Joel Bruckenstein of T3 and I just released the 2021 T3/Inside Information Advisor Software Survey, which includes user ratings and market share statistics (and year-on-year changes to both) for more than 400 different software products and services in 32 different categories. You find all the CRM tools in the marketplace down to those with less than 1% total market share, and the same for tax planning software, college planning tools, financial planning software, portfolio management tools, enterprise content/document management software, bill paying and cybersecurity solutions and a lot more.
Our annual goal is to provide the advisor community with a truly comprehensive guide to the profession’s diverse and complicated software support ecosystem.
We owe a debt of gratitude to, among others, Advisor Perspectives for sending out invitations to participate in the survey. In all, we collected 5,255 responses, making this, by several orders of magnitude, the most statistically relevant report in the profession.
As you might imagine, the process of taming more than 5,000 individual responses covering 400 software products is basically an exercise in putting your head down and letting the data emerge in charts and graphs – and then we look at the charts and graphs that we’ve produced and are inevitably surprised by what we see. For instance, we thought that Redtail’s 62% market share in our 2019 survey might have been a fluke, but this year 61.86% of the respondents who are using a CRM program in their business life told us that they use Redtail. And they like it; the program achieved an average user rating, on a scale of 1-10, of 8.06. Anything over 7.0 is excellent in our survey, because there are inevitably a few grumpy advisors who can’t seem to bring themselves to give anybody or anything a rating above a ‘5.’ Only a very few programs achieve ratings above 8.0 – which makes it even more remarkable that Concenter Services’ XLR8 program, one of Redtail’s smaller competitors (2.49% market share) achieved a user rating of 8.85 – very nearly the highest in our survey.
This, in turn, illustrated another recurrent theme of our annual exercise: Many times the highest-rated programs are not the market share leaders. In my commentary below and between the charts, I encourage advisors who are looking at upgrading or adding a software tool to scan not just the most popular programs at the top of our list, but also the average user ratings down the list. Redtail doesn’t have many dissatisfied users looking to switch, but the other 38% of advisors, and those (very few) who are not currently using a CRM program, might consider the XLR8 Salesforce overlay based on its overwhelming popularity with users.
Speaking of Salesforce, its Financial Services Cloud program was by far the leader in “programs that respondents are considering” – another data point we collected from respondents. The idea is to find out who is generating the most interest among dissatisfied users in each category, which might be a sign of which programs will be adding market share. (Redtail finished second on this “considering” chart, which means it may, if possible, become even more dominant next year.)
Salesforce Financial Services Cloud finished fifth in market share, so something interesting was clearly going on here. Our survey collected demographic information on each respondent, including years in the business, size of their firm and business model (fee-only, dually registered or wirehouse broker), which allowed us to cross-correlate these characteristics with existing users. What we found was that as financial advisory firms get larger, they are more likely to be attracted to the industrial-strength feature of Salesforce’s Financial Services Cloud. Just 2.32% of the very smallest firms were using Salesforce’s advisor-adapted CRM, and that was generally true until you reached firms with $4-5 million in annual revenues, when suddenly Financial Services Cloud’s market share jumped to 9.25%, and it was 14.39% for the very largest firms who reported over $8 million in revenue.
Redtail’s market share, in contrast, was dominant among the smaller firms, and still very competitive among firms with $3-4 million in annual revenues (49.79% market share). But then, for the three largest firm categories, its market share (though still strong) dwindled a bit, to 42.20% for firms with $4-5 million in annual revenues, to 40.29% for firms with $5-8 million in revenues, down to 34.06% for the largest advisory firm respondents.
Virtually every respondent is using at least one of the 13 CRM software programs that we asked about, down to Salentica (0.76% market share) and ProTracker (0.53%), and our “other” responses (which allows survey respondents to tell us about programs we did not include in the survey) suggest that the market share total is very nearly 100% when you add in such programs as Hubspot, Less Annoying CRM, Zoho, Bill Good Marketing and Sugar CRM.
This was not true with financial planning software – which produced another surprise. When we calculated the total category market penetration of the 20 financial planning programs we asked about, it came to just 78.74%. This was a comprehensive list that goes all the way from Envestnet MoneyGuidePro (36.82% market share) and eMoney Pro (29.71%) down to niche programs like Cheshire Wealth Manager (0.10%), PlantechHub (0.06%) and Advice Systems, Inc. (0.04%).
A nontrivial number of people calling themselves financial planners or financial advisors are mostly focusing on client portfolios, while meanwhile doing the kind of perfunctory retirement sufficiency analysis that you can perform on a spreadsheet. This is alarming; many people who think they’re receiving professional planning advice may not be.
Nevertheless, the advisors who are using the most popular programs like them; MoneyGuidePro, eMoney and RightCapital (at 9.71% a somewhat distant third place in market share) all reported very high user ratings: 7.91, 7.90 and 7.78 respectively. Following our own advice, we looked a bit further down the list for a higher user rating and found Asset-Map (number 6 in market share at 4.61%) with a high 7.96 rating.
Our “considering” chart shows that the market share leaders aren’t going anywhere: eMoney and MoneyGuidePro were number 1 and 2 on the list, and RightCapital was number three. The contenders included Orion Financial Planning (formerly Advizr), which finished fourth in both market share (6.32%) and in programs under consideration, and Asset-Map, which finished sixth in the “considering” chart.
In our breakdown of which programs are most popular with which demographics, we found that the market share leaders were consistently popular among advisors of all experience levels and firm sizes, though RightCapital was far more popular with smaller firms and younger advisors than larger firms and more experienced advisors.
Of course, we looked at the specialized categories of software that complement the financial planning programs, and there were surprises there as well. Only 23.88% of our respondents are using any kind of specialized tax planning software, at a time when detailed tax forecasting is a very important component of a planner’s advice. The market share and user ratings leader was a new program called Holistiplan, used by just 8.3% of the survey respondents, but with a sparkling 8.69 user rating. Holistiplan automates some of the most time-consuming aspects of tax planning; it scans and reads a client’s tax forms, and based on various algorithms, makes observations about opportunities and potential advice. The scanned data then feeds a tax projection engine, allowing advisors to explore the sweet spot for partial Roth conversions, bunching deductions into a single year or deferring income.
Social Security and college planning software were more popular (used by 45.23% and 44.21% of respondents, respectively), but in both cases, the market share leader was the MoneyGuidePro module. That tells us that few advisors are using the more detailed features of specialized programs like SSAnalyzer (user rating: 7.87) and Covisum Social Security Timing (7.91) in the Social Security space, or College Aid Pro (8.71) or Collegiate Funding Solutions (7.11) in the college planning space.
By far the most competitive software category in our survey was the portfolio management/reporting sector. We identified 27 programs in this software niche, but none of them achieved more than a 20% share of the market. The leaders had excellent user ratings: Albridge (19.96% market share, 7.49 user rating); Morningstar Office (16.25%, 7.50); Orion Advisor Services (13.89%, 7.71); Envestnet’s Tamarac program (11.68%, 7.42) and Advent/Black Diamond (6.07%, 7.82). But once again, if you scan down the list, you come across a remarkably high 8.98 user rating, earned by niche player Panoramix (currently 0.84% market share).
Our deep dive into this important category showed that market share leader Albridge was very strong in the brokerage/wirehouse sector (47.27% market share) and among dually registered advisor reps (38.85%), but almost nonexistent among fee-only firms (4.38%). The opposite was true of Orion, which registered 4% and 11% market share among wirehouse and broker-dealer reps, respectively, but owned a 23.29% market share among fee-only advisors. Looking across firm sizes, Orion and Morningstar Office had consistent market share from smallest to largest, while Albridge was strongest among smaller firms and weakest among larger ones. Tamarac showed exactly the opposite pattern; just 10-15% of the smaller firms reported using it, but 23-25% of the largest firms are Tamarac users. Depending on the size of your firm, this might indicate which of these options you would want to give most attention to.
We were not terribly surprised to find that Morningstar Advisor Workstation dominated the investment data/analytics category (market share 26.87%; rating: 7.74), well ahead of second-place YCharts (7.00%, 8.2), and, of course, YCharts actually uses Morningstar data and overlays it with a variety of graphical tools and analytics. It was not surprising to see that Riskalyze was the market share leader among risk tolerance instruments (used by 25.84% of our survey respondents; 8.05 rating), but its lead over formerly dominant FinaMetrica (4.22%, 8.01) is a bit startling.
Enterprise content/document management is one of the major categories of the survey, but I am constantly surprised at its low aggregate market penetration. This year, 40.40% of respondents say they use these electronic filing systems, up from 32.97% last year, but well short of the 100% that one might have expected. Remember when document management was the hot thing in the financial services world?
This is another super-competitive category; nobody achieved higher than a 10% market share. The three co-leaders were Redtail Classic Imaging (9.80% market share, 7.87 average user rating), Citrix Sharefile (9.76%, 8.15) and OneDrive (9.31%, 8.18). It was surprising that Laserfiche, which is far and away the most robust enterprise solution, finished sixth in the market share rankings, used by just 3.03% of respondents. (Rating: 7.42.)
The most downright depressing revelation in our survey was that only 18.71% of our respondents are using one of the nine professional cybersecurity resources that we identified. Fully 13.55% of those were using market share leader Smarsh Entreda Unify (rating: 8.16); only KnowBe4 (3.46%, 8.24) and AdvisorArmor (1.39%, 7.04) were used by more than 1% of the advisor marketplace. They were followed by longtime industry provider True North Networks (0.82%, 7.95) and newcomer cleverDome (0.48%, 8.88), which also finished second and fourth in the ‘considering’ rankings. [Note: cleverDome does not capitalize the ‘c’ in its name.]
Why is this depressing? Because cybersecurity has become a pressing regulatory issue, and the threat of hackers and cyber thieves has never been greater. Moreover, this is an area where the potential liability and reputational damage greatly exceeds the cost of prevention. More than 80% of advisory firms seem to be taking a significant risk to their operations – and their clients’ data.
The survey asked about 14 of the largest independent custodial platforms (did you know there were that many?), and the standouts in terms of average rating were TradePMR’s Fusion platform (8.65), TD Ameritrade Institutional’s soon-to-be disbanded VEO platform (8.19) and Shareholders Service Group (8.18), which builds on Pershing’s NetX360 platform.
Among the 15 large independent broker-dealers in our survey, the highest ratings went to Commonwealth Financial’s Advisor360 platform (8.81), LPL Financial’s ClientWorks (8.08) and Cambridge’s Advisor Workstation (7.99). But in that category, some of the most interesting numbers were on the low end, including Ameriprise’s PracticeTech (a dismal 4.88), AXA Advisors’ Branchnet (4.67) and Northwestern Mutual’s NM Connect platform (3.13, one of the lowest user ratings in the entire survey).
There are, of course, many more categories in the survey, some of which would qualify as niche programs (automated cash management systems; insurance analysis and buying services), and some are mainstream beyond the planning world (scheduling apps and password management tools). Every year we include a miscellaneous chart for programs that don’t fit neatly into a category, and for every category we ask advisors to tell us the names of programs they’re using that we did not include in the survey instrument itself. Among the responses: Circle of Wealth, Bucket Bliss, Income Architect, Tax Caddy, Refinitiv Eikon, SMArtX, GuruFocus, AlphaDroid, Stratifi, eValuator, FeeX, AdvisoryWorld, Levitate and Pulse 360. The eternal surprise of our survey, which you’ll notice if/when you look it over, is that there are a lot more solutions than most of us can keep track of.
Bob Veres' Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog at: www.bobveres.com.
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Joel Bruckenstein of T3 and I just released the 2021 T3/Inside Information Advisor Software Survey, which includes user ratings and market share statistics (and year-on-year changes to both) for more than 400 different software products and services in 32 different categories. You find all the CRM tools in the marketplace down to those with less than 1% total market share, and the same for tax planning software, college planning tools, financial planning software, portfolio management tools, enterprise content/document management software, bill paying and cybersecurity solutions and a lot more.