The financial advice industry is a highly competitive and complex landscape. Achieving sustainable growth, while challenging, is crucial for long-term success and the growth of a practice.
A Schwab study highlighted that 75% of advisors polled reported that growth made their operations more complex — but if they could automate or streamline time-consuming activities, they would utilize the newfound time to boost growth by spending more time with clients (69% said this), prospecting for new clients (62%) and offering more services (33%).
Guest article for ThinkAdvisor written by:
While many registered investment advisors believe they are growing organically, it is essential to look beyond the surface and examine the underlying factors driving expansion of their business.
Is the growth solely attributable to market returns? Are there strategic operational practices at play? Is the firm onboarding more clients in the accumulation phase of their retirement planning versus the decumulation phase?
By addressing operational challenges and leveraging automation, RIAs can optimize their efficiency, enhance the client experience and unlock new opportunities. Streamlining operations is a critical component of organic growth, yet many RIAs falter at this critical step.
Let’s examine some common pitfalls that RIAs can overcome to avoid stagnation and ignite growth.
1. Choosing the Wrong Software
Automating back-office tasks and other operational work can give advisors more time to build their book of business. However, a Cerulli poll on the challenges facing advisors found that choosing the wrong software platform can be an enormous impediment to growth — with up to 77% of RIAs admitting to having difficulty selecting, maintaining and integrating technology.
If not done thoughtfully, this process can lead to clutter and noise that impedes progress. When navigating the tech landscape, RIAs must take the time to vet and find software solutions that best fit their practice’s needs. Uninformed decisions can create more problems than solutions — RIAs should avoid software that creates more questions than answers.
While it may be tempting to rush into a decision in an effort to mitigate costs or hit deadlines more quickly, it is important to conduct proper due diligence. This deliberate and intentional approach will pay off in the long run, allowing advisors to run their practice functionally without disruption.
The right technology can make all the difference when it comes to streamlining operations and powering growth for a practice. By carefully considering all potential options, RIAs can ensure they select a compatible solution for their business needs while avoiding unnecessary clutter and confusion.
Doing so will allow them to focus on what matters most — providing unbeatable service to clients while growing their business organically.
2. Overloading on Tech Tools
Scale, efficiency and data accuracy can all be compromised when integrating too much software into an RIA practice. Advisors attempting to utilize different tech solutions for each use case (CRM, portfolio accounting, third-party billing, aggregation and financial planning) can quickly be overwhelmed and miss out on all of the functionality that the tech entails.
An all-encompassing solution could be the answer, freeing up an advisor’s time that could be better spent on providing value-added services to clients or growing the business in other ways.
Not only does using multiple software solutions increase complexity but it also increases costs associated with onboarding new clients and servicing existing ones. Each piece of technology has its own cost structure, which means additional fees may need to be factored in when budgeting for a practice’s operations.
Lastly, a glut of technology introduces more room for human error due to inconsistencies between systems or the lack of integration between them. This, in turn, can create more headaches than necessary when trying to troubleshoot any issues that arise.
Having too much technology can have a negative effect on a practice’s ability to grow organically— it restricts scalability and efficiency while increasing operational complexities that hinder long-term growth.
3. Ignoring Model Portfolios
Leveraging model portfolios is one of the most effective ways to streamline operations and maximize efficiency within a financial advice practice. Model portfolios allow for a structured approach to investment management — advisors are able to offer clients sophisticated models while leveraging scaling gains that come with using models.
The use of model portfolios also helps reduce operational costs associated with manual data entry and tracking errors due to differences between systems. By consolidating all relevant information into a single source, advisors can feel more confident that their reports are accurate and up to date.
Additionally, this system allows for more efficient execution of trades, saving time and money in the long run. Model portfolios can also be used to quickly update client accounts in response to market conditions or changes in client needs — and advisors can quickly switch from one portfolio to another without having to manually enter new orders for each individual account they manage. This flexibility makes it easier for Advisors to respond quickly when needed without sacrificing accuracy or incurring unnecessary costs.
Advisors should carefully consider the number of model portfolios they use; depending on the size and complexity of their practice, 10-30 may suffice. Too many model portfolios can lead to an overwhelming amount of administrative work, while too few could limit an advisor’s ability to respond flexibly in changing markets or meet specific client needs.
4. Failing to Standardize Billing
When it comes to streamlining operations, failure to standardize billing can cause a significant bottleneck for RIAs. Many firms and advisors have different billing frequencies and methodologies across a single book of business — and managing all of these inconsistencies puts a strain on a practice’s resources, preventing them from efficiently scaling.
To prevent this, it is essential that all team members are on the same page with their billing software.
A consistent approach will save time and frustration in the long run while supporting billing cycles that are prompt and accurate. With a comprehensive platform offering a robust suite of billing features, a firm is able to streamline the nuances that come with billing to meet the evolving needs of clients.”
Streamlining operations is extremely important for RIAs to manage and grow their practice organically, regardless of market conditions or the economic environment. By remaining judicious and carefully selecting the right combination of technology tools, RIAs can free up valuable time to focus on elevating the client experience.
By consolidating multiple software solutions into one comprehensive platform with automated processes, RIAs can not only reduce costs associated with scalability but also offer the timely delivery of quality advice. Ultimately, these measures enable RIAs to better manage their practice while paving the way for sustainable growth.
Jack Hannah is the Chief Operating Officer at GeoWealth,, an enterprise technology and TAMP built for the needs of the modern RIA.