The findings in this blog post come from RIA in a Box’s annual survey, which was conducted in the first quarter of 2023.
In our last blog post, we talked about the top RIA portfolio management and reporting systems that RIA firms prefer. This time, we’ll be delving into the findings from our annual survey results in response to financial planning software used by RIA firms and exploring the trends over the years.
RIA adoption rate of financial planning software by assets under management size
From cash flow analysis to long-term planning to tax strategy plans, RIA firms have plenty of reasons to invest in financial planning software to simplify essential tasks. According to our survey, the adoption rate of financial planning software can be directly correlated to a firm’s assets under management (AUM).
Our survey also found that while the percentage of RIA firms that adopted financial planning software were consistent in previous years, this year that number has dropped to 41%. The specific factors influencing the adoption rate of financial planning software can vary from year to year and across different RIA firms. However, to name a few, speculative reasons:
- Saturation: In previous years, a large number of RIA firms might have already adopted financial planning software, reaching a saturation point in the market. As a result, in the following year, there may be fewer firms left to adopt the software, leading to a drop in the adoption rate.
- Economic factors: During challenging economic times, firms may be more cautious about investing in new software or may prioritize cost-cutting measures, leading to a decline in software adoption.
- Cost considerations: If the costs associated with implementing and maintaining the software increase, some RIA firms might choose to delay adoption or opt for more affordable alternatives. This could result in a drop in the adoption rate.
Top financial planning software adopted by RIA firms
eMoney and MoneyGuidePro continue to be the top financial planning software that RIA firms use, as measured by market share. It’s important to note that MoneyGuidePro (acquired by Envestnet) and eMoney (acquired by Fidelity) are now part of larger investment adviser industry conglomerates.
We should also note that RightCapital, since its founding in 2014, has continued to see success in the financial planning software category in a relatively short amount of now, and now ranks as the third financial planning software that RIA firms use with 18% market share.
Investing in financial planning software can be crucial for RIA firms. However, while they’re meant to simplify essential tasks, firms might find themselves spending more time trying to undo damage if the wrong software is selected.
RIA firms of all sizes encounter the challenge of finding solutions that fit their budgets and address their specific business needs. As RIA consultants, we understand the daunting nature of this task, especially as firms grow. Therefore, we’ll continue to look into how RIA firms like yours are addressing these very same challenges.
Tune in next week for a look at how RIA firms are using risk tolerance software and how they have gained popularity among RIA firms.