Tax, Estate Planning Drive Next Wave of Advisor Technology
Financial advisors’ push beyond traditional investment management is creating new demand for technology that can support increasingly complex client needs, with tax optimization and estate planning emerging as key growth areas.
Advisors now provide an average of 7.6 services, according to the latest Cerulli Edge—The Americas Asset and Wealth Management Edition. The number and sophistication of those services tend to increase with clients’ wealth, requiring firms targeting affluent households to expand their advice capabilities.
“Serving affluent clients requires increasingly sophisticated advice capabilities,” said Michael Rose, a director at Cerulli. “Advisors moving upmarket must be able to offer clients income tax planning, estate planning, charitable planning and more.”
Investment management remains central to most advisory relationships, but firms are increasingly adding services designed to address clients’ broader financial lives. Cerulli found that 55% of advisors offer trust and estate planning services, while 40% provide income tax planning.
That expansion is reshaping advisors’ technology priorities. Among advisors that do not currently use portfolio tax-optimization technology, 47% expect to adopt it within the next 12 months. Meanwhile, 37% of nonusers of specialized estate-planning technology plan to add those tools over the same period.
“The increased emphasis on technology among more financial-advice-oriented advisor practices is not surprising,” Rose said.
Financial planning and related services require greater customization than investment management, which can be standardized and scaled more easily across client accounts, Rose added. Tax and estate-planning systems can help advisors manage that complexity while coordinating information and producing more personalized recommendations.
Cerulli expects financial planning to remain a long-term driver of wealth management technology spending. As firms compete for affluent and high-net-worth clients, technology that helps advisors deliver customized tax, estate and charitable-planning strategies at scale is likely to become an increasingly important part of the advisory platform.