Why RIAs are shunning mobile apps and why Black Diamond, Orion, Fidelity and others are still placing their chips on an iPad future

Despite the worldwide craze for mobile apps, RIAs are proving resistant to their lure.

“I think we’re in the middle of this major shift to mobile apps and I think advisors are a little late to the game in regards to taking advantage of this shift and realizing how to position their firm,” says Eric Clarke, president of Orion Advisor Services LLC. See: How Orion Advisor Services became a mobile device pioneer and how competitors plan to react.

Its not for lack of trying on the part of custodians and fund companies, both of which are rapidly introducing apps on a daily basis for advisors. In fact, just last week, online RIA Personal Capital and Franklin Templeton Investments launched iPad apps.

Fidelity, Pershing and TD Ameritrade all have apps for advisors, but the adoption rates have been as low as 10% in some cases —though technology leaders at those firms say the interest has been growing and adoption rates increase each month. See: Fidelity releases mobile trading for advisors – just don’t expect many mobile trades.

The interest in mobile apps among consumers is remarkable. Mobithinking.com predicts downloads could reach 50 billion this year and 76.9 billion in 2014.

Reed Colley: We start each new
enhancement with the mindset that we
build for mobile first and the
laptop/desktop second. This is a shift
and not a fad.

With this new reality in mind, Reed Colley, founder, senior vice president and general manager of “Black Diamond Performance Reporting” says that his company has made a big strategic shift in how it develops technology.

“As we continue to build out our mobile technology solutions, we start each new enhancement with the mindset that we build for mobile first and the laptop/desktop second. This is a shift and not a fad and we want to continue to be a great partner to our clients in developing impactful solutions that will help them be great.”

Approaching ubiquity

The two most important ways for RIAs to use mobile apps are to connect with client accounts when they’re traveling or to develop their own branded mobile apps as a way to get their firm noticed by prospects and clients, Clarke says.

Eric Clarke: I think advisors are
a little late to the game.

Clarke says RIAs should consider developing their own mobile apps for their firms as he believes that having them will become just as prevalent as RIAs’ having websites.

At a recent Financial Planning Association conference, Clarke asked a room of about 100 advisors how many had their own branded app, and just three people raised their hands — and two were his own customers! See: A reporter empties his notebook after attending FPA’s Business Solutions event.

Advisors who want to build their businesses need to begin to offer apps. Orion is one firm that offers an app where advisors can brand themselves and provide to clients at no cost. Clarke says that of his firm’s 285 advisor customers, some 30% use the branded apps for their clients. See: Trust Company of America is giving RIAs more weapons for free-wheeling.

Newfangled

“I know RIAs think these mobile apps are crazy, but they aren’t. I told them they need to have branded mobile apps,” Clarke says. “I think as more and more people get smartphones, advisors have got to figure out a way to get their own apps in the marketplace.”

There’s no question that RIAs who offer their own branded apps can add value to their firm and build recognition more quickly, says Bill Winterberg, principal of Dallas-based FPPad.com.

Bill Winterberg says mobile technology can
be successful but advisors need to
give clients a reason to revisit
the app over and over.

“It can be very successful,” he says. “Advisors have to put in a lot of content that’s really popular to give clients a reason to revisit that app over and over.”

Not a priority for RIAs

But having access to apps simply isn’t a priority for the majority of Schwab advisors, says Diane Russell, senior vice president at Charles Schwab & Co. Inc.

“We’ve spent a lot of time talking with advisors about their priorities and how we can best help them run their businesses,” Russell says. “We have not heard a huge demand for mobile capabilities. It’s just not been at the top of advisors’ lists for running their businesses.”

Right now, she says, there is much more demand from retail customers who have been using mobile apps.

She says her firm understands the industry is evolving quickly and realizes advisors could begin demanding these solutions in the near future.

Still, Russell says her firm is planning to roll out an iPhone app this year and is looking into iPad apps. Advisors won’t be able to make trades but will be able to access client information.

“We’re trying to think about this from a holistic approach of how we can help advisors manage their businesses rather than just create a single app.”

Diane Pearson: We don’t want someone
with $1,000 to invest to call
us. We don’t want mass attention.

Not so mobile

RIAs have been slow to adopt mobile technology because they are not particularly mobile, at least in their work lives, says Diane Pearson, advisor with Legend Financial Advisors Inc., a Pittsburgh-based RIA with $350 million in assets. In addition, they don’t make frequent trades throughout the day. Pearson says she has downloaded TD Ameritrade’s app to her iPad but she simply doesn’t use it much because she’s mostly in the office.

“I’m at my office and on my computer all day long,” Pearson says.

She says her firm has considered creating a mobile app for clients and prospects but feels it would be too costly and would be too general of a marketing tool.

“We haven’t seen a lot of value in it,” Pearson says. “We just don’t think it’s worth it right now, but that doesn’t mean we wouldn’t change our minds down the road. If we were marketing to the general public, then we may do it. But we don’t want someone with $1,000 to invest to call us. We don’t want mass attention.”

Big picture

Another concern with some of the mobile apps is, they don’t show a client’s entire portfolio — especially if the client’s assets are held with multiple custodians, says Dan Joss, an advisor with Fox Joss and Yankee, a Reston, Va., RIA in with $325 million. His firm uses Schwab and Fidelity.

Dan Joss is concerned that a
mobile emphasis may just encourage clients
to seek sudden on-the-fly changes. "We’re
trying to slow the clients down,"
he says.

He also feels it’s not important to have a company app, because his firm is trying to get clients to focus on a long-term approach and if they’re checking an app daily, he’s afraid they may want to start making sudden changes.

“We’re trying to slow the clients down and tell them that 'you don’t need to look at your accounts every day,’” he says. “'When there’s a big decision, we’ll help you with it.’”

Ten years and counting

One firm that has been in app game for the past decade Pershing LLC. In fact, Ram Nagappan, a managing director, says his firm originally created apps for the Palm and now have apps for the iPhone, Android, BlackBerry and iPad. See: Pershing keeps ahead in the mobile space with an Android app and mobile trading.

Even though adoption rates are still less than 10%, Nagappan says his firm will continue to deliver apps on the most popular devices. He says adoptions rates are increasingly rapidly each month.

“We’re on top of this game and we’re trying to understand all of the mobile technology,” Nagappan says. “We know that adoption in the financial industry may be slower than other industries but it will be adopted at some point. We’re getting ready for it and we want the app in place.”

Ed O’Brien: It’s an area we’re
going to continue to hit.

Colley is taking a similarly aggressive approach based on telltale signs of budding demand. See: Black Diamond releases BlueSky Mobile for the iPad.

“Mobile technology in the RIA market is still in a nascent stage. However, it is where everything is going, specifically tablet/iPad. The usage of our iPad app had steadily increased amongst our user base into the low 20%'s — users that use that app amongst our total users). The more striking statistic is that [for] our 12,000 users — advisors and account holders — the usage of iPad as a browser, versus laptop/desktop has increased [300%] in the last six months alone.”

More interest at Fidelity

One company that has experienced better adoption rates is Fidelity Institutional Wealth Services where about 40% of the 2,000 advisors are using mobile apps, says Ed O’Brien, head of technology. See: Fidelity slips in ahead of Pershing on Google phones with WealthCentral for Android.

O’Brien says that although he is pleased with the adoption rates, his company isn’t focused on them. Fidelity will continue to present new mobile apps even if RIAs are slow to use them, he says.

“We’re firmly committed to the mobile space and we’ll continue to invest in it,” O’Brien says. “We’re fully committed to making sure we have the best investments in WealthCentral and we’re adding new features.”

Fidelity rolled out its iPhone and Android app in February 2011 and added its iPad app for advisors in December. At this point, O’Brien says the greatest demand is for continued growth with the iPad app on which advisors can manage all of their clients’ accounts and ascertain client information. They can also place trades.

“We have plans to continue to keep up the pace with new mobile apps and features,” O’Brien says. “It’s an area we’re going to continue to hit. The features will continue to get better.”

Taking it on the road

Advisors who travel a great deal appear to be adopting this technology more quickly. Case in point: Carroll “Bill” Hayes Jr., principal of Charles Carroll Financial Partners, who travels frequently to and from his Boston and Annandale, Va., offices.

He worked with technology vendor ViziApps, which helped him create an iPad app that he uses and that clients can also use to provide them all of the necessary documents to sign up. Clients can download the app for free from an iPad or he can pull it up on his own iPad and show it to prospects during meetings.

“I purposefully wanted this separate from my website,” he says. “This allows me to show prospects all of the necessary documents that will need to be filled out if they become my client.”

Amy Webber: There’s no way we
couldn’t make it a priority.

Hayes has had the app few months and is finding it to be quite useful. He has about 45 clients and manages some $30 million in assets.

“I travel quite a bit to meet with clients, and it was getting more difficult to get the necessary information and this makes it much easier,” Hayes says.

Change is hard

Technology leaders at independent broker-dealer Cambridge Investment Research Inc. are racing to craft an app for advisors who want to access information from an iPad, says Amy Webber, the firm’s president. She says it’s a priority for her firm this year.

“The demand from our advisors is huge,” she says. “There’s no way we couldn’t make it a priority.”

But she also acknowledges that despite the strong demand, the actual usage from advisors may be slow.

“It feels like the demand is really high, but it won’t be the first time in the industry where there appears to be high demand but the adoption may take awhile. Change is always hard for people.”