Creating Efficiencies through Integrated Technology

Independent financial advisors working with integrated technology are likely to spend more time with clients and prospects and less time on administrative tasks. The result is more revenue for the financial advisor. Practices with a moderate level of technology integration produce on average $100,000 more in annual revenues. Advisors at firms that have some integration earn approximately 20 percent more in annual income than their peers that lack integration.

Integrated Technology

Creating Efficiencies through Integrated Technology

A survey conducted by the Aite Group, an independent research and advisory firm, showed that advisors who are supported by a fully integrated technology environment spend the majority of their time (52 percent) with clients, about 50 percent more time than the average advisor, and were able to reduce their administrative burden by 33 percent. Additionally, their findings indicated that technology integration could also streamline compliance efforts by 30 percent. The staffs of firms with at least some technology integration spend 32 percent less time on operation processes than the staffs at firms with no integration at all. This equates to freeing up approximately 40 weekdays each year for every employee to engage in more revenue-generating activities, including client management and prospecting.

According to the Aite Group study, small RIAs tend to source individual technology components on an a la carte basis from vendors and acquire technology from their custodian(s). Oftentimes, the result is a collection of disparate applications that, while very functional on a stand-alone level, do not integrate well or at all with each other. The result: decreased operational efficiency, more staff and increased operational risk which can inhibit business growth.Now is the time for advisors to leverage an integrated technology environment that can offer scalability through increased efficiency, as well as oversight on many of the most important areas of the practice. “Although independent RIAs do not possess the large technology budgets and staffs of larger firms, choosing integrated technology quickly levels the playing field,” said Alois Pirker, research director for Aite Group.

As advisors begin to fully integrate, many would benefit from better training and education about their systems. An SEI survey released last year indicated that two-thirds of financial advisors said they “knew enough to get by” while just 27 percent called themselves “pros.” Nearly half of advisers acknowledged that integrating their systems was the most challenging aspect of technology. Deciding on which tools to purchase and determining a true return on investment were also cited as challenges.

Technology will continue to be a key driver of success for advisory firms. Technology integration is fast-becoming a centerpiece of the advisory firm’s technology strategies. Buying technology without integration will not help advisors achieve their goals of servicing the client and growing in terms of business development and profitable growth. Utilizing integrated technology can help achieve these goals.

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