As someone who has been a proponent of the paperless office for many, many years, I often feel a sense of frustration at the number of paper-driven activities still prevalent in our industry. Sure, we’ve come a long way in recent years.

Many advisors now provide digital reports to clients in the form of PDF files. Some offer digital portals that clients can access on a PC or mobile device. Many B-Ds and custodians now accept mobile check deposits and wire authorizations. Some even accept digital signatures and digital processing of account applications and the like. But I still get the impression that the glass is less than half full. To get perspective on where the industry is today with e-signatures and related technologies, and where it is headed, I recently had a conversation with Andy Wang, the director of financial services solutions at DocuSign.

Wang brings a unique perspective to the discussion. He started his career at Laserfiche, where he was part of the team that spearheaded that firm’s penetration into the financial services arena. From there, he moved to TD Ameritrade, where he was instrumental in its implementation of electronic signatures for institutional account opening on the VEO platform. He recently accepted a position at DocuSign that gives him an opportunity to influence the course of digital work flows throughout the financial services industry.

To understand how Wang could meaningfully affect financial services technology, one needs to have some familiarity with DocuSign. The firm has been an innovator in its field for over 10 years, and it is an industry leader. Its footprint is global: There are DocuSign clients in 188 countries today. The firm claims that more than 50 million people have completed a transaction using its technology, and the firm has well over 100,000 paying customers.

What’s really important, though, is the number of successfully completed transactions attributed to DocuSign technology. In 2014, these numbered more than 62 million. According to Wang, an independent third-party estimates that DocuSign’s market share is approximately 76%.

Wang says that most financial service professionals think of his firm’s technology in narrow terms. “When wealth management firms think about DocuSign, they generally think in terms of account openings, asset transfers and wire transfers,” he says. There are many more cases that often get overlooked, and not all of them are cases where an electronic signature is required. Keep in mind, DocuSign provides more than an e-signature. It also routes documents for signature, so the system can be used for document tracking and to acknowledge receipts.

Let’s briefly outline just a few examples where the use of DocuSign would be appropriate. In the compliance area, it might be sending out disclosure documents or an annual offer of your ADV and having proof of delivery. The human resources departments can use it for new employee paperwork. Again, there is no need for a signature here, but having proof of delivery is essential in case of a dispute in the future. Legal departments can use the technology for contracts and non-disclosure agreements. The list goes on.

There’s more to digital signatures and work flows than just efficiency, however. This technology can also play a role in helping firms keep their clients satisfied.

A Totally Digital Office
The goal is to move beyond just digital signatures, perhaps to a totally digital office.

Offices lie on a digital spectrum. At one end we have a totally manual office. Every transaction is entered manually. There are no digital signatures, no work flows and no automated sharing of data. This is the most inefficient and costly method of transacting business, and one prone to errors. The next stage is one where the advisory firm creates back-office work flows. Here, you gain some efficiency, but there is no passing of data beyond the back office, and there is no appreciable improvement in the end client experience.

The third stage is one where most advisory firms implementing an e-signature solution start, perhaps with one offered by DocuSign, which they mix with a client relationship management system and electronic forms. This is where advisory firms start to see a return on investment:

The customer experience improves and form accuracy improves. However, the firms are still not fully taking advantage of technology, because their digital forms and delivery system are not integrated with their back office systems or those of their broker-dealer or custodian. Unfortunately, few independent RIA firms have progressed past this stage, though we suspect things are about to change.

There is a great deal of talk in the industry about the next stage, true “straight-through processing,” but few advisory firms have had the ability to get this far on their own because it requires significant time and resources. Here, you need integration with your own back office systems as well as those of your B-D or custodian. Some firms have gotten to this stage, but it’s a small minority, and some of those rely on the technology supplied by their broker-dealer. If they were to leave that B-D, they might no longer have access to the technology.

Wang says that the goal of all firms today should be a fifth stage, the totally digital phase (he calls it “digital transaction management.”) At this stage, all data and documents are in digital format, and the data flows seamlessly between both internal and external systems. These data flows then power dynamic digital work flows. At this level, firms can achieve higher levels of efficiency while lowering costs while also strengthening oversight and compliance. Perhaps more important in today’s increasingly competitive environment, such an office would offer a seamless, consistent customer experience.

To better understand the benefits that a truly digital work flow can provide, let’s consider a few situations. Today, advisory firms still primarily open accounts manually. They fill out forms manually (sometimes these are pre-populated from a database). Then the forms are printed and presented to the clients and prospects for signature. If the clients are visiting the office, the forms can be printed and signed there. They will then be overnighted to the B-D or custodian, or they might be rescanned into an advisor’s system and faxed to the B-D or custodian.

What happens if the client or prospect is not physically present? The process gets extended. You have to somehow (by mail, fax or encrypted e-mail) send the paperwork to the client and wait for the client to respond. If you mail it or fax it, the documents might sit there for some time if the client is not close to the delivery destination you selected. The client is then responsible for returning the documents to you. If these documents are returned with incorrect or incomplete information, the process of sending and receiving starts again.

With an efficient system like DocuSign’s, you access digital forms that are integrated with your master records. Forms are pre-populated and digitally routed to the client. The whole client-facing digital experience can be customized to your needs, using your firm’s branding. The client can access the documents immediately, anywhere, anytime, on any device connected to the Internet. As clients complete the forms, the system is smart enough to alert them to fields they may have missed and cuts down on those forms not in good order. It will make sure that the clients complete everything correctly before transmitting it back to you, or the next person in the work flow.

How does the digital experience improve on the manual one? It is faster, so it is a better experience for clients. They spend less time dealing with paperwork, the accounts are opened faster, and their money is put to work faster. The transactions can take place on mobile devices, which will make them convenient for many. Finally, your firm will save on costs. DocuSign estimates that firms can save, on average, $30 per transaction by using a fully digital process instead of a manual one.

There are other benefits as well. The information captured during the on-boarding process can be shared with one or more systems. The data can flow independently of the document itself.

One often overlooked feature of DocuSign is security. We would argue that a DocuSign signature is more reliable than a wet signature on paper. With DocuSign, you get a full audit trail. You know who signed it, when it was signed, where it was signed and how it was signed.

The whole process is protected by bank-grade security. According to DocuSign, only 0.00001% of its digital signatures are ever challenged. More significantly, not one digital signature or acknowledgement made through the DocuSign system has ever been successfully challenged.

What’s The Problem?
If DocuSign is such a great product, why has the industry been so slow to adopt it? Part of the reason is inertia. This is not a sexy technology, and until recently there was no catalyst for change.

But robo-advisors may be the catalyst the industry has needed. These platforms have clearly demonstrated how superior a true digital on-boarding process can be and how much better the user experience is. If advisors are to compete effectively in the future, this type of technology will be essential.

The other problem is that most advisory firms don’t have the expertise to adopt DocuSign’s tools to their business in order to implement the system. Salesforce had similar problems before the firm, along with custodians and various third-party providers, began customizing it for use by financial service professionals.

Currently, some B-Ds and custodians have released or are preparing to release work flows powered by DocuSign and their partners. DocuSign also offers integration with Salesforce through the App Exchange, and the firm is currently working on an integration with Microsoft Dynamics CRM. Going forward, Wang says the firm intends to build out integration with other CRM vendors in financial services. Two names he mentioned were Redtail and Junxure.

Wang thinks that more work needs to be done, however. He envisions his firm building digital work-flow templates based on DocuSign technology that advisory firms can use out of the box as a turnkey solution, or, if need be, a method in which advisors can edit the templates, thereby customizing them to fit the needs of their individual firms.

We’ve long admired DocuSign’s technology, but we’ve had some serious doubts about how well the firm understands the financial advisory space and the needs of advisors. With Andy Wang spearheading the firm’s efforts in financial services, DocuSign finally has a knowledgeable person at the helm who is passionate about helping advisors be successful. We expect positive developments from the firm in the coming months.