Advisory Back Offices: The Next Efficiency Frontier

Operational demands brought about by the pandemic have emphasized the need for greater digitization and efficiency in advisory firm back offices. In addition to meeting current needs, technology also can enable advisory firms to seize the long-term value-creation opportunities. With sophisticated front-end technology now nearly ubiquitous, Docupace explains why the time has come for advisory firms to seize the value-creation opportunities in the back office.

Ryan George, chief marketing officer at Docupace, discusses how broker-dealers and RIA firms can enhance back-office operations in the following interview with InvestmentNews Create.

InvestmentNews Create: Why should advisory-firm executives — top management as well as operations and compliance professionals — be considering back-office technology improvements now?

Ryan George: Most broker-dealers and RIA firms already employ front-end technology in the form of customer-relationship management systems (CRM), portfolio management tools and financial planning software. Improvements in those areas brought great gains in efficiency and effectiveness. Since most of the front-office gains have been achieved, we are now at a turning point where people are starting to realize that the next big gains will come from the back office, where systems generally aren’t as advanced, where investments haven’t been as intensive, and where the traditional solution — adding more staff — no longer is viable.

Covid has been a catalyst for accelerating this new focus, largely because so many firms and advisors had to find ways to work efficiently and seamlessly away from the office. When our users went home in 2020, they experienced little or no change in how they operated. And as clients stayed home and did more online, we noticed something else: Even if they weren’t specifically asking for technological tools, clients and their advisors increasingly came to expect the speed, ease of use and security that only digitized back-office solutions can make possible.

InvestmentNews Create: What back-office jobs specifically does Docupace technology do?

Ryan George: We like to describe ourselves as the connective tissue for back offices. Our system routes tasks automatically and always with the correct and necessary documents, so that there are no potentially costly delays or gaps. If firms need help in establishing the pathways for the automated workflow processes we offer, we’re there to assist based on years of experience in helping to create back-office best practices.

In addition to gathering information on existing accounts, our systems enable new accounts to be opened easily using digital signatures. Along with faster inputting of new accounts, we provide an advisor transition service that accelerates account transfers. It’s a mixture of tech and white glove service that has led to 87% of adviser transitions being completed in less than 60 days.

Finally, as a by-product of having automated process that track every action, our system facilitates risk management and regulatory compliance, because each step in every process is archived and immediately accessible. And everything is protected with the highest levels of security.

InvestmentNews Create: Advisory firms tend to be skeptical of adding new technology for good reason — it often doesn’t live up to the hype and its complexity often makes adoption spotty. What would you tell firms to satisfy their concerns?

Ryan George: First, our sales cycle is a several months-long educational process in which we learn about a firm’s needs and they find out more about what we can do. Sometimes, the fit is just not right, and we always discuss that openly. Usually, our tools replace proprietary technology that has become antiquated or doesn’t communicate well with other systems. Before and during the deployment of our system, our in-house trainers work with firm personnel. Since everyone’s business is a little different, we customize our training to every situation. We also work with a designated champion in the home office who becomes the go-to person for the firm and Docupace during this period. After the initial transition, we meet with the firm monthly and create specific on-going training modules.

As far as ensuring usage, being in business as long as we have — we like to say we’ve been on a mission to eliminate paperwork since 2002 — we continuously work to make our system more intuitive. We listen to our customers and have adapted our system to their needs and requests.  

InvestmentNews Create: How would a firm measure the success or payback they would get from an investment in Docupace?

Ryan George: Quantitiatively, they should see almost immediate increases in processing speed and operational efficiency in terms of person-hours spent on task. On the more qualitative side, they should note higher levels of customer and advisor satisfaction. If firms use surveys or other satisfaction-measurement tools in addition to what they hear anecdotally, they’ll see much less time and effort being spent on getting forms signed and a sharp reduction in the friction users encountered in previous interactions with the firm.

For example, a large West Coast RIA that began using us late last year saw a dramatic reduction in rejected work items in a matter of weeks because the system prevented incorrect items from being processed. For example, the system determines whether a required box is checked off on a particular form and if all forms necessary for a specific type of account opening are submitted. Since there are so many forms and an almost infinite number of form combinations, this eliminates costly errors and corrections.

InvestmentNews Create: Any other takeaways?

Ryan George: To be sure, we are in the business of improving the efficiency of the back office. But we’re also in the business of trying to improve the work life of people whose contributions are often overlooked. Operations sits in the background, yet everyone expects it work perfectly. We want to elevate and promote the essential work that back-office personnel perform and at the same time empower them so that firms can provide sound financial advice to more of the public.