Financial Advisor Desktop Dilemmas

As if developing a desktop to satisfy the complex needs of financial advisors wasn't challenging enough, there's the vast array of advisor-business models to support.

Sure, firms emphasize fee-oriented relationships. But in reality, only the top 5% to 10% of advisors in the full-service marketplace run fee-only practices. The other 90% to 95% handle everything from traditional stock and bond investing to selling packaged retirement plans to corporations.

Firms are reworking compensation plans to reward managed accounts and larger accounts and tickets. They are also lengthening training programs, allowing advisors to stabilize their business before putting them on full-commission with a subsistence level draw.

Problem is, the shift to fee management requires, on average, a three- to five-year transition period, highlighted by lower production figures -- is hitting advisors right in their wallets.

This compounds the integration headaches that plague most firms. Internal technology departments operate under the notion that they can build anything cheaper and faster than outside vendors. At the same time, costly mistakes of the past have curtailed the desire of many IT departments to risk making comprehensive system changes. As a result, many are creating less risky patch solutions to existing architecture problems.

For example, a number of firms employ a cobbled-together hybrid of thin and fat client applications across market data and account information, attacking symptoms but never rooting out the disease. As expected, vendors claim they have the solution despite a lack of intimate knowledge of the underlying variety of system architectures deployed industrywide. In short, many vendors claim everything is always one API or Web server link away, regardless of complexity. The result is a stand off: IT departments are reluctant to make wholesale change while leading vendors (those that offer true portfolio- and relationship-management systems) only offer wholesale change.

So what are the central tenets of an advisor desktop? To maximize an advisor's effectiveness, Gomez recommends making the following components available in an integrated environment that balances utility with usability:

1). Advisors and clients should see identical data. Brokerage firms need to ensure that the advisor desktop delivers the same information the client is seeing. This implies real-time delivery of account information.

2). Detailed cost basis is a must-have. The availability of tax-lots is an integral component when performing tax and financial planning. Not having this data readily accessible to the advisor limits his ability to provide sound advice. Moreover, this lack of data undermines the accuracy of any portfolio analysis or financial-planning tool, whether used by the advisor or client.

3). Automated-portfolio management tools with alerts are a necessity. The availability of tools that both address a client's portfolio and alert the advisor when a portfolio strays from prearranged parameters is a key differentiator. Alerts continue to present only price, news or research on a particular equity. Shifting alert emphasis away from the equity to the portfolio gives advisors a powerful reason to contact their clients -- one that is perceived as being supportive of planning goals rather than product sales motivated.

Advisor desktops have yet to catch up with the business desire to follow a fee-dominated model. Industry interactions reveal that the aforementioned features are vital for firms determined to arm advisors with the best household information available. This means tasking IT departments with building -- or acquiring -- contact management, investment management and execution systems that help foster deeper relationship-building client interactions, enabling advisors to accelerate delivery against the firm's lofty fee-based goals.

Dan Burke is director of brokerage services at Gomez, Inc., a Waltham, MA Internet quality market research and consulting firm. Dan is the author of a soon-to-be released report that addresses advisor requirements, perceptions and usage of desktop systems. He can be reached at [email protected].