Our upcoming report Advisor Productivity: What’s Technology Got To Do, Got To Do With It? reveals that financial advisors spend an inordinate amount of time on non-client-facing and non-revenue-producing tasks which are often associated with the back office. In fact, only 20% of an advisor’s time is spent meeting with clients which dampens productivity.
Less time engaging with clients means less revenue.
This is because client engagement activities are where advisors add differentiated value. Freeing up advisors to spend more time on value-added activities is one of the biggest challenges faced by wealth managers. So, what can wealth management firms do to refocus advisor efforts on value-added, client-facing activities?
Advisors often cite manual tasks associated with client onboarding, in particular new account opening (NAO), as significant pain points. Wealth management firms can support advisors by streamlining and automating processes associated with NAO. But this is easier said than done, as wealth managers continue to struggle with NAO automation initiatives.
NA0, while simple in concept, is fraught with complexities that make the process difficult to automate. Some financial institutions and/or platforms claim to offer straight-through-processing (STP) for new accounts. But most STP instances involve single custodial relationships and only apply to a subset of account types i.e., brokerage. Firms that support even moderately complex advisor business models — multicustodian, multiproduct, and multiaccount types — struggle to automate workflows associated with account opening and the corresponding maintenance transactions.
Here are some of the core issues associated with NAO process automation:
- Inability to open multiple accounts simultaneously. Clients often have multiple types of investment accounts: qualified versus nonqualified; advisory versus brokerage; trust, etc. Most wealth managers do not support a process that enables the simultaneous processing of multiple types of accounts. This becomes more complicated if the wealth manager or RIA offers access to multiple custodians.
- Lack of functionality to support account funding. Automating account funding, within the advisor’s workflow and the client journey, continues to be a gap for many wealth managers.
- Mixed participation by major custodians. Each custodian has different account opening requirements and uses different types of application programming interfaces (APIs). Many custodians do not support advisory account opening. Thus, STP NAO often applies only to brokerage accounts. Additionally, some custodians use service APIs.
- Redundant workflows between CRM and third-party NAO vendors. Workflows, tasks, and notifications for advisors are duplicated within the customer relationship management (CRM) and NAO applications. Understanding where the CRM ends and begins relative to the NAO workflow can help to improve efficiency.
- Lack of bidirectional integrations with other key applications. In an ideal world, NAO would tightly integrate with CRM, proposal generation, IPS, and financial planning tools. However, few firms have been able to achieve even basic integrations between these functions. Syncing data across systems is almost nonexistent.
- Lack of a singular, integrated workflow. An automated and integrated workflow that solves for the above challenges and connects to CRM, financial planning risk, and proposal systems continues to escape the industry.
The good news is that platform providers and vendors have enhanced their onboarding and NAO workflow and integration capabilities. For example, Advisor 360 has developed a digital onboarding platform that can open accounts in as few as 90 seconds. Docupace recently launched a toolkit for financial advisors and RIAs which boasts out-of-the-box NAO workflow and integration capabilities.
In addition, wealth managers are beginning to realize that workflow automation is not simply about improving advisor productivity and firm efficiency, but it also involves enhancing the client experience.
Poor client experience leads to lost business for advisors.
As a result, Celent expects that wealth management firms will double down on workflow improvements beginning with NAO.
The chart that follows indicates that the NAO experience is extremely important to clients.