Back in 2002, when Forrester Research Inc. examined how financial advisors use technology, Forrester identified nine categories into which advisors could fit, depending on various factors, from the way they generate fees to their attitudes toward technology.

The top categories included the “grudging adapters” — high revenue-generating technology pessimists whose client base featured a mix of transactional and fee-based business. Although they disliked technology, they were willing to “give it the old college try.”

Then there were the “striving straddlers.” These low revenue-generating technology
optimists, whose business is part transactional and part fee-based, saw technology as key to growing their businesses and moving up the food chain.

These contrasted with the “planning rainmakers,” the technology optimists. At the pinnacle of their careers, they had strong relations with clients and had managed to annuitize their business, so they were earning “heaps” of revenue. They were bullish on how technology could keep them at the top of the pile.

Not much has changed in three years. Ask anyone in charge of building technology platforms for financial advisors and they’ll tell you it’s a thankless job that requires diplomacy and an ability to be all things to all people. Their challenge is to build an advanced platform that caters to the range of skills, needs and desires of a disparate group of advisors.

At least two investment dealers, however, think they’re on the right track. Blackmont Capital Inc. , formerly First Associates Investments Inc., and GMP Private Client Ltd. are in the process of rolling out what they hope will be winning platforms that will help them recruit top-end advisors, retain the ones they have and serve clients better.

Chris Hawman, technology and chief information officer at Blackmont in Toronto, says the biggest problem he faces at the moment is the breadth of the offering and ensuring Blackmont is competitive. The firm has grown to 185 advisors across 13 offices through acquisition. With each acquisition, Blackmont inherited more applications and systems — some it wanted and some it didn’t. Hawman’s task since joining the firm in the spring of 2004 has been to design a platform that weeds out some technology and providers, and opens the door to new ones.

Hawman — who joined Blackmont from HSBC Securities (Canada) Inc. , at which he headed application development for the retail brokerage in North America and was involved in the Merrill Lynch HSBC discount brokerage — says his job is “focusing on the advisor experience and the tools advisors need on their desktops to service their clientele.”

To date, the firm’s front- and back-office technology has scored in the middle of the pack in Investment Executive’s annual Brokerage Report Card. But if the changes Hawman is deploying bear fruit, that could change. He has focused on the trading and reporting systems, as well as tools that will allow advisors to manage accounts at the household level.

“We’re also making it easy for advisors to service clients,” Hawman says. “That’s something we’re focusing on, not only to retain the advisors we have but to attract the best.”

The firm, a Microsoft shop, is upgrading Windows NT to make Windows Server 2003 the guts of its infrastructure for developing, integrating and securing applications. One of the first things the upgrade will do is eliminate the annoying need for advisors to have multiple passwords to gain access to different software applications.

Windows Server 2003 will also form the basis for a new intranet. It will allow advisors to customize their sign-on pages and call up relevant information from within their firm.
They will be able to draw on equity research from different content modules, for example. So an advisor whose style is active trading can draw on different information than an advisor who favours a value-investing style. “One of the biggest challenges to providing technology here is maintaining that flexibility,” Hawman says.

As part of that, the market data feed and broker desktop system has been changed. The firm moved from StarQuote, now owned by Thomson Financial, to Reuters Plus and its broker desktop solution. The latter system streamlines the workflow for advisors and allows them to customize their market information, including in real time.

On the trading front, Blackmont is converting from IBM Corp.’s back office to ADP Dataphile of Toronto, a move that is expected to be completed in 2006. “It allows us to get much more straight-through processing and better executions,” Hawman says.

@page_break@It also allows real-time reporting of client positions, so, eventually, clients and advisors will be able to see intraday position changes. The system will also link with Envoy, Blackmont’s online portal for clients. That will allow clients to get information online about their portfolios, including statements. “It’s convenient for them and helpful for advisors and their support staff,” he says,

Blackmont is also beefing up its separately managed account platform and now has access to 16 money managers, including KBSH Capital Management Inc., Sionna Investment Managers Inc. and Bissett Investment Management, a division of Franklin Templeton Investments Corp.

So far, so good, Hawman says: the firm has had “success recruiting advisors from bank-owned firms who are bringing a lot of fee-based assets with them.”

Building a technology platform that attracts advisors is also high on the list at Toronto-based GMP. The firm, a subsidiary of GMP Capital Corp. , was launched in mid-May and has aggressively set out to hire 15 to 20 advisors in the expectation of gathering $3 billion in assets by the end of the year.

GMP is almost halfway there, after hiring about 12 advisors controlling $1.3 billion in assets. Steve Tutty, managing director of marketing at the firm, says the long-term goal is to build a national firm in five years, with six to eight locations and 100 advisors. The focus is “high-achieving advisors” and the high net-worth clients that come with them.

Tutty expects that growth to come from “mostly the bigger [bank-owned] firms and larger independent firms. I think there’s some frustration [among advisors at the bank-owned firms],” he says.

Tutty, who joined GMP from RBC Dominion Securities Inc. , says GMP spent a year working out its business plan and building the technology platform. It called on Steve Kruspe, former CIO for Charles Schwab Canada Corp. , to provide advice; Kruspe is now chief technology officer of GMP’s parent firm. Because GMP was a launch, it was not handcuffed by legacy systems and started with a clean slate.

The firm also selected ADP Dataphile as the core investment platform, Tutty says: “It’s an all-encompassing system that allows you to bolt on [additional technology].”

It also allows for online account opening and know-your-client forms. As well, GMP was attracted by the real-time nature of the system’s processing. “As soon as a trade happens, an advisor is able to see it,” explains Tutty

The system integrates well with applications from other vendors. For example, GMP uses MVEST from CGI Group Inc. , a modelling and order-management system. “It allows you to manage books on a discretionary basis using models,” Tutty says.
Advisors can exercise bulk trades across their client base but keep weightings within each portfolio constant. Advisors who want to increase or decrease a position across their accounts simply have to enter the trade.

Tutty says the system will support advisors with fee or transaction businesses, as well as those who have their portfolio management designation and engage in discretionary money management.

For GMP’s separate accounts platform, it is working with IA Sciences of Toronto and has a series of money managers advisors can tap into, including YMG Capital Management Inc., Seamark Asset Management Ltd. and Guardian Capital Ltd.

GMP is using Microsoft Business Solutions CRM as its contact management and client relationship software. “It integrates completely with Outlook, the firm’s e-mail system,” Tutty says. “Advisors can track correspondence and target clients for marketing efforts.”

For example, if an advisor has tickets to an art gallery opening, he or she could search the contact book to find which clients have expressed an interest in art — assuming the advisor has logged that information into the system.

Although independent firms are up against bank-owned firms that have large technology budgets, the independents can still compete. The technology “doesn’t cost as much as you think,” says Tutty. And it’s a great equalizer. It allows smaller firms to play on the same field as large firms, which have to build their platforms around option-limiting legacy systems. Building a system for advisors from scratch is a blessing, Tutty says: “It’s fun to have that blank sheet of paper.” IE