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Advisors go high-tech to better serve savvy clients

Brian Power, a principal at a registered investment advisory firm in New Jersey, recently spent a full day in New York City meeting with clients.

Armed with little more than his laptop, he reviewed accounts with clients and showed them performance reports and research, all without using a single piece of paper.

"People don't want paper," said Power, a certified financial planner and wealth management advisor for Gateway Advisory. "And we're happy not to provide it."

Video conferencing
Thomas Barwick | Getty Images

From automated reporting systems and efficient trading platforms to webinars and videoconferencing, technology is changing how independent RIAs like Gateway run their businesses and serve their clients.

RIAs, which provide investment advice and have a fiduciary duty to clients, continue gaining market share among investment managers.

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Cerulli Associates predicts that independent RIAs—whether affiliated with a broker-dealer or not—will manage 28 percent of assets by the end of 2018. That compares with 20 percent at year-end 2013, when professionally managed assets stood at more than $36 trillion.

At the same time, RIAs as a whole have watched their profit margins get squeezed as revenue streams have become more fee-based and operational expenses—such as compliance costs—have risen. Also, clients are seeking more non-revenue-producing financial advice on matters largely unrelated to investment management.

Read MoreAdvisors turn to social media

"Technology allows us to do more with less," said Greg Gardner, a CFP and president of the Gardner Group.

One example of useful technology by RIAs is trading platforms.

"Five years ago it would take my partner hours to do one trade," Power said. "Now it's 10 to 15 minutes. That's huge."

Power explained that when Gateway makes changes to its investment models, the firm's trading platform automatically makes the changes in all client accounts.

"It also makes sure every single client is treated fairly," said Power, explaining that all trades across client accounts are executed at the same time and at the same price.

Gardner sees an additional benefit to clients. When changes are made to investment models, he said, perimeters set on an individual account continually prevent its investments drifting from a client's risk tolerance and asset allocation.

"It allows accounts to be managed 24-7," Gardner said.

While it's difficult to quantify RIA use of technological offerings, there's no question that some of its growing prevalence is driven by investor ease with incorporating technology in their financial decisions.

"Using videoconferencing ... allowed my business to grow exponentially over the past year." -Eric Roberge, principal of Beyond Your Hammock

A Spectrem study released last year shows that 23 percent of mass affluent investors (with a net worth of $100,000 to $1 million in liquid investable assets) use mobile devices—PCs, smartphones and tablets—to buy and sell investments, and 39 percent of millionaires ($1 million to $5 million in liquid investable assets) and 62 percent of ultra-high-net-worth investors ($5 million to $25 million) do.

The investment management industry generally expects those figures to rise as younger investors, who are ultra-comfortable with technology, begin to develop more wealth and seek out financial advisors.

RIAs are responding to that increasingly tech-savvy client base, regardless of age.

"Using videoconferencing ... allowed my business to grow exponentially over the past year," said Eric Roberge, a CFP and principal of Beyond Your Hammock, which has clients in eight states.

Clients get comfortable

He said his clients are completely comfortable meeting via videoconferencing rather than face-to-face.

"Once the trust is there and it's apparent that I'll do what it takes to service my clients' needs, the rest is just details," Roberge said.

He said the integrated trading platforms he uses allow clients to fund their accounts from the privacy of their own home.

That interface "also allows them to clearly see how their strategies are working and measure the progress toward their investment goals, on demand," Roberge said.

Read MoreDually registered advisor space booms

Power said automated performance reporting is a technology that benefits clients. The platform that Gateway uses automatically runs the reports, which clients can access through a secure website portal. It also can aggregate account data from other places—i.e., a 401(k) plan held elsewhere—for clients so they can see all their assets in one report.

Power also said his firm uses a client relationship management system that gives the staff access to the same information—things like note-taking after phone calls, service requests to assistants, appointments and advisor calendars—that ultimately benefits clients.

"It makes us efficient and makes clients feel like they are being served properly," Power said. "If they call to check up on something, an assistant can pull up notes and see who's working on it and where it stands."

Like all industries, investment managers are aware of the importance of protecting private client information and preventing security breaches.

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"You always have the concern, of course," Power said. "But you make sure you deal with companies that are up to speed with the protections and firewalls that are necessary to protect [client data]."

Power said most of his firm's clients, regardless of age, embrace the ability to access their account information online instead of receiving copies in the mail or via email.

"If you just make the change, clients will go with it," Power said. "You might get a couple clients who get upset; then you just say, 'No problem. We'll keep sending you reports.'"


—By Sarah O'Brien, special to CNBC.com.