A newly released white paper by Envestnet/Tamarac, a provider of web-based portfolio and client management software for independent advisors and wealth managers, showed that integrating technology into their business has helped financial advisor boost their income by an impressive 20 percent over those advisors who did not use integrated technology.
How Integrated Technology Helps Increase Assets Under Management
A 2012 survey asked 201 primary financial advisors about their businesses; in particular, the role integrated technology played in their business. The report highlighted that fact that, because many registered investment advisors (RIAs) are smaller, independent operations, these financial professionals often choose to source their technology from vendors or custodians. However, this process often leads to systems that do not work well together. On the other hand, RIAs who utilize integrated technology often have more efficient and profitable businesses because all systems integrate and function well together.
In particular, the study found that RIAs with even some degree of technology integration had almost twice as many assets under management as RIAs without any integrated technology. Those who utilized integrated technology had, on average, $90 million more in client assets and produced about $100,000 more in annual revenue that those without.
Integrated Technology and the Gift of Time
Further, the study found that advisors in firms with some technology integration spent about 23 percent less time on operations processes than advisors in firms without technology integration. This saved time freed up about 40 days each year for every employee, thereby allowing them to focus on revenue-generating activities.
The study reported that 30 percent of all firms have no technology integration. The study found that, even though smaller RIAs don’t have the large technology budgets of larger firms, employing integrated technology could often help level the playing field.