As custodians commit their substantial resources to technology for advisors, the prospects for better products, better integration and lower technology costs look bright. That's good news indeed!

Migration To Web Applications
Web applications for advisors have been around for a number of years, but it's only recently that professionals have been taking them on at a brisk clip. After a slow start, attributable in part to a "soft" rollout, the adoption rates for Fidelity's WealthCentral are picking up dramatically. In the nine months ended June 30, the number of firms using components of this platform is up approximately 65%. There are now more than 300 firms using the platform's trade order management/rebalancing tools and more than 250 firms using Advent's portfolio management tools through WealthCentral.

According to Linda Strachan of EISI, the leading developer of financial planning software in North America, 12% of EISI users switched to an online version of EISI software this year from a desktop or offline version when they renewed. This trend should accelerate further in the coming months with the recent rollout of EISI's NaviPlan Select, an online product that combines the best of the NaviPlan Standard and NaviPlan Extended desktop product lines while adding a host of new features and enhancements. It's not just existing clients migrating to the Web: EISI is experiencing 12% growth in new sales of online applications as well. Strachan sees a parallel trend on the institutional side: "Our large enterprise clients have also increasingly requested that EISI host their applications, a change from the internal hosting trend of the last decade," she says.

Bob Curtis, the president of PIEtech Inc., the developers of online financial planning software MoneyGuidePro, says that the maturation of Web-based software and its ease of use have made applications such as his increasingly attractive to advisors. While MoneyGuidePro has offered client collaboration tools for almost a decade now, Curtis believes Web collaboration has finally gone mainstream. "Today, collaborating on a financial plan over the Web with clients is really part of the business. The tools are better and there are more opportunities to offer interactions over the Web," he says. MoneyGuidePro includes online presentation tools that make it easy for advisors to work with clients remotely.

Strachan agrees. "Advisors are increasingly involving clients in the planning process and are looking for their financial planning software to support this need. EISI is responding with focused, interactive visual presentations of plans," she says. This includes a presentation module for both product lines launching in fall 2010, she says.

Curtis cautions that there are also direct-to-consumer tools on the market that target your clients, so it is important to stay ahead of the curve and ensure that clients come to you and your Web site to get their financial information.

Meanwhile, advisors are also adopting online document management in greater numbers. Clearly, firms hesitant to install in-house document management solutions in the past have found the online applications more to their liking. James True of Cabinet NG reports that fewer than 5% of the company's existing document management software clients, whether they are financial advisors or not, have converted to an online system. But among new users, the story is dramatically different: More than 90% of new financial advisor clients have chosen a hosted subscription "software as a service" model. (New clients from other industries are choosing the online model in 70% of the cases.)

Rebalancing Software Makes Inroads
A few years ago, iRebal and Tamarac, the two leading providers of sophisticated rebalancing software, each claimed only about 40 advisory firm clients. Tamarac now serves about 350 firms and iRebal serves about 70. Some 300 advisor firms, meanwhile, use Northfield's rebalancing application through Fidelity's WealthCentral platform.

Other products are gaining a following, too. Total Rebalance Expert (TRX) has emerged as a cost-effective solution for small to midsize RIA firms using Schwab's PortfolioCenter as their portfolio management software. eAllocator, developed by Joel Javer of Sharkey, Howes & Javer, is another affordable product. TradeWarrior, currently in beta from Nine Mile Software, is yet another.

We expect other applications to roll out soon. Morningstar is reportedly working on a rebalancing application to round out Morningstar Office, and Pershing is also reportedly beta testing a third-party rebalancing product that the company expects to roll out on its NetX360 platform before year's end.