There is no question that RIAs can be more efficient when they have these technologies in place. For instance, RIAs who used a dedicated rebalancing system in 2009 said they were able to perform that task in 15% less time (the median reported improvement) than when they were doing rebalancing manually or using nonspecific software. And that is just one example.

Making More Out Of Technology
This is all good as far as it goes. However, most of the RIAs that have bought these technologies have purchased them only as separate modules and are even then using only a subset of their features. Fifty-three percent of respondents said they faced a challenge in integrating disparate technology systems and components; 47% said they were still figuring out what work-flow and process changes to make to maximize their technology investments (see Figure 3).

It can sap productivity when a firm has its technology systems siloed this way. For instance, if an RIA firm must re-enter client account information multiple times in multiple systems, it adds expense, increases the risk of error and draws the firms' principals into activities besides working with clients and growing business. After all, many RIA firms are small, with fewer than ten employees. When something important must be done-with a client's order, with a compliance issue or with a new technology-the people whose names are on the door often have to get directly involved.

A Focus On CRM
There is no overnight answer to RIAs' technology system challenges. However, one development worth tracking is in the area of client relationship management systems, or CRM. RIAs already clearly recognize the value of CRM systems; nine in every ten advisors regard CRM as being important to their business success, and 84% already use a CRM system.

As the application on the desktops of most employees in an RIA firm, the CRM can become the window into a client relationship, moving well beyond the management of contacts and personal information to include more detailed client information, transaction and performance history, holdings information and client correspondence. Furthermore, with its work-flow management capabilities, CRM software can help manage those daily business processes that really take operational efficiency to the next level.

But as it happens, few of the CRM systems at advisory firms today are set up like this. Like other technology, these systems are underused and unintegrated. Nevertheless, they will become more important to advisors and help them narrow the gap between efficiency and scale of service that now still favors the technology-deep wirehouses.

The Time Is Now For Advisors
This brings us back to growth opportunities. There is little doubt that many clients of Wall Street firms are thinking about moving their business after being shaken by the market. According to other research we have done, former clients of full-service brokerage firms remain RIAs' No. 1 source of new assets (according to the Schwab Independent Advisor Outlook Study, January 2010). That may not have amounted to much in 2009, when investors were reluctant to take any action with their assets, in many cases putting off the decision altogether.

However, fortune seems to favor the independent advisor. Cerulli reports that RIAs, independent broker-dealers and dually registered advisors will nearly match wirehouses' market footprint by 2012, taking a 39.3% market share of assets under management while the wirehouses take 40.7% (according to the Cerulli report, "Advisor Migration: The Changing Landscape of Retail Distribution," 2009). And even though people are taking longer to make the switch, the RIAs in our study remain very confident in their ability to close new business: 74% of advisors report that closing success is a top enabler to growth-the second-highest enabler behind quality of client service. (See Figures 1 and 2.)

In this respect, all the soothing RIAs did for client nerves in 2009 may well turn out to help them develop business. In 2009, 83% of new clients coming into RIA firms came from referrals. That number holds pretty steady in this business every year. But in order to find the time to engage and serve customers in today's new reality, advisors have to pay more attention to efficiency and productivity. Their ability to do that will likely answer the question of how high "up" really is for the RIA industry. 

Bernie Clark is head of Schwab Advisor Services, a leading provider of custodial, operational and trading support for more than 6,000 independent investment advisory firms.

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