If you ask typical financial advisors to name the top three concerns they have about their current broker-dealers, the odds are that technology will not be among them-but perhaps it should be. There are many reasons why technology is an important factor in choosing a B-D (or evaluating your own), but for now, two reasons should suffice.

One of them is that the survival of B-D itself may depend on it. Many broker-dealers are operating on thin profit margins, and this means they may be financially vulnerable to small shifts in their revenues. If they have high fixed costs and volume declines, for example, their profits could evaporate. If they can't deal with new regulatory burdens efficiently, their margins may contract. More important, if its competitors can lower costs over the long term and your B-D can't, there is a good chance it will lose market share. If the problem gets bad enough, the financial advisor will suffer if his company raises costs, curtails service or both.

The second major reason technology matters is that there is a trickle-down effect to you. In the current economic environment, many independent financial advisors are finding their margins are under pressure. To boost profitability, they need to either bring in new business or manage their existing business at a lower cost. In either case, technology is the least expensive way to do it. If your B-D can give you the right kind technology at the right price, you benefit.

Most reps, whether they're captives or independent, largely depend on their B-Ds for this technology-for example, to open new accounts and process orders. If the technology is good, you get better, faster service, as does your client. This keeps your costs low and boosts client satisfaction. The opposite is also true. Inefficient manual processes slow the response time and increase the likelihood of error. This adds to your overhead and does nothing to boost your standing with your clients.

Many B-Ds offer their reps additional software at attractive prices, such as CRM applications, financial planning programs and portfolio management software. Not only do you benefit from the buying power of the group, you also benefit from the due diligence of the B-D. You don't have to become a software expert because the broker-dealer has qualified people doing the work for you.

When advisors now have so much riding on the technological prowess of their B-Ds, it seems like a good time to survey a few firms to see what new items they are launching or upgrading.

Pershing LLC
Pershing offers a broad range of clearing services to hundreds of independent broker-dealers and has approximately $786.5 billion in assets held in custody. Its parent company, the Bank of New York Mellon Corp., has $20.2 trillion in assets in custody. When technology evolves at Pershing, literally tens of thousands of reps feel it, and this year, many changes are afoot.

One change that will have wide-reaching effects is that Pershing will launch the successor to NetExchangePro, its advisor-facing technology platform, which currently supports over 90,000 users. Pershing Vice President Michael Geller says that in June 2009 the firm will be introducing NetX360, "an innovative, open-architecture technology platform for introducing broker-dealer firms, investment professionals, and independent registered investment advisors (RIAs). This new next-generation NetExchange offering will provide Pershing's customers with a complete solution to help them manage their firm's entire commission and fee-based business, including their advisory and managed accounts, on a single, integrated platform."

Pershing is also relaunching its annuity automation initiative, which matches up annuity orders and supporting documentation as they enter the Pershing work flow. When the digital documents are accessed, all of them will be available in one place, saving time and improving efficiency.

iNautix (USA) LLC, a Pershing affiliate that offers enterprise-wide business and technology solutions to institutional and retail financial organizations and independent registered advisors, is also moving forward technologically on a number of fronts. For some time, iNautix has provided custom data warehousing solutions to financial firms. The firm's expertise in requirement studies, existing data warehouse models and scale allow it to offer solutions more efficiently than its client firms can on their own. Now, iNautix is looking to further leverage its expertise by developing one or more "standard" data warehouse packages. Since these packages will not entail extensive customization, they should be less expensive, and implementation times should decrease substantially.

In another initiative, iNautix underwrote a recently released Moss Adams study entitled The Art of Efficiency. One of the study's key findings was that highly efficient broker-dealers appear to share some common characteristics. They are:

Simplified processes. It takes top-performing firms 50% less time to process an account transfer and 20% less time to process a new brokerage account.

Integrated systems. Top-performing firms are 15% more likely to have integrated systems.

Greater productivity. Top-performing firms generate 42% more revenue and support more than four times the number of advisors per home office staff.

Optimal staffing model. The proportion of operations staff to total staff is half as much for top-performing firms.

With regard to integrated technology, the study found that the benefits are significant. They include:
Lower overhead expenses
Lower not-in-good-order (NIGO) rates
Faster processing times
Greater staff productivity

In partnership with National Regulatory Services Inc. (NRS), iNautix will begin delivering non-transaction-based compliance solutions via Netx360. Through a single sign-on via NetX360, advisors will be able to create customizable written supervisory policies and procedures and registered representative compliance manuals; leverage anti-money-laundering (AML) training using NRS approved templates; manage registered representative licensing, registration and appointment data through two-way communication between FINRA and NRS; and leverage model documents in the NRS forms library.

Securities America
Perhaps the biggest technology news at Securities America is the ongoing enhancements to the company's document imaging offering. For a number of years, through eOffice Advantage, Securities America has made anything that it scans, including applications and checks, available to reps at no charge through an interface called Document Viewer. Securities America has also made quarterly CDs or DVDs of this information available to reps. For an additional fee, Securities America, through its "Permanent Storage" offering, allows reps to upload image files to Securities America's document management system, where they can be indexed and stored.

Now, Securities America is moving forward on two fronts. First, the company has already released a new Document Viewer interface. According to Securities America CIO Doreen Griffith, this new, improved interface has been very well received by reps.

The firm will soon be rolling out something called SAI Desktop Vault. This new software product can sit on a single computer or on a client/server. It is designed to fulfill three major roles:
Transmit paperwork to SAI from the rep
Replace the CDs/DVDs
Allow reps to create their own document server and share their own documents

Reps can use the TWAIN scanning interface built into the system, or they can use their own scanning interface to get documents into the system. Once the documents are in the vault, the software will perform optical character recognition (OCR). This allows users to perform full text searches of their documents.

SAI Desktop Vault is designed to automatically synchronize the user's computer or server with the SA servers. This alleviates the need for reps to upload files to or download files from SA manually. Since reps will have a fully synchronized version of their files at their own location, this should alleviate the need for SA to send out disks, since reps can do so locally whenever they want to. It will also give the reps the opportunity to make multiple copies to multiple media.

Commonwealth
Commonwealth Financial will be adding a planning tab to its Client 360 platform. Darren Tedesco, Commonwealth's director of business systems and strategic development, calls this new software "financial conversation software." "We want to engage the client in a conversation that is goals based," he says. The software is designed to track goals and it provides basic Monte Carlo functionality. It will help clients address questions such as, "Are you on target to reach your goals?" and, if not, "How much will you need to achieve 100% of your goals?"

According to Tedesco, this software is collaborative. It is designed to be used with clients during meetings. Advisors and clients will be able to use simple sliders to change assumptions on the fly. The software is designed so that accounts are linked to one or more goals. There are 12 goal types in total. Each includes a work sheet. Each work sheet includes hyperlinks associated with the goal so, for example, if someone is creating a college savings goal, the work sheet might include links to a tuition pricing database.

Goals are subdivided into basic needs and lifestyle needs. The software runs two types of probability analysis, one assuming "average" market performance (50th percentile) and the other assuming "poor" market performance (90th percentile). The software uses 20 years of historic data and it runs 1,000 simulations for each scenario. "We don't want this confused with comprehensive financial planning software," Tedesco said. He indicated that the strength of this software is that it can be set up in a few minutes, so more clients can be engaged in a conversation about their long-term goals.

Tedesco says Commonwealth is "really close" to rolling out its new, proprietary portfolio accounting engine. At that time, the company will sunset the existing Advent engine. Tedesco expects the new engine to deliver multiple advantages to Commonwealth advisors and their clients. For example, if an advisor wants a time-weighted return report today, the new system can deliver it, whereas the old one would generate it only monthly. In addition, the new system will be able to offer daily time weighted returns for any set of accounts that the advisor wants. So an advisor will be able to generate returns by account, by household, by book of business or by any other grouping. Tedesco says the reports generated by the new system will be more eye-pleasing and will include better graphics. Another advantage of the new engine is that it will better integrate with other Commonwealth systems and much of its functionality will extend to Investor 360, the firm's client-facing portal.

Raymond James
Raymond James is also hard at work delivering new and improved technology solutions to its representatives. One major new initiative is the enterprise-wide deal with PNC/Albridge to provide consolidated reporting and other value-added services. According to Mike Shelly, VP of Technology Practice Management at Raymond James, all Raymond James advisors will have access to a "lite" reporting package, similar to those offered by other B-Ds, at no charge. For a modest additional monthly fee, advisors can choose to add Web services to push data to other systems, and/or a client data aggregation tool. Those who want to purchase the top-of-the-line Albridge performance reporting package will be able to do so through Raymond James at a substantial discount to the prices Albridge typically charges individual RIA firms.

Shelly highlighted CRM as another area of improvement. "We are a Microsoft CRM shop," he says. "Many of our advisors still use ACT!, but we believe we can offer them a more compelling product. We are creating a product based on Microsoft CRM that we think can win ACT! users to our system."

By the end of June, Raymond James plans to release its new Investor Access client-facing portal. The updated portal will supply clients with more data points, including asset class data on their holdings from Morningstar and Raymond James Research Reports. In addition, reporting will be improved so that clients can create household groupings and thereby generate reports at the household level.

Security settings are being enhanced. To better protect data, Raymond James will offer two factor authentications. Security settings will offer more granular control, so someone can be granted permission to see some data, but not all. This new functionality might be used to give third parties such as accountants or attorneys access to pertinent data.

The firm currently offers an option or clients to receive all communications electronically, but they are finding that some clients still want at least a year-end report in paper form. In order to accommodate this demand, the firm will soon offer such an option.

In Summary
While these samples of new broker-dealer technology are not intended to be comprehensive, they do offer examples of how a few leading B-Ds are rolling out technology improvements that either bolster their own efficiency or help reps bolster theirs. Pershing's new workstation and Securities America's new document management platform are examples of technologies that should deliver operational efficiencies for both the parent B-Ds and the reps. Commonwealth's new financial conversation software is a good example of a technology that will allow its reps to add value and perform basic planning in less time, thereby increasing their efficiency. The new Raymond James reporting engine will initially boost the productivity of reps, but over time it should offer additional internal operational benefits for Raymond James as well.