Practice Management

How RIAs and Financial Advisors Can Improve Their Operating Efficiencies

Kristian Borghesan

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Financial institutions and advisors everywhere share the common goal of improving operational efficiencies in their day-to-day workflow so that they are able to spend more time with their clients and continue building their book of business.

We’re fortunate enough to be in a position here at FutureVault where we regularly talk with several organizations and industry leaders, equipping us with a solid understanding of what efficient operations look like in financial services, and really any industry for that matter.

From what we’ve heard and witnessed first-hand, we know that overall operational efficiencies and effective practice management boils down to three primary drivers: people, process, technology.

For firms looking to stand out from the crowd and continue making an impact, it’s incredibly important to pay attention to these three factors.

Let’s dive into each one of these to learn more about how firms can improve their operating efficiencies and net positive returns on their business investments.

Your people are everything and they always will be.

First and foremost, it always has and always will start with people. Specifically, having the right people behind your organization in front, middle, and back-office functions, driving forward with the goal of creating a better experience internally and externally for your clients.

For financial services organizations to win, it’s all about being able to attract the next generation of financial advisors and service professionals. But attracting them is only one small piece to the puzzle, firms need to make sure they’re providing the right type of value internally to retain advisors, and better yet all employees for that sake.

In fact, this is one of the major challenges that CEOs in wealth and finance are feeling the pressure on. According to PwC’s 20th CEO Survey, 72% of CEOs in financial services say that the limited availability of skills is a threat to organizational growth. In other words, attracting and retaining the right people is something that organizations cannot simply afford to overlook.

So, the question remains—how exactly can firms attract and retain the right people?

While there are several ways for firms to navigate this, three core solutions in particular stand out as clear winners:

  1. Corporate governance. Your values, policies, and overall practices as a firm set the stage for your reputation internally as well as externally to potential new hires and clients. Creating an environment that maintains a high set of standards across the organization as well as the service offering for clients is one of the major keys to success.
  2. Tools and technology. Advisors and service professionals are always inclined to have an understanding of the tools and technology available to them. Equipping your front office with the tools and features they need to streamline daily workflow and confidently improve the relationship they have with their clients is an absolute must for firms. Not to mention that powering your front office(s) with a standardized tech stack alleviates a ton of work and stress for compliance teams.
  3. Middle and back-office support. Last is ensuring that your back office is providing your front office with the right level of support, in addition to technology, they need to continue building their book of business and satisfying clients.

It’s imperative that firms lead by example and practice what they preach if they’re serious about retaining top-level talent that can help bring in new clients and grow the business, together.

Really, it’s all about creating a win-win-win environment.  

Building systems and processes to scale.

Next, is all about building systems and processes across your front, middle, and back-office functions to support growth and scale your organization. This heavily revolves around daily workflow and the systems in place to manage advisor-client relationships.

From client communications and advice to managing security and compliance with regards to managing, storing, and sharing information and documents, there’s a lot that takes place behind the scenes.

In fact, we know that wealth managers, financial advisors, insurance agents, you name it, struggle on a daily basis because they are constantly bogged down with administrative tasks and regulatory requirements they’re obligated to fill. Something that a combination of well-defined systems and a strong investment in technology, which we’ll get to later, can and will solve for.

Examples of workflow and processes that take place day-in and day-out include:

  • Collecting, organizing and storing client documents
  • Sharing new resources and materials with advisors and clients
  • Creating and maintaining security and compliance checklists
  • New client onboarding and processing 

Successful systems and processes clearly define the who, what, where, when, why, and how. It’s about clearly identifying ownership and accountability, with the right people to execute, as well as understanding which processes can help you achieve that.

Having the right people in place, as we discussed above, can lead to sound and smooth systems and as we’ll soon see below, technology proves to be a critical role in augmenting the speed, delivery, and impact of those processes through automation amongst other factors.

At the end of the day, having the right processes and systems are what ultimately lead to an enriched client experience which ultimately leads to growing the share of wallet.  

Investing in leading technology is an absolute must.

Last, but certainly not least, technology continues to be the primary driver for operational efficiencies while acting as the connective tissue between being able to attract the right type of people, namely professional service providers, and scaling systems and processes.

Long gone are the days where an investment in technology was considered a “nice to have” for firms. Nowadays, technology is fundamental to the way business is being conducted in addition to managing client expectations. In other words — it’s an absolute must.

This is clearly evident in the market today. There is a steadily growing trend that shows advisors, and their firms, who invest in and embrace technology are the ones that reap the benefits — they are the ones who scale, grow, and ultimately win at the end of the day.

Yet despite the above, somewhere around 6 out of every 10 advisors are not using technology to the fullest — meaning that there are significant areas of operations in which technology can fill the void. Contrarily, advisors and firms using technology in all areas of their business have reported 42% higher AUM in their books relative to those who do not.

To further paint the picture, in a study with more than 1,000 asset management professionals across a range of sizes, J.P. Morgan Chase & Co found that clients who work with technology-oriented advisors see their fund operating costs fall 39 percent and their average dollar target for return increase by 19 percent versus tech-neutral actors.

While the industry has begun to shift towards adopting new technologies, there still remains a lag in adoption. This lag in adoption is less about the lack of appetite for technology and rather more so about not fully knowing or understanding exactly where to begin — and rightfully so.

With the abundance of technology offerings solving for different operational challenges, knowing where to start is certainly overwhelming. However, advisors who are able to visualize what their clients’ end experience will look like, and map technology from there, will achieve the deepest and most tangible business results.

Michael Kitces’ Financial AdvisorTech Solutions map provides a good starting point for firms and advisors looking for industry-leading technology.

Focusing on tangible use-cases and business results should always be at the forefront of decision-making when assessing the implementation of new advisor technology. The right technology can help firms successfully:

  • Improve advisor-client relationships with connected experiences and modern collaboration tools
  • Strengthen relationships and productivity across front, middle and back-office functions
  • Optimize data and business results by utilizing powerful analytics and AI-fueled predictions to drive actionable insights
  • Improve the way enterprise and client documentation is being accessed, delivered, and managed with a secure digital document vault
  • Streamline compliance management activities and reduce audit readiness cycles across the organization

Firms that transform their business models and reimagine the role technology plays to personalize client engagement at scale are the ones that will be best positioned to capture a meaningful market opportunity.

Kristian Borghesan Future Vault

About the Author

Kristian Borghesan

Kristian is a well-known marketing executive with an entrepreneurial spirit who has a proven track record of helping FinTech and SaaS startups gain early traction and momentum. Currently, Kristian is the Director of Marketing at FutureVault, the leading document management system and Digital Vault solution for financial services, where he remains responsible for overseeing and executing on all areas of marketing. Over the last several years, Kristian has provided content marketing services for financial services organizations, including RIA’s and Broker-Dealers, helping them build credibility in the market with both new and existing clients.

To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Learn more. Wealthtender is not a client of these financial services providers.
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