good. The opportunity lies in the gap between technology that drives most of the cost of advisory firms as a service business in the first place: the service work humans still have to accomplish.In short, the most successful advisor platform of the future will be one where advisors human Make part of your business more efficient!
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