One of the biggest mistakes a wealth management firm can make in launching a new technology or AI tool is not thoroughly testing it with the users first.
As simple as that sounds, advisors say it happens often — a firm might run a new tool through the IT department, compliance and senior leaders, but then do very little beta testing with advisors on the ground who are most likely to use the technology.
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“There’s so much new fintech out there, and there’s so many things that firms can build seemingly pretty easily to help streamline an advisor’s practice. But historically, the industry never included the advisor in that process,” said Andree Mohr, president of Integrated Partners, a hybrid registered investment advisor based in Waltham, Massachusetts.
For the past few years, Mohr has been advocating for firms to include advisors and practice managers in a beta testing group in addition to running the tech through IT and compliance. Mohr said Integrated Partners usually conducts beta testing groups of five to 10 advisors who are most likely to use the new technology.
“How you build the technology and how you use the technology are always two completely different things. And advisors run their businesses in different ways,” she said. “Without having the advisor’s voice in the process, it creates all of these barriers to entry for advisors and their teams to leverage that technology.”
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On average, advisors are utilizing only 62% of the tech they have, which is about half integrated, according to a survey of 542 participants conducted by wealthtech platform Orion Advisor Solutions in January 2024. The study also found one in 10 respondents felt they have all the technology their firm needs. Results indicate that while the tech is available to advisors, they’re not maximizing their use of it.
One barrier to a good tech integration can be user feedback — both in terms of collecting frank feedback from beta testers as well as making sure that includes particulars on how well the new tool works with the existing technology advisors are already using.
Firms will “just jump in and say, ‘Okay, we’re going to launch this thing and see how it goes.’ And then you start getting bad feedback,” said Scott Lamont, managing director at F2 Strategy, a wealthtech consultant. Advisors “are not comfortable using the tool, and that creates a negative vibe around the whole process. And pretty soon, you have people just complaining about it or ignoring it altogether.”
Lamont said F2 often gets pulled in by advisory firms that have already made “some bad decisions” about tech implementation.
“I would never tell them that they’ve chosen the wrong technology … because I don’t think there is a best. There’s a lot of good pieces of tech that need to be embedded in the right way,” he said. “Mostly it’s about us understanding, what were you trying to accomplish, and how did you lead up to making that decision? One of the things that we talk about a lot is having champions.”
Those champions Lamont is referring to are the advisors or key stakeholders who are most impacted by the new tool — the people who will end up being the “key, strong voices for the tech,” he said.
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But getting advisors’ input also means having a willingness to receive and respond to feedback, even if it means stopping the tech implementation or changing directions.
Ed Friedman, director of business development and growth at Summit Financial, an RIA based in Parsippany, New Jersey, recalled a situation several years ago, when his firm sought advisor feedback on a platform for 401(k) management called FeeX.
At the time, it was “really impressive, very interesting. I thought it was a little young in their development, and I did run it by a couple of advisors,” he said. “Their response was, ‘Sounds really interesting but I don’t know that we’d have an interest right now.'”
FeeX rebranded to Pontera in 2022 and made what Friedman called “significant technology development,” so he went back to his core testing group of advisors.
“Fast forward, about 10 months ago, we put Pontera on the platform, and it’s been a big hit for us,” he said.
But when the tech is already being implemented, pausing that forward motion due to received feedback is much more challenging for a firm. Typically, firms set an implementation deadline based on the launch date at the outset, before integration and testing is complete.
“Advisors like to give you their opinion, which is great, and so they’ll tell us and we listen. Because if they don’t like it and they won’t use it, then it makes no sense for us to implement that technology,” Mohr said. Conversely, “if they love the technology and we roll it out, they become the spokespeople for that technology. And advisors love to hear from other advisors, so it’s a great way that we can build adoption.”
Mohr also acknowledged that the process takes time — anywhere from one month to six months, with more complex integrations and consumer-facing tools taking the longest.
That’s a challenge when firms are under immense pressure to show a return on new technology investments, as spending has surged for advanced tools like AI. Total spending in wealth management tech is expected to grow nearly 5% to $56.1 billion in 2024, up from $53.7 billion last year, according to a Celent report.
This is when Joel Bruckenstein, producer of the Technology Tools for Today (T3) Conference, said firms need to stress that change is happening regardless.
“In an ideal world, you’d like buy-in from all users, and giving them a voice can be helpful; however, many folks, especially older employees, are often resistant to change,” he said by email. “Anything that looks new and unfamiliar will be viewed with skepticism. So, if you make it clear that change needs to happen, and if you solicit feedback from the likely power users on your team, you are most likely to get better results.”
