Broker-Dealers Cite Technology as Key to Future Business

What would broker-dealers do with an extra $100,000 to invest in their businesses? Spend it on technology.

Sixty-two percent of broker-dealers surveyed said they would invest additional money in technology automation and integration, according to a news release about a recent SEI quick poll. Twenty-seven percent stated that offering best-of-breed technology was a key selling point to advisers.

Attendees of SEI’s first annual summit for broker-dealers who participated in the survey noted that advice, not commissionable products, is driving the industry, with 67% saying they are now more open to fee-based programs. Respondents also indicated increased regulatory scrutiny has significantly affected operations, along with a shifting focus from providing products to assuming more fiduciary responsibilities.

For the future, broker-dealers predicted greater industry consolidation – fewer and larger players in the marketplace. They also predicted that as products become more commoditized, the industry will continue to move toward holistic planning and advice, and that increasing compliance complexity and market environments will drive greater need for stronger relationships with broker-dealers.

Other than investing in technology to prepare for the future, survey respondents suggested that to avoid redundant due diligence efforts, working with fewer product providers is one way to prepare for emerging industry opportunities. Respondents also said adviser firms can increase profitability by leveraging their broker-dealers to help offload time-consuming administrative burdens.

Twenty-five summit attendees from some of the largest national broker-dealer firms were asked to participate in the poll.