Operational efficiency is often ignored, but should be equally important from an advisor's perspective. How can we do more with less? How do we maximize the use of our team and the technology we have?
Moss Adams LLP recently released a study in conjunction with my firm titled the "Art of Efficiency" that focused on the operational best practices of broker/dealers. The report identified what differentiates the most operationally efficient broker/dealers from others and in turn makes them the most profitable. The report didn't specifically look at this topic from the vantage point of an advisor, but many of the same themes are relevant. This month we'll examine three issues advisors should consider in the interest of becoming more operationally efficient and ultimately more profitable.
- Technology Deployment and Usage - Just signing up and starting to use a technology solution will not necessarily bring about desired outcomes. Whether it be a solution that your firm or custodian is offering, or one you've signed up for on your own, the right level of training and knowledge of best practices amongst other advisors will help ensure success. Other users have most likely been in the same situation as you and there is a significant opportunity to learn from that. Solution providers are very happy to help you become a better and more educated user so don't be afraid to ask.
- Integration - According to our study, the most operationally efficient broker/dealers were 15 percent more likely to have integrated systems. It would stand to reason that this relationship between integration and operational efficiency also exists within advisors offices. I've addressed in previous columns the importance of having solutions that talk to one another. Prior to using a solution, take the time to understand the level of integration it has with other offerings. Solutions that stand alone and don't work with others should probably raise a red flag. In addition, many custodians offer fully integrated platforms in which many capabilities are integrated into one place. It is important to understand what you have at your disposal before spending time looking into other solutions.
- Processing - This last item brings together technology deployment and usage and integration. The processes you have set up to bring in new customers, open new accounts and service customers are only as effective as the extent to which the process is defined, repeatable and measurable. As the study points out, the goals of a process are to perform work accurately and in as little time as possible. Deploying technology and having the right level of integration helps to solve issues quickly and accurately. Technology can reduce errors by having up-front edits to catch mistakes that paper-based processing cannot. The right level of integration can ensure that you don't have to key the same data you have in one system into another or make it easier to have one-stop-shop access without having to log into multiple places. It can also help to reduce errors that would result from rekeying data.
Each advisor's operational model will undoubtedly vary depending upon target market, customer profile, product and service offering, and any other way you want to distinguish your practice in the marketplace. The right technology deployment and level of integration will ultimately help reduce processing times, increase efficiency and drive greater profitability.
Marc Butler is managing director with iNautix (USA) LLC, an affiliate of Pershing LLC in Jersey City, N.J. He can be reached at firstname.lastname@example.org.