As we think about the future of financial advice, our industry is becoming increasingly intertwined with technology. It supports our day-to-day operations and how we connect and sustain relationships with clients.
It also provides guidance for how we share financial data and help individuals plan their financial futures.
Embracing technology – and all of its possibilities – presents a groundbreaking opportunity for advisors. But simply making the decision to invest isn’t enough. It has to be done right.
We discovered some best practices by examining the common traits shared between our top-performing (top 10 percent) RIA clients using Envestnet | Tamarac®. The most successful firms integrated the platform in an intentional, planned way, and developed the right infrastructure to support their investment. Here are a few takeaways:
· Follow the Leader – Successful firms appointed a dedicated project lead who was heavily involved throughout the implementation process and could act as an onsite resource to properly train staff.
· Take Advantage – These firms took time to understand the full capabilities of the platform, including what it offers from a financial planning and data aggregation point of view. They also took advantage of resources like Tamarac University and User Group meetings to get hands-on experience with Tamarac consultants and other RIA users that could help link the software’s capabilities directly to client needs. Many also broadly deployed the client portal for end clients to make sure they had visibility into the financial planning process.
· Scale Matters – We noticed many successful firms scaled the platform to best meet the needs of their firm and unique clients. For example, some deployed a methodology to address client segmentation and adopted separate “brands” to manage smaller client relationships through the suite.
By taking steps like these, our clients realized two key benefits: productivity and profitability. They saw a huge increase in AUM (approximately 225 percent), increased annual revenue, and spent up to 45 percent less time managing operational tasks based on our internal data. Investing in the right infrastructure helped firms make technology work to their benefit, and they were able to grow their businesses as a result.
At the same time, we also noticed a few trends that defined less successful firms (the bottom 10 percent) as they worked to implement Tamarac, including:
· No Project Lead or Executive Sponsor – These firms didn’t have a dedicated project manager to oversee implementation nor did they have an executive sponsor to help champion the value of technology within their organization.
· Resistant to Change – Instead of adjusting workplace processes to accommodate technology, many firms were reluctant to adjust their current way of doing work, even if that meant hanging onto inefficiencies.
· Not Realizing the Potential – These firms were hesitant to discover the full capabilities of what technology could offer them and their clients, and didn’t take advantage of the support available to get the most traction from the software.
When it comes to investing in technology, there are no hard and fast rules to creating your firm’s infrastructure. Leaders must do what’s best for their organization, but the takeaways we noticed from our clients could provide a foundation to help firms get started and position them for future success.