Outsourced technology integration tools can provide significant benefits to RIAs, including improved productivity and efficiency that can help raise revenues, according to a new study.
The study, commissioned by NFP Advisor Services Group and produced by independent research firm Aite Group, concludes that outsourced technology integration tools provide operating and financial benefits to RIAs.
NFP Advisor Services Group serves financial advisors and is a business segment of National Financial Partners Corp., a provider of benefits, insurance and wealth management services.
"Against the backdrop of an increasingly competitive wealth management environment, it is more important than ever that RIAs operate lean, efficient businesses that allow them to focus more of their time on client service and prospecting," said James Poer, president of NFP Advisor Services Group.
The study indicates "an integrated technology platform is an extremely valuable tool that lets RIAs streamline operational processes and maximize productivity," Poer said.
The study said that despite the wide range of business applications required to operate their businesses, RIAs' current level of technology integration across applications averages below 50%.
Without a fully integrated platform, advisors sacrifice two days per week, on average, for operational tasks such as data reconciliation, performance reporting and fee billing, the study says. Supporting advisory staff lose even more time without integration, spending three times as many hours on operations as on client acquisition and prospecting, the study says.
In a fully integrated environment, the time spent on operations can be reduced by almost one full day per week for advisors and by 40% for support staff, freeing employee capacity for productive relationship management and business development, according to the study.
Because larger firms employ more support staff, inefficient operations pose an even greater burden on RIAs once they reach a certain size, according to the study. Firms with assets under management of between $100 million and $500 million could regain an average of 114 days of time previously allocated to operational activities when they move to a fully-integrated technology environment, according to the study.