Financial advisers' productivity is better at bank brokerages with cutting-edge technology than at those that are not state-of-the-art, but some technology may actually be counterproductive, a report says.
The Kehrer-Limra report found that bank brokerages described by their chief executives as having "significantly better than average" technology are those in which reps are most productive.
Advisers at such banks are 11% more productive than those at bank brokerages whose chief executive officers rate their technology "better than average" and 17% more productive than those with "average" technology, according to the report..
But the report, which was published last month and sponsored by Bank of New York Mellon Corp.'s Jersey City, N.J., based Pershing LLC unit, contained some contradictions.
For instance, it found that brokerages with the highest profits per customer household very likely do not use pre-populated new-account forms. Such forms save time: They spare brokerage personnel the task of entering clients' data from scratch-on multiple forms when an account is opened.
Banks clearly like the pre-populated forms as 57% of those surveyed said they provide them, and 28% said that they plan to use them.
Banks whose advisers have access to financial planning tools actually reported slightly lower productivity than their counterparts at banks without the tools.
Financial planning tools can be time-consuming, said Randy Reynolds, a managing director at Pershing.
"All that technology hits a point of diminishing returns," he said.
Kenneth Kehrer, the director of Kehrer-Limra, acknowledged that some of the data gathered from 75 bank brokerage chief executives was perplexing, and that the relationship between some data and the brokerage's level of success may be coincidental.
The report is the first of its kind conducted by the Princeton, N.J., research firm, so there is little to compare the findings against, he said.
It supports the views of at least one large-bank executive who said he takes a very practical view of technology.
"Technology for its own sake doesn't impress me much," said Christopher Randall, president of M&T Securities Inc., the investment unit of M&T Bank Corp. of Buffalo. "I look at whether it is applicable to daily operations."
For example, Mr. Randall does not plan to heavily use online account opening for annuities anytime soon — the technology being developed to facilitate it is unproven, he said. On the other hand, he said he swears by online learning.
"You can have fewer trainers, you don't need to be in different regions, you're not flying all over the country," he said. "That has been a huge help and it's highly scalable."
Image workflow technology, which can help reduce paperwork for M&T's 260 financial consultants, 1,400 licensed platform employees, and their back-office colleagues, is Mr. Randall's idea of useful technology, he said.
Overall, he said, the bank's conservative technology investments have worked out well.
For instance, though far more information must be gathered to open new accounts than was the case a decade ago, the bank's automated account opening platform means that the process still takes about as long now as it used to, Mr. Randall said.
In fact, M&T consultants' productivity has increased steadily over the past few years, Mr. Randall said.
Mr. Kehrer said some banks have shifted their spending priorities. They are concentrating more on back-office functions than they were a few years ago, in part because of issues such as underuse of some tools in the front of the shop, he said.
Mr. Reynolds said that many banks have changed their focus from offering lots of frills for their brokers to making sure that the brokerage technology lines up with broad bank initiatives.
Certain large-bank clients, for example, are having their brokerage units report client information much more frequently than they did a few years ago, Mr. Reynolds said.
Such fresh data allows banks to make better pricing and service decisions based on the value of a particular client, he said.
