Automating Process: The Key to Efficiency and Value Creation

With key front-end software in place at most financial advisory firms, the time has come to seize opportunities in the back office. Docupace, which describes itself as the “connective tissue for back offices,” explains how and why process improvement and automation is central to gains in efficiency and improving a firm’s overall performance.

Below, in an InvestmentNews Create interview, Ryan George, chief marketing officer at Docupace, discusses how process improvement and automation create lasting enterprise value.

InvestmentNews Create: A passion for process typically is not a hallmark of financial advisory firms. Why is that the case and does it really matter?

Ryan George: Docupace is in the process automation business, so obviously we approach work with a process mindset and care about it a lot. But that’s not how others necessarily think, which actually is a good thing. The financial advisory business has done so well because it has always focused on attracting and serving clients by delivering the best possible advice. The processes needed to accomplish that objective are important, obviously, but not an end in themselves. What’s more, success in the financial advice business requires passion about people and helping to solve the problems they face, not on the best way to handle forms. And that’s the way it should be. As a result, however, processes at many advisory businesses evolved over time in piecemeal ways, with lots of ad hoc fixes and inconsistencies. It all works, but it’s not optimal and it’s risky. Without establishing efficient, consistent and, ultimately, automated processes, financial advisory firms seriously hamper their ability to provide excellent service, as well as to attract and retain advisors and clients. Given today’s increasing pressure on margins, process improvement becomes even more imperative.

InvestmentNews Create: Give us a specific example of a process issue that often poses problems.

Ryan George: Account-opening is an evergreen problematic area. With so many different types of accounts that can be opened — trust, joint, rollover, etc. — there is a staggering number of combinations of forms or approvals that may be required. Without establishing and then rigorously following a standardized procedure for each account opening, firms are inviting errors and omissions that can lead to delays, greater liability and costs, and poor service. Automating the processes associated with opening a new account —  including the use of digital signatures — not only speeds an essential task but also ensures that all necessary steps are done completely and in the proper order. What’s more, automation creates a digital track record that is invaluable for management oversight and compliance purposes. The bottom line is that codifying and automating back-office processes not only increases firm efficiency, it results in clients and advisors being more satisfied.

InvestmentNews Create: What other back-office jobs does Docupace technology handle?

Ryan George: At the highest level, our system routes tasks automatically and always provides 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.

New-account opening, as we mentioned, is one job we handle. And let me mention that along with faster inputting of account data, 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.

Since the system sits between a firm’s customer relationship management software, its turnkey asset management program and its custodian, we serve as the glue that helps integrate everything and create the ecosystem to keep the business running effectively.

Finally, everything is protected with the highest levels of security, permitting safe remote access, redundancy and the ability to operate under emergency conditions.

InvestmentNews Create: Where does “enterprise value-creation” come in?

Ryan George: As ongoing businesses, broker-dealers and registered investment advisory firms, whether small or large, must be more than the sum of the individual books of business of the advisors in their employ or those affiliated with them. Working in teams and creating standardized elements of service — such as a set number of client meetings a year, delivering reports on a scheduled basis and updating financial plans regularly, for instance — institutionalize the business and make it less dependent on any one person. For this enterprise value to be truly realized, however, the back office must be integrated into these processes so that work flows smoothly and without error throughout the business.

Repeatable, fee-based business that comes from delivering high-quality service to a growing yet stable client base makes any advisory business valuable and desirable by others. In whatever way a business owner or owners wish to access the value of that business — through a sale or merger, for instance, or succession — advisory firms that operate efficiently and profitably as a standalone enterprise and not merely an advisor’s book, carry higher multiples and are more in demand.

InvestmentNews Create: What do top management and owners find most surprising when they decide to automate the back office?

Ryan George: Usually, management anticipates that there will be more than a little reluctance to changing the way the firm deals with paperwork. While it’s true we often encounter some skepticism at first, it’s typically a lot less than everyone fears. Our system, which has been updated and modified over the years, has become so intuitive and so specialized for the unique needs of advisory firms that most back-office personnel tell us they feel more productive and more satisfied once they understand what it can do. As one administrative person once told us, “I’m glad I can stop putting out fires.”