The findings in this blog post come from our annual survey of over 1,800 registered investment advisor (“RIA”) firms, conducted in the first quarter of 2021. This proprietary RIA in a Box study is paired with publicly accessible data provided by the Securities and Exchange Commission (“SEC”). The goal of our annual study is to understand different options that comprise each firm characteristic, and to determine whether specific characteristics impact the growth, size, or operational efficiency of an RIA firm. In this blog post, we will explore our survey results in response to financial planning software systems used by RIA firms.
RIA Adoption Rate of Financial Planning Software
For this year’s survey, we focused on the overall industry adoption rates, regardless of whether an RIA firm discloses on its Form ADV that it offers financial planning services. Our findings indicate that 43% of RIA firms use financial planning software. As the chart below reflects, the industry’s financial planning software adoption rate has remained relatively consistent over the past five years. We have observed a slight uptick in adoption rate from 42% of firms surveyed in 2016 to 43% of firms surveyed this year:
Financial Planning Software Adoption Rate Year Over Year
RIA Financial Planning Software Adoption Rate by Firm AUM Size
Similar to RIA customer relationship management (“CRM”) software adoption rates, we do observe an increase in financial planning software adoption rate as the size of an investment advisory firm increases as measured by regulatory assets under management (“AUM”). Compared to previous year surveys, financial planning software adoption rate by AUM segment appears to have not changed significantly. Less than 30% of firms with $5 million or less in AUM use financial planning software. On the other hand, 54% of firms with $100 million or more in AUM use financial planning software. Thus, as the size of an RIA firm increases, we do observe a significant increase in financial planning software adoption rates:
Top Financial Planning Software Systems Adopted by RIA Firms
Since we first discussed the five key components of RIA financial planning software tools in 2015, eMoney and MoneyGuidePro continue to be the financial planning software industry leaders, as measured by market share. However, the dominance of the two industry leaders does appear to be slowing a bit in recent years. Three years ago, MoneyGuidePro and eMoney had a combined financial planning software market share of 77%. However, our most recent survey results show they have a similar 69% combined market share today. It’s also important to note that MoneyGuidePro (acquired by Envestnet in March 2019) and eMoney (acquired by Fidelity in February 2015) are now part of larger investment adviser industry conglomerates.
We should also note that since its founding in 2014, Right Capital has continued to see success in the financial planning software category and now stands at third place with 11% market share. This is quite the rise over the past two years for Right Capital which sat at less than 5% market share in the 2017 survey.
This is the final blog post that will focus on the core technology solutions available to investment advisory firms. Our previous posts include discuss findings on RIA document storage, portfolio management systems, CRM providers, and risk tolerance software.