This Year’s Top-Ranked Software Products

For instance? More than 50% of the sample reported total firm revenues of $1 million or less, suggesting that lifestyle businesses are more prevalent in the profession than most people realize. From there, the spectrum of firm size was evenly distributed: 11.50% in the $1-1.5 million range, 7.72% with revenues between $1.5 million and $2 million, 7.32% at the $2-3 million level, 5.21% with $3-4 million in annual revenues, 2.96% $4-5 million, 3.80% at $5-8 million and 10.48% with revenues over $8 million – which roughly corresponds to firms with over $1 billion in AUM. That last number may be high, since the respondents who work in brokerage teams all gave the >$8 million response. If we pull those out, 4.43% of the sample represents billion-dollar AUM wealth management firms, which more closely represents the marketplace.

Every year, the percentage of advisors who follow a fee-only revenue model goes up, to the point where this year it made up just over half of our survey participants. Across our sample, 43.87% were dually-registered, a number that is slowly declining each year (47.31% last year), which suggests a slow, steady migration away from dual-registration and commission business. Just 6.05% of our respondents came from brokerage teams, but that amounts to 272 responses, which represents a sizable percentage of the larger teams that are allowed to seek outside software not on their brokerage platform.

For the first time, we asked our respondents which professional associations they belong to, and we were not surprised that the Financial Planning Association (32.41%) and the National Association of Personal Financial Advisors (15.86%) were the most popular, followed by the XY Planning Network (5.67%) and the AICPA's PFP Section (4.12%).

What was surprising was the overlap. Among FPA members, 25.74% are also NAPFA members, 52.59% of NAPFA members are also FPA members, 63.78% of AICPA PFP Section members were also members of one or the other of the FPA or NAPFA, and just under 10% (9.55%) of the survey respondents belong to three or more of the nine organizations we listed.

Looking deeper, fewer than half of the respondents (45.21%) belong to any of them – which means that the professional organizations depend on a relatively small percentage of advisors who hold multiple memberships.

CRM solutions

Getting to the results themselves, we found that 96.89% of the survey respondents are using one of the 15 CRM solutions we listed, and most of them (58.84%) are using Redtail. It was by far the market leader, and with an 8.17 average user rating (anything over 7.0 is considered excellent), there is no reason to suspect that this newest component of the Orion suite will be leaking users.

Far behind Redtail was Wealthbox (9.05% of respondents), Envestnet/Tamarac (4.98%), Salesforce Financial Services Cloud (4.63%) and Advyzon, which is really an all-in-one platform listed in a variety of categories (4.25%). Of those market-leading solutions, only Advyzon's 8.18 user rating challenged Redtail's, though if you look down the list, you find that a Salesforce overlay, Concenter Services' XLR8 CRM, earned an amazing 9.16 user rating. This represents a theme we find over and over again in the results: There are always one or two solutions, with relatively low market share, whose user ratings are as high or higher than the market share leaders. A wise software shopper should demo those alternatives before making a final buying decision.

The survey broke down CRM market share by various demographic characteristics: years in the business, whether the respondents are fee-only, dually-registered or affiliated with a wirehouse, and size of firm. The first item that jumps out from this is that Wealthbox has most of its market share among firms with less than $500,000 in revenues, while Tamarac and Salesforce become more popular as firms get larger.

Financial planning

Surprisingly, we found that only 82.18% of advisors are using one of the 21 financial planning programs listed in our survey. This is up from 78.74% last year, but still suggests that not everybody who calls him/herself a financial planner does financial planning analysis. This category is dominated by a "big three”: MoneyGuidePro Elite (32.79% market share, 8.08 user rating); eMoney Pro (28.59%, 8.13) and RightCapital (11.59%, 8.14). Interestingly, of the three, only RightCapital reported a gain in market share – but each posted excellent user ratings.

Here again we found some interesting overlaps. 8.91% of MoneyGuidePro Elite users are also using eMoney Pro, and 3.17% are using RightCapital. 10.35% of eMoneyPro users are also using MoneyGuidePro Elite, and 2.65% are also using RightCapital. 9.02% of RightCapital users are using MoneyGuidePro Elite and 6.53% are using eMoney Pro. A handful of advisors are using all three.

Delving into the demographic breakdown of users, RightCapital had a dominant market share (44.52%) with younger advisors with 1-5 years of experience, and tended to be more popular with smaller firms than with larger ones. The opposite was true with eMoneyPro, while MoneyGuidePro Elite tended to hold a consistent market share across all firm sizes and advisor demographics.

Tax planning

One of the most interesting success stories in the survey is Holistiplan in the tax planning software category. Before Holistiplan entered the survey (and market) in 2020, fewer than 10% of advisor respondents reported using any tax planning solution. It's not hard to understand why; most of the legacy programs require a brutal data-entry process, pulling different numbers by hand out of a client's previous tax returns and then navigating clumsy interfaces that were more designed for tax preparation than forecasting and advising.

Holistiplan uses OCR technology to automatically populate the necessary fields for tax planning and forecasting for clients, and offers an intuitive interface for processing that information. In 2021, its first year in the survey, Holistiplan had twice the market share of the next competitor – and a remarkable 8.69 user rating. In this survey, its 17.95% market share was more than twice the entire category market share of the 2020 survey and multiples ahead of its closest competitor (Intuit ProConnect/ProSeries software, with 3.56% of the advisor market). Holistiplan's user rating also rose to 8.93.

Portfolio management and reporting

The portfolio management category is always interesting because the market share is divided so evenly between Albridge (used by 17.06% of advisory firms), Orion Advisor Services (14.37%), Morningstar's Portfolio Builder (10.61%) and Envestnet's Tamarac solution (9.54%). Advent/Black Diamond (5.94%), Advyzon (3.80%) and SEI (3.29%) are also competing to join the upper tier. The user ratings of all of these solutions fell in the excellent range, between 7.5 and 8.0, except Adyzon, which posted an exceptional 8.49 rating from its users.

The demographic breakdown in this important category was eye-opening. Albridge is the overall market share leader, but virtually all of its users are dually-registered or wirehouse reps; it has just a 3.07% market share in the fee-only world. Tamarac also enjoyed a higher market share among dually-registered advisors (20.08%) than fee-only planners (9.28%). Orion enjoyed by far the highest market share among fee-only advisors, and was generally more popular with larger firms than smaller ones.

All-in-one

One category that we always watch with interest is the all-in-one software solutions. A number of firms are building comprehensive platforms and acquiring best-of-breed solutions (see Orion's purchase of Redtail CRM, AdvisorEngine's purchase of Junxure, Morningstar and Envestnet buying FinaMetrica risk tolerance and MoneyGuidePro planning, respectively). Advisors can now switch to a unified platform without compromising from the traditional best-of-breed software stack. In 2021, we reported that 17.93% of the total advisor market had adopted one of the 10 solutions we listed; this year their total aggregate market share reached 20.78%.

There is no clear winner in this race. The market share leaders are Orion (6.12%), Morningstar Office (6.10%), Envestnet Tamarac (3.92%), and the Advyzon program (3.56%). Advyzon stands out from the others as a totally home-grown solution. The people who are using these platforms are either contented with them (Morningstar and Tamarac each earned a 7.45 user rating) or quite pleased (Orion's rating was 7.83 and Advyzon's was 8.33).

Surprising results

What else surprised us? Only 38.69% of advisors are using one of the trading/rebalancing tools we listed (market share leaders: iRebal at 9.03% of the respondents, Tamarac at 8.63% and Orion at 7.92%), and an astonishingly low percentage of advisors are using a retirement distribution planning tool (10.72%) or estate planning tool (10.95%).

But the real head-smacker was the cybersecurity category, where just 22.45% of advisors reported using one of the 10 services we listed. This is up slightly from 18.71% in the previous survey, and the category leader, Smarsh Entreda Unify (12.48% of the respondents) posted an excellent 8.16 user rating.

There's only one explanation for the low cybersecurity adoption. Advisory firm leaders haven't internalized the fact that their client data represents a rich target to the most sophisticated cyberthieves who are probing their defenses. We suspect that if we had listed, as a survey option, 'Local IT Guy and Some Antivirus Software,' that would have been the runaway market share leader in this important, overlooked category.

Of course, the overall survey contains a lot more data, including the market share rankings and user ratings of investment data providers, risk tolerance instruments, document management and document processing tools, a new category of client communication power tools, and the ratings of all the custodial and broker-dealer platforms. Plus, it shows the votes for most valuable software category in an advisory firm tech stack.

As an Advisor Perspectives reader, you can download the full survey free of charge or obligation (which means not having to give your contact information). Go here.

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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