Please take a moment to support the financial planning profession by taking my and Joel Bruckenstein’s software survey.
Michael Kitces just published the results of his new software survey. Many of the results confirmed what Joel Bruckenstein and I have been reporting for years. But there were some key differences.
Bruckenstein and I launched this year’s annual T3/Inside Information Software Survey for advisors and advisory firms, and of course we’re inviting everybody in the planning community, from all tribes (NAPFA, FPA, AICPA/PFP, Investments & Wealth Institute, XY Planning Network, etc.) to lend their views. The questionnaire lists more than 300 different programs and solutions in 40 different categories, where participants can offer a single click that tells us not just what they use but their 1-10 rating of their user experience.
You can access the survey, and tell us what you think of your own tech stack, here. We collect roughly 5,000 responses each year, but this year we’re hoping for more. Including yours.
For a number of years, we were the only survey that collected this data – that is, how many people were using which solutions in different categories and what they thought of what they were using. This group wisdom is the most basic and important information a potential software buyer would want to know.
This year, Michael Kitces, of The Kitces Report, asked similar questions, albeit with a slightly different take on the categories, and the completed writeup was just released. (You can find it here)
Naturally, I was curious to see what his survey turned up, and a few things surprised me.
If imitation is the highest form of flattery, then we’re definitely flattered; the Kitces survey used the same 1-10 rating that we’ve used for years. The report breaks out ratings and market share in 27 different categories, and the data reflects the responses of 783 advisory firms. In what might be a sidewise comment on our much larger survey (measured by participants), the introduction to the Kitces survey said that the smaller ”curated” sample size “limited the ability of technology vendors to selectively encourage their advisor customers to participate.” (In our experience, tech vendors have limited influence over what their users are willing to say in an anonymous survey. In any case, given that our results are anonymous, there is no reason to expect a vendor-encouraged respondent to favor or disfavor a product.)
On to the results… Like our own survey, the Kitces survey measured the overall aggregate percentage of respondents who use different software categories – grouping all the responses for all the solutions together. Of the Kitces survey respondents, 93% use financial planning software, and 94% use CRM solutions – which is broadly similar to our own results from last year (83.68% and 96.46% respectively). But there were some interesting differences down the list: 41.10% of our survey responses reported using tax planning software, while the Kitces survey number was 68%. Exactly half of the Kitces respondents are using retirement distribution planning software, versus 12.78% in our survey. This may be the result of the fact that the Kitces Report has a greater focus on tax-related planning than Inside Information.
If you look deeper into the numbers, however, you see that the surveys are in general agreement; in both the tax planning and retirement distribution categories, the Kitces survey included “financial planning software” as an option on the list, meaning anyone using eMoney or RightCapital for their tax planning would be lumped into a group of users who, together, added up to 11.3% of the tax planning respondents. The same thing happened in retirement distribution planning; ”financial planning software” added 24.5% to that category’s total market share number.
But that aside, the emphasis in both surveys was/is on the focused, standalone solutions that aren’t an add-on to some other software solution. In retirement distribution, the relatively new Income Lab analytical tool has seized the top of the market share rankings. Holistiplan leads the tax planning category in both surveys by an imposing margin, with faster growth than any other program in either survey. And Holistiplan’s user satisfaction rating of 9.3 is also among the highest in the tech landscape.
Most readers of these surveys tend to flip immediately to the software categories, to see the market share leaders and their user satisfaction ratings. We are once again flattered to see that, like our long-term policy in our own survey, the Kitces survey includes not just the current user satisfaction score, but the one from the previous survey as well, which offers a hint as to whether each software solution is improving or declining.
The financial planning market share leaders in the Kitces report are the same as in our survey: eMoney, MoneyGuidePro and RightCapital, but I was surprised to see that the race is much tighter in the Kitces report than in ours, virtually a three-solution dead heat. (Is RightCapital catching up? Soon we’ll have our own updated numbers.) The Kitces list of planning programs surprisingly didn’t include FP Alpha (which provides machine-learning advice in a variety of nontraditional advice categories), but it does feature something that we might add to our future surveys (sending the flattery back in the other direction): It asked how many advisors were using a ”self-built” solution. In the survey, 2% of Kitces respondents were opting for their own spreadsheets or apps, and 2.8% were supplementing their mainstream planning with something they constructed on their own.
Is this a trend? Or does that represent the last of the dead-enders who will only give up their spreadsheet solution when it’s pried out of their cold, dead hands?
The CRM category leader was Orion’s Redtail solution (26.9%; 7.7 average rating) followed by Wealthbox (23.2%; 8.1), Salesforce (17.3%; 7.8), Advyzon (4.9%; 8.2) and AdvisorEngine (4.2%; 6.5). You will look in vain for Concenter Service’s XLR8, Practifi and Salentica, until you realize that the Kitces report puts them in a separate ”CRM overlay” category, because they’re built on Salesforce or Microsoft Dynamics. XLR8 has the largest ”overlay” market share at 29%, and it would be interesting to have seen its user satisfaction rating in the Kitces survey, because it consistently gets the highest CRM rating in our own survey.
I was frankly surprised that Redtail’s market share was so low in the Kitces survey. It makes me wonder if Redtail’s dominance of this category might be slipping; our survey from last year showed nearly a 50% market share. It will be interesting to see the results when we collect more recent numbers.
In the estate planning category, FP Alpha and EncorEstate held the top market share spots, but with a paltry 2.4% and 2.3% market share, respectively, which suggests that not many advisors are offering detailed estate planning advice. (Our market share numbers were higher.) But their 8.4 and 8.6 user ratings, respectively, put them near the top of the user satisfaction list. Of course (one of the weaknesses of all surveys like this), the two do very different things; FP Alpha is an analytical tool, while EncorEstate facilitates the inexpensive production of simple estate planning documents and allows advisors to control the process. One can easily envision advisory firms using both solutions.
The Kitces survey lumped trading/rebalancing/tax loss harvesting with portfolio management in one category, and broke out performance reporting into a separate category, making it hard to compare the two surveys. Kitces reported an 82% market share for the portfolio management, trading and rebalancing category; our survey reported (a surprisingly low) 46.30% for trading/rebalancing/tax loss harvesting, and 64.97% for portfolio management. Some of our survey’s market share was absorbed by our all-in-one software category (which included AdvisorEngine, Advyzon, Orion, Envestnet Wealth Management Technology, Pershing Wove etc.), whose software solutions include those features. (The Kitces survey didn’t include an all-in-one category.)
Market share leaders for the Kitces portfolio management breakdown were Envestnet/Tamarac (12.0% market share; 7.9 user rating), iRebal (11.5%; 9.1), Orion Eclipse (10.0%; 7.6) and Black Diamond (5.9%; 8.0), and one wonders where Advyzon would have ranked had Kitces thought to include it. (Advyzon is another solution that typically enjoys high user satisfaction scores in our survey.) The performance reporting market leaders were Orion (19.9%; 7.7), Tamarac (11.3%; 8.2), Black Diamond (8.9%; 7.8) and Advyzon (5.9%; 8.8).
Looking over the rest, Nitrogen/Riskalyze was (no real surprise) the dominant provider in the risk assessment technology, well ahead of FinaMetrica (which is actually now considered a component of the Morningstar Risk Ecosystem, and listed that way in our survey); the marketing category was led by FMG (called by its old name – FMG Suite – in the Kitces survey) and Snappy Kraken (7.4% and 4.3% market share, respectively); and Hubly, the workflow engine solution, seems to be reenergizing the ”workflow support” category, albeit with a modest 3.8% market share at the moment.
Is there room for two software surveys? Absolutely; Today’s software buyers (who are facing an ecosystem with 500 or more solutions in a growing number of categories) will never get too much data. We’re hoping that a more inclusive survey will reveal additional insights. If you weren’t invited to participate in the Kitces survey (or if you did participate), then we welcome your participation in ours.
Here’s again is the link.
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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Please take a moment to support the financial planning profession by taking my and Joel Bruckenstein’s software survey.