The findings in this blog post come from our annual survey of over 1,500 registered investment adviser ("RIA") firms that was conducted in the first quarter of 2018. This proprietary RIA in a Box study is paired with publicly accessible data provided by the Securities and Exchange Commission ("SEC"). The goal of our annual study is to understand different options that comprise each firm characteristic, and to determine whether specific characteristics affect the growth, size, or operational efficiency of an RIA firm. In this blog post, we focus on the top financial planning ("FP") software used by RIA firms.
In years past, we only considered firms that offered financial planning as a service to clients when analyzing financial planning software adoption rates. In the past, we also observed some very interesting trends when comparing firms that offer financial planning services vs. firms that do not. For this year's survey, we focused on the overall industry adoption rates regardless of whether an RIA firm discloses on its Form ADV that it offers financial planning services or not.
RIA Adoption Rate of Financial Planning Software
Our most recent survey revealed that RIA firms with a single technology solution were most likely to have an financial planning solution, beating out all other technology solutions. For many firms, they can not provide core services without some form of financial planning technology in place. Despite financial planning software often being the first type of technology adopted by investment advisers, we have not observed a meaningful increase in overall industry adoption rates in recent years:
It's possible this recent plateau in financial planning software adoption rates can be attributed to a similar slowing percentage of RIA firms offering financial planning services in recent years. In our 2016 survey, we noted that 67% of all investment advisers offered financial planning services compared to 66% of firms in our 2017 survey.
RIA Financial Planning Software Adoption Rate by Firm AUM Size
Similar to other technology solutions, larger advisory firms are much more likely to adopt financial planning software. On the other hand, unlike other types of RIA technology solutions such as portfolio management and reporting software, just because a firm grows larger does not mean that it will inevitably adopt financial planning software. Rather, the adoption of financial planning software by RIA firms seems to be more driven by the services and profile of the firm rather than solely the size of firm. In other words, firms that don't provide financial planning services are generally less likely to adopt such software.
However, increasingly in recent years we have found a growing number of advisory firms that don't offer financial planning services adopting some form of financial planning software as the capabilities of these platforms has expanded dramatically to focus not just on financial planning but also more broadly on client engagement.
In recent years, financial planning software adoption has remained relatively consistent across various firm sizes:
Top Financial Planning SoftwareSystems Adopted by RIA Firms
In 2017, MoneyGuidePro and eMoney continued to distance themselves as the two clear RIA financial planning software industry leaders. While MoneyGuidePro has been the market share leader for a number of years, eMoney continues to gain momentum and now only trails MoneyGuidePro by 5% market share. Historically, we've generally seen MoneyGuidePro have better traction with smaller advisory while eMoney has fared better with relatively larger firms. However, in recent years this small vs. large distinction appears to be changing with eMoney now offering a range of product levels to appeal to various RIA market segments.
Both leading providers have also continued to enhance their client engagement and client portal features with both making large investments into empowering holistic wealth management powered by third party account aggregation. While MoneyGuidePro's account aggregation capabilities are powered by Envestnet's Yodlee platform, eMoney has built its own in-house account aggregation network.
This post is the third of five blog posts that will focus on the core technology solutions available to investment advisory firms with past post focusing on customer relationship management ("CRM") and portfolio management and reporting software. In the coming weeks, we will look at continue our series of blog post with a detailed look at document storage and portfolio risk solutions.