Is there too much choice in advisor tech?

Is there too much choice in advisor tech?

Such a wide variety of financial planning options to choose from might be considered a good thing; however, experts are asking the question of whether too much choice in advisor tech may actually be a bad thing.

Image Credit

When variety is no longer the spice of life

Financial planning software, asset allocation, risk management and analytics platforms, rebalancing, CRM and cybersecurity tools have exploded in growth in recent years, offering advisors and clients a wealth of options from which to choose.

At first glance, having so much choice may seem to be a positive development; however, experts now argue that when faced with too many options, people have trouble making the right choice. They remain indecisive, unhappy and immobilised; in some cases, they may not make a decision at all.

Experts claim that having too many IFA software options may lead to advisors and clients suffering from fatigue.

Image Credit

Dealing with overwhelming choice

It is easy to see why advisor technology has experienced such a rapid surge in growth. As client demands have increased and new tech providers have emerged and expanded their investment offerings, the market has adapted accordingly; however, with the fatigue from superfluous advisor tech, you end up with a scenario where someone makes a decision for you, or you revert back to fewer options.

Experts claim that consolidation of products will be inevitable at some point down the line as firms limit their choice of IFA software or the market picks winners in each category. It is likely that firms will limit their options to those that meet the needs of their business, and their clients, the most, which will restrict choice naturally.

According to CNBC, more choice does not improve an investor’s experience; instead, fewer, better choices are what we need. By putting the clients’ best interests first, firms would be faced with fewer, better IFA software choices, helping to weed out the poor investment options that simply serve to cloud the decision-making process. In some instances, reducing the anxiety for investors by restricting choice may increase savings rates and boost confidence related to making decisions.

Other experts argue that having a lot of choice with regard to advisor tech is a positive thing, as it can lead to innovation in the sector and may prevent independent advisors being pushed into a box.

Categories: Technology

About Author