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Please click the image above to view the table of contents for Tiburon's Financial Advisor Technology Research Report

New Tiburon Research Report - Financial Advisor Technology: Implementing Leading Edge Technology & Outsourcing Strategies for Captive & Independent Financial Advisors

Tiburon Strategic Advisors, a market research & strategy consulting firm serving a wide variety of financial institutions and investment managers, is pleased to announce the release of its newly updated research report on Financial Advisor Technology. This research release summarizes some of the report's key findings.

The purpose of this report is to provide readers with an initial understanding of financial advisor technology & outsourcing strategies. This report also aims to establish a broader framework for analyzing back office technologies throughout the financial services industry. The report begins by addressing the four phases of technology evolution in the investment advice market. This historical account is followed by a category-by-category description of current technologies and their related issues. The report concludes with Tiburon’s predictions for future impacts of technology in the financial services industry. This is Tiburon’s second draft of this report.

Tiburon’s first draft of this report was published in 2006; that version was primarily developed by consolidating prior Tiburon research into one report.

This is Tiburon’s second draft of this report; this version reorganizes this report to stand together with Tiburon’s equally insightful online tools & advice report, acknowledging the now overlapping nature of software and online tools.

Key Findings
This report has a long list of interesting facts to share:

Market History

  • The first two machines were connected to form the ARPANET in 1969
  • The USD regulated stock commissions in 1975 on a day referred to as May Day
  • The introduction of personal computers took place from 1977-1983
  • The first personal computer was launched in 1977
  • Laptops were introduced in 1985
  • Ameritrade completed the first internet trade in 1994
  • Exemplifying the importance of financial services to the growth of the internet, in the early 2000s only one-third of non-investors were online, as opposed to three-quarters of investors
  • Personal computer ownership eclipsed 50% household penetration in 2000
  • The tech bubble bursting did a number to the investment banking business in 2001; IPOs in the first quarter of that year were down over 90% from that of 2000

Market Definition

  • The financial services technology industry can be defined to include both tools & advice companies, and hardware & software companies

Market Growth

  • Market growth in financial services technology can be measured by the number of financial services technology companies, their number of clients, revenues, & profits

Leading Financial Services Technology Companies

  • The leading financial services technology companies can be measured by their number of clients, revenues, & profits

Market Segmentation

  • There are six fundamental financial services market segments, including bank, brokerage, asset management, insurance, financial advisor, and other technology
  • Ensuring the quality of customer data is currently a huge drain on staff in the bank industry, as one-quarter of employees’ time is spent on fixing, finding, or clarifying data
  • Further, one-third of the bank industry’s customer data is inaccurate
  • It is suspected that $50 million to $60 million is lost per year to ATM related fraud
  • Fiserv’s CheckFree handles 50% of all online bill payments
  • Key developments in online banking & bill pay technology include growing concentration in the industry, feature enhancement, outsourcing, movement away from vendor sites, and the proliferation of the risk as opposed to good funds model of online bill pay
  • Online banking security has proliferated to stop three threats, including unauthorized withdrawals, identify theft, and check fraud
  • $60 billion is lost per year due to online transaction fraud
  • Nearly all affluent internet users report their security concerns would be alleviated through guaranteed reimbursements
  • And two-thirds of all online banking users report that their security concerns could also be alleviated through alerts of credit report activity
  • And finally, one-sixth of affluent internet users report that security advertisements alone would even alleviate their security concerns
  • The advantages of check imaging technology are clear, as online crimes only account for about 10% of fraud cases
  • The mortgage & loan processing market is led by Fidelity National Financial with near 50% market share, and trailed by a handful of other moderately large players
  • Brokerage institutional technology flows from broker desktop or electronic commerce portals to a transaction processing system, which in turn flows data to a handful of other technologies

Increased Spending on Technology & Shift in View of Technology from Obstacle to Enabler

  • Financial services industry technology spending is expected to grow steadily at 4% a year until 2013
  • Technology will be increasingly viewed as an enabler, as opposed to an obstacle as it has in the past
  • However, one-third of those technology proponents still feel their technology capabilities create obstacles that inhibit growth, meaning there is a ways to go before financial services firms again fully embrace technology as an enabler in every aspect of their businesses
  • Almost half of all financial advisors use no account aggregate software
  • Over one-third of all financial advisors do not use document management software
  • And 13% of financial advisors do not even use report generation software

Growing Dominance of Application Service Providers (ASP) Models Rapid Growth in Outsourcing

  • The use of application service provider models will likely grow rapidly
  • Implementing document management systems in the front office tend to add to the bottom line; for instance, banks that have made document management investments have seen returns on investments of between 20% and 40%

Rapid Growth in Outsourcing

  • Over one-third of financial advisors now outsource some part of their business
  • The first reason outsourcing is growing is because of the growing variety of client demands as they retire
  • The second reason that outsourcing is gaining popularity is because of increasing investment product sophistication
  • The third reason that outsourcing is growing is because of increasing labor costs
  • The fourth reason that outsourcing is growing is because of increasing compliance demands
  • The fifth reason that outsourcing is growing is because of rapidly changing technology
  • The sixth reason that outsourcing is growing is because of the increasing reliability of internet connections
  • The seventh reason that outsourcing is growing is because of the large number of new fee-based financial advisors raised on outsourcing models
  • The eighth reason that outsourcing is gaining popularity is because of the increasing sophistication of both TAMP & service provider offers
  • Some believe that those who outsource will be more profitable because they can redeploy their time with clients and/or business developments

Financial Advisor Technology Venture Capital Opportunities

  • The financial services industry technology industry presents numerous venture capital opportunities
  • Nearly half of financial services firms expect to increase automation of corporate actions
  • Nearly half of financial services firms expect to increase automation of static reference data
  • Opportunity abounds in developing better straight through processing solutions
    Walker Capital Management generates over $500,000 in revenues, with a solid jump in 2005 of almost $100,000
    Fee-based financial advisor mergers & acquisitions will increase to 163 per year by 2012

To better understand the developments for Financial Advisor Technology, executives can purchase Tiburon's Financial Advisor Technology: Implementing Leading Edge Technology & Outsourcing Strategies for Captive & Independent Financial Advisors research report where the key findings highlighted above are covered in greater detail. Please contact Sarah Sage at SSage@TiburonAdvisors.Com or 415-789-2540.

Additional Information

The following links will open specific pages on Tiburon's web site:

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Tiburon Strategic Advisors

Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer market research & strategy consulting services to all types of financial institutions and investment managers:

  • The firm has served over 300 corporate clients and completed over 1,100 projects since its founding, and today, its knowledge base includes mutual fund distribution, separately managed account programs, alternative investments, wealth management, insurance products, banking services, the fee-only financial advisor market, the CPA firm market, the family office market, & various international markets
  • Tiburon holds a series of CEO Summits semi-annually for its executive-level clients. Tiburon CEO Summit XVI is scheduled for April 15-16, 2009 at the Ritz Carlton Hotel in New York, NY, followed by Tiburon CEO Summit XVII, scheduled for October 7-8, 2009 at the Ritz Carlton Hotel in San Francisco, CA. Attendance is by invitation only and attendance at each Summit is managed to between 100 and 125 senior industry executives. Visit the CEO Summits section of Tiburon's web site for details on current and past CEO Summits, including attendee lists, meeting agendas, & highlights. Please contact Tiburon's Managing Principal Chip Roame at CRoame@TiburonAdvisors.Com or (415) 789-2541 if you are a Tiburon client and have an interest in attending a future Tiburon CEO Summit
  • Tiburon has published forty-seven ~300-400+ page research reports, which offer detailed analyses of growing business segments; each is available for $5,000; these reports can be ordered by contacting Sarah Sage at SSage@TiburonAdvisors.Com or (415) 789-2540
  • Tiburon offers an annual research report access program, whereby dozens of clients receive all Tiburon reports published within a year for $25,000; clients can subscribe to Tiburon's 2009 Research Report Access Program by contacting Sarah Sage at SSage@TiburonAdvisors.Com or (415) 789-2540
  • Tiburon also offers a database access program, whereby it shares its 300,000+ person industry executives contacts database with dozens of clients for $25,000 per year (distributed quarterly); clients can subscribe to Tiburon's Database Access Program by contacting Sarah Sage at SSage@TiburonAdvisors.Com or (415) 789-2540
  • Tiburon offers thirteen online business benchmarking tools that are available to all types of financial advisors in an effort to help them benchmark their business practices and build more successful businesses. The sites include www.BrokerBestPractice.Com for wirehouse & regional brokers, www.FABestPractices.Com for fee-based financial advisors, www.IndependentRepBestPractices.Com for independent reps, and www.PrivateBankerBestPractices.Com for private bankers. Almost 5,000 advisors have used these tools. By completing one of the online surveys, financial advisors can access a FREE copy of the relevant comprehensive Tiburon research report, which summarizes and analyzes the collective results
  • Tiburon's weekly research releases, like this one, are emailed for free to interested industry executives, media representatives, conference planners, and individual financial advisors. Over 55,000 industry executives now receive these releases. Feel free to sign up to receive future research releases at Tiburon's web site (www.TiburonAdvisors.Com) if this release was passed to you by a colleague and you would like to receive them directly in the future
  • Tiburon plans to expand its workforce in 2009. Specifically, the firm plans to add two-to-three incremental principals (the most senior role at the firm) and several more research managers in 2009.
  • Tiburon has built three executive programs (CEOs-in-Residence, Financial Advisor Roundtable, and Consulting Fellows) in an effort to bring the experiences of additional senior level industry executives to Tiburon clients. Feel free to contact any of the members of Tiburon’s executive programs directly or ask that they be included in any ongoing Tiburon project.

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