Technology has had a huge impact on the way we do business today and nowhere more so than in the financial services profession.
This article from across the pond reveals that advisers who used at least two technology solutions grew assets faster than those that used none or just one. Firms using two technologies experienced 4.2% greater growth in AUM than those using one technology and 8.7% greater growth in AUM than those using no technologies. The greatest growth figure of 8.4% was seen by advisers using four technologies.
The technologies adopted included customer relationship management (CRM), financial planning, portfolio management, document storage, or similar solutions that helped save time and money.
Product vs service
The challenge for you as a financial adviser is that you are aiming to offer a personalised service to your clients, which by definition means you are limited to how many clients you can look after effectively. After all, there are only so many hours in the day.
This immediately makes an advisory firm less scalable than a product-based business. Nevertheless, it is possible to find efficiencies by using technology to improve and streamline your processes. It may be that you can think of certain aspects of the business you could productise and technology can help with this.
How can technology maximise AUM growth?
If you look at the aspects of your business which are particularly time consuming, you may find areas where technology can drive real benefits. For example, firms have seen automation technologies significantly reduce the time spent on quarterly portfolio rebalancing. Time is no longer wasted waiting for permissions and response rates have also improved considerably.
Such efficiency savings help the business increase assets under management and the revenue per adviser, as it frees up their time for more client-focused activity. A firm can also increase profitability by streamlining non-adviser tasks.
But how do you know what’s right for you?
There are a vast array of technology options on the market. It’s important, therefore, to choose the ones that are right for your business and which will deliver the most benefit.
Customer relationship management and ‘portfolio management and reporting’ systems are often the first to be adopted. Perhaps they are seen to be the ‘sexy’ products on the current financial scene. However, the study showed that these two systems produced the least growth in AUM. The greatest improvements, in fact, came from investments in financial planning (e.g. forecasting and modelling tools) and document storage technologies (definitely not sexy-sounding!)
What is certain, though, is that whichever solution you opt for, you shouldn’t expect to see instant benefits.
And make sure you invest in training for your employees on how to use the technologies. If you can get the whole firm engaged with the new systems and excited about the benefits, you stand a much better chance of long-term success. For example, if you’ve got a shiny new CRM system, it won’t do much good if not all client communications are recorded in it or not every lead is entered.
But once the right technology is adopted across the business, the evidence suggests that real business benefits can be leveraged in terms of assets under management. Why not start investigating what you could introduce?