The wealth-management industry must seek new ways to enhance advisor productivity and transform the business’s efficiency as the industry faces intensifying competition, increasing client expectations and growing regulatory demands, argues a new report from Oaks, Pa.-based SEI Investments Co.
The report, which SEI published on Monday in conjunction with Rockville, Md.-based research firm, WISE Gateway LLC, argues that the wealth-management industry remains riven with inefficiencies that impair client service and advisor success. For example, advisors are saddled with administrative chores. According to the report, almost 40% of an advisor’s day “is spent on low-value administrative work.”
In addition, firms’ technology offerings are often cobbled together over time, creating complexity that leads to service and operational issues. The report says that, as a result, “cracks are appearing” at wealth-management firms, and that this will likely lead to bigger problems down the road if it’s left unaddressed.
“Right now the cracks are growing and without radical transformation, wealth-management ‘cracks’ can quickly turn into wealth-management ‘breakdowns’,” the report says.
To address these concerns, the report calls on firms to take a page from tech companies, such as Amazon.com Inc. and Uber Inc., rethink their “value chains” and devise strategies to ramp up productivity and profitability. However, it cautions that there is no “silver bullet” that will solve all of the industry’s issues in one fell swoop.
Rather, the report suggests that firms must go on a “journey” to re-evaluate their value proposition and profitability structure and to devise ways to reach their objectives.
“In practical terms, this means investing in [advisors’] productivity, in cutting back administrative work, eliminating manual processes, reducing co-ordination costs, upgrading old technology and giving them time back in their days — and then holding them accountable for better service and sales outcomes,” the report states.
According to the report, the most productive and profitable firms share several distinguishing characteristics, including: higher levels of support and better infrastructure for advisors; streamlined sales and service processes; centralized servicing tasks; and plans for managing small accounts and single-service relationships.
“Attaining higher levels of productivity — attaining a new frontier — involves a variety of tactical and foundational changes: streamlining sales and service processes; centralizinglower-value sales and servicing tasks; developing a plan for small accounts; adding administrative and client service support resources,” the report says.
As well, the report says that firms should be open to using automation and partnership arrangements to meet their goals.
In particular, the report suggests that firms should also be focused on improving advisor productivity.
“Firms need to do more — significantly more — to support their advisors and to improve the productivity of their client-facing teams,” the report says. “By empowering their advisors to drive growth, firms can alleviate revenue and expense pressures.”
“As advisors are tasked with delivering a more holistic approach to helping clients achieve their goals, their time becomes an even more valuable asset,” said David Lincoln, co-founder and partner at WISE Gateway. “Finding ways of increasing efficiency through better use of people, process and technology will help wealth managers deliver a better service experience while continuing to grow both client numbers and profitability.”
The report is based on surveys of 80 U.S. wealth-management firms and interviews with dozens of executives.
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