Indeed, it has been widely acknowledged that one size does not fit all, and the answer to the above therefore depends on the structure and strategic goals of individual businesses. Various forces determine the factors that ultimately influence technology purchasing decisions, as was discussed during the second panel of the Family Wealth Report Summit in New York last month.

Nick Voutsakis, founder of WealthTech Alliance, chaired the panel, which included: Scott Becchi, partner and principal in advisory services at Ernst & Young EY); Glenn Bolstad, vice president of sales for North America at Appway; Joseph Larizza, chief administrative officer at Fieldpoint Private; Daniel Rheault, director of product marketing at Netage Solutions; and Matt Sonnen, vice president at Focus Financial Partners.

Voutsakis kicked off the session by noting that technology developments haven't just transformed the wealth and investment management space in a back-office context but now have a direct impact on the client experience. The notion of a platform provider being a partner is “much more significant today,” he added, before asking the panelists to outline what they believe are the essential elements a technology vendor should provide.

“You want outsourced software to look like it is part of your brand, your ecosystem, as well as being single sign-on,” said Larizza of Fieldpoint Private.

“One of the questions we ask is how easy is it to get away from a vendor, so we look at who owns the data and can we readily take it,” he added. “We also consider what client disruption might be like should we have to switch.”

Voutsakis then asked which factors might cause a client or prospective client to reject a vendor.

“The answer to this might be different for us than for a very large institution,” said Sonnen of Focus, which owns 32 independent RIAs. The quick answer is cost, but the true answer, he said, is that many vendors are trying to “do it all” in cases where what a prospect really wants is a specific solution to a problem rather than “a technology.”

“I agree,” Larizza said. “We see that all the time and it’s my job to protect our clients and colleagues from it. Not only is there a cost aspect here, but end-user confusion.”

Voutsakis highlighted the significance of the difference between solutions that have been designed explicitly for the wealth and investment management industry versus those that are more “generic.”

“Salesforce and other generic players require vast customization that can create significant complications when updates to the platform are implemented,” said Rheault. “Industry-specific solutions are successful because they are configurable and built to grow alongside firms’ evolving operational needs.”

“Disruptors”

A number of start-ups, sometimes described as “disruptors,” have recently entered the wealth management technology space – often with distinct functionality advantages such as agile data management and creative presentation of vital analytics, as well as a consistency in look, feel and delivery.

Meanwhile, the digital revolution is compressing timelines in terms of how quickly incumbent players must respond to and approach advancements in technology.

“Where we see incumbents struggle the most is when they get a little too comfortable with their client relationship and maybe don’t put in as much effort as they did when it first started,” Becchi of EY said.

Becchi’s point also mirrors other industry insights that suggest investors are extremely sensitive when it comes to a firm’s level of responsiveness. A 2011 Spectrem study revealed that unreturned calls were a key reason clients left advisors, while more recent research shows that clients have become increasingly concerned about the quality of advisor contact.

So what can wealth management organizations do to make sure complacency doesn’t set in? According to Becchi, this is down to the relationship between the two parties. “You’ve got to be very diligent in establishing and maintaining that relationship,” he said.

For many of his firm's clients, the decision to move to a start-up is often fueled by a feeling of knowing that it will be more open to making changes that they’re driving, versus being part of a large user community where “you have to get in line,” so to speak.

“It also goes beyond managing a particular vendor...it’s about understanding the space,” Larizza added. “At some point, you’re making a value proposition decision."

“And you want to be able to talk to them about what is happening in the industry, what others are doing and ultimately what is their plan,” Becchi added.

Budget allocation

Although the financial services sector at large has been slow to adapt to evolving technology, wider trends affecting the way people typically communicate and obtain information are inevitably manifesting in the space, and organizations are spending more to accommodate these behaviors.

According to data from the global research firm Ovum, the US high net worth banking and financial planning sector spent $3.3 billion on technology in 2013 – a figure which the firm anticipated would rise to $3.4 billion in 2014; $3.6 billion in 2015 and $4.2 billion through 2018. Globally, $7.9 billion was spent in the HNW banking and financial planning sector last year. Again, this is projected to hit $8.3 billion this year; $8.7 billion in 2015 and $10 billion by 2018.

However, is the industry seeing a return on investment for this increased spend? The consensus among panelists was “yes.”

The technology is certainly there, Sonnen said, noting that the issue is centered more around knowing how to get the “full bang” for what it can do.

Larizza agreed that ROI in this context is “all about adoption and usage.”

“What I am finding is that technology spend is increasing, especially in the family office space…they need more than an Excel spreadsheet now,” said Bolstad of Appway.

Another trend that relates to the industry's heightened focus on technology is the highly talked-about wealth transfer currently sweeping the US – a phenomenon that will usher in a new wave of clients to advisors. 

“There is a point where someone else is going to come in and provide the technology that Millennials have come to expect,” Bolstad said.

He added that the current “waterfall” approach of technology implementation in a three- or four-year timeframe is the old way of doing things and that the way forward is to show success early on and be able to complete an integration quickly and efficiently. 

“It shouldn’t ever take three months to open a client account,” he said.