Advisers set 2016 tech investment priorities

Despite acknowledging it as a potential game-changer for their business practices, client retention and prospecting, a majority of brokerages report minimal spending increases on technology this year — and plan the same for 2016.

More than half (51%) of advisers responding to EBA’s second annual technology survey say they’ve spent less than $50,000 on technology in 2015. Only 5.6% expect that number to increase by more than 20% in 2016, while nearly 3 in 10 (27.3%) plan no changes in their technology spending for next year.

Although there are “a lot of shiny new pennies” in the technology space, brokerages may be hesitant to spend too much on them before new products are fully vetted, says Bob Harnett, USI Insurance Services’ senior vice president and employee benefits practice leader in the Baltimore/Washington metro areas.

Also see: “Top 10 technologies used by advisers.

“A lot of the technology that’s existed in the benefits space for the last several years hasn’t necessarily made anything easier: Having to adopt it, implement it, train people how to use it and be able to push it out to the end user in a meaningful way that allows for the work to be streamlined in some fashion,” he says. “There’s a lot of promise associated with technology, but it doesn’t necessarily always deliver.”

A website/web portal is the No. 1 software currently used by respondents to the EBA tech survey (77.3%), followed by a client management system (67.7%). [See chart below for a breakdown of technology usage among small and large brokerages.]

Although 15% of more than 200 responses to the question, “What is your biggest technology challenge,” cited security — the second most common response after education (19%) — only 52% report currently using computer security software at their office, and just 50% have an active data backup system.

The other top challenges most cited by advisers include: integration (14.5%); budget/cost (8.5%); and adoption (7%).

Adoption and education are integral at INSURICA Insurance Management Network. The Oklahoma City-based agency has more than two dozen partner firms, and Ashley Andrews, associate director, EB resources, is the company’s technology officer.  She says keeping INSURICA advisers up to date on technology ensures they can then keep up with the competition, especially larger firms.

Her goal in training INSURICA advisers on technology is “to hone in on allocating the use of investments that aren’t being used to full potential,” she says.

“Especially in California, in Texas, they’re in those huge markets where they’re fighting a Willis, a Holmes Murphy, all of those big corporations … They have that technology, what do we have? Well, we have it; they just haven’t found the time to dedicate to help spread it to our other colleagues,” Andrews adds. “That’s the challenge with our internal training is to get out there face-to-face, get them hands-on, showing them what exactly we’ve invested in and how it will work with their clients.”

Size matters

There is a noticeable difference in the technology use of large brokerages versus smaller ones. Larger organizations are around twice as likely as smaller brokerages to use the following forms of technology, according to EBA’s tech survey:

• Data analytics (54.5% vs. 25.6%)

• Client survey tools (50.6% vs. 24%)

• Salesforce automation (41.6% vs. 16.5%)

• Claims analysis (39% vs. 16.5%)

But, those who work at firms with 100 or fewer employees are more likely to use sources of technology associated with communication at home than those who work at larger brokerages.

For example, 40.5% of smaller firm advisers use social media at home, versus 27.6% of larger firm advisers. When it comes to communication platforms such as Skype or ooVoo, 16.5% of those at smaller brokerages use them at home versus 11.8% of those at larger ones. Also, smaller firm brokers are 9% more likely to use email marketing at home than bigger firm brokers — 24.8% and 15.8%, respectively, utilize such platforms at home.

Also see: “How Heffernan became a tech-focused brokerage.

As far as product satisfaction, advisers are most satisfied with their smart phones, and least satisfied with commission tracking. Nearly 8 in 10 (79.7%) are very or completely satisfied with their smart phone devices, while just 48.8% feel the same about commission tracking.

It does not appear, however, that they will be putting their money where their mouths are in 2016, as just 9% report they will increase spending on commission tracking technology next year.

A reason advisers may be hesitant to invest more in important areas like commission tracking, Harnett says, is uncertainty over the unknowns associated with bringing in new products.

“When you’re dealing with commission tracking it’s antiquated and it’s difficult, [but] in a lot of organizations there’s still a lot of workaround and a lot of processes that are at least somewhat satisfactory, so that the pain that would be associated with replacing it with something new, it just isn’t worth it,” he says.

Meanwhile, although quite satisfied with their smart phones, a quarter of respondents (24%) still intend to increase spending on them in 2016. Other top areas where advisers expect to increase technology spending in 2016 include:

• Laptops (37.8%)

• Websites/portals (36.9%)

• Client management systems (36.9%)

• Servers (33.3%)

• Tablets (29.7%)

Conversely, areas where they least expect to increase spending next year include:

• Communication platforms (8.1%)

• Commission tracking (9%)

• Claims analysis (9.9%)

• Salesforce automation (16.2%)

• Desktops (17.1%)

• Social media platforms (17.1%)

The numerous technology vendors in the space right now “are all starting to blur,” says Vinnie Daboul, partner at Sage Benefit Advisers in Peterborough, N.H., but “those [advisers who] will thrive in our business will have a strong technology solution. They’re not necessarily going to own it, but whether it’s through one of the many names we know — Employee Navigator or bswift, Benefitfocus, Businessolver — it has to be part of what we deliver.”

Also see: “Lockton builds analytics talent with former Liberty Mutual exec.

And the stakes can be high. Just over 4 in 10 survey respondents (40.9%) report they have gained or lost business based on their ability to offer client-facing technology solutions.

The next level

It is USI’s Harnett’s hope that advisers will soon be able to offer clients technology that is primarily driven by consumer engagement. “If somebody has something that’s truly integrated and really allows a level of decision-making and support to be put into the hands of an employee or of a customer,” he says, “I think that’s really going to create a differentiator for whoever’s able to bring that to the client.”

Even so, the broker with an eye on the future still needs to take things slowly for clients to benefit from that technology, adds INSURICA’s Andrews. Forward-thinking brokers are “going to look for more of a collective system, more of an HRIS-type do-it-all payroll, administration, EDI feeds, things like that,” she says, but “our clients aren’t going to be too excited about it because they don’t know what it is, and it scares them. So we just have to tell [our advisers] to reign it in a little bit. ... You want to help make it look better instead of making it look more scary.”

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