Removing Obstacles to Practice Growth: New Opportunities for Independent RIAs

Transcription

1 Removing Obstacles to Practice Growth: New Opportunities for Independent RIAs SEPTEMBER 2013 Alois Pirker 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited.

2 TABLE OF CONTENTS IMPACT POINTS... 3 INTRODUCTION... 4 METHODOLOGY... 4 A COMPARISON OF THE RIA AND WIREHOUSE LANDSCAPE... 5 ADVISOR TIME ALLOCATION... 9 BEHIND THE SCENES OF RIA PRACTICES CONCLUSION CHOOSING THE RIGHT OUTSOURCING TECHNOLOGY THE ESSENTIALS VENDOR OFFERING CLIENT COMMUNICATION TOOLS ADVISOR TOOLS SOLUTION ATTRIBUTES AND SERVICES ABOUT AITE GROUP AUTHOR INFORMATION CONTACT LIST OF FIGURES FIGURE 1: DISTRIBUTION OF FINANCIAL ADVISORS, FIRMS, AND CLIENT ASSETS ACROSS WIREHOUSE AND RIA FIRMS 5 FIGURE 2: DISTRIBUTION OF CLIENT ASSETS UNDER ADMINISTRATION AND MANAGEMENT BY BOOK OF BUSINESS FOR WIREHOUSE AND RIA SEGMENTS 6 FIGURE 3: PRACTICE STRUCTURE 7 FIGURE 4: NUMBER OF EMPLOYEES IN ADDITION TO PRIMARY FINANCIAL ADVISOR PER PRACTICE 8 FIGURE 5: PRIMARY FINANCIAL ADVISOR TIME ALLOCATION IN THE RIA CHANNEL 9 FIGURE 6: PRIMARY FINANCIAL ADVISOR TIME ALLOCATION IN THE WIREHOUSE CHANNEL 11 FIGURE 7: RIA OUTSOURCING 12 FIGURE 8: RIAS' FUTURE VIEWS ON OUTSOURCING 13 FIGURE 9: AVAILABILITY OF ADVISOR DASHBOARD 14 FIGURE 10: LIMITED OR UNAVAILABILITY OF KEY BUSINESS APPLICATIONS Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 2

3 IMPACT POINTS Registered investment adviser (RIA) practices are generally smaller than wirehouse practices in terms of client assets under administration and/or management. Sixtythree percent of wirehouse practices surveyed eclipse US$100 million in client assets, while only 28% of RIA practices do the same. RIA practices employ approximately 50% more people than do similar-sized wirehouse practices. Small RIA practices report having an average of 1.6 more practice members than small wirehouse practices, and large RIA practices have an average of 2.7 more team members than do large wirehouse practices. Advisors in large RIA practices spend a similar amount of time on client acquisition and prospecting as advisors in small RIA practices on average, despite employing more people. The inability to scale their business through improving operational efficiency is evident in that the primary advisor in large RIA practices does not have more time to hunt for new clients. Contrary to primary advisors in large RIA practices, the primary advisor in a large wirehouse practice spends more than twice as much time on client acquisition and prospecting than does the primary advisor in a small wirehouse practice. Fewer than half of advisors surveyed in both small and large RIA practices indicate that their firm currently outsources portfolio accounting and related operations tasks such as data reconciliation and fee billing. Those that do not currently outsource portfolio accounting and associated operations tasks show tepid interest in doing so in the future. Outsourcing represents the unknown for many RIAs, and the need to give up basis points in exchange for outsourced services can initially be a barrier to change. Approximately 60% of advisors in small and large RIA practices alike can access the advisor dashboard while away from the office. In order to operate more efficiently, advisors need increased access to their tools on demand and not be restricted by their physical location or be tied to one machine Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 3

4 INTRODUCTION The U.S. RIA firm landscape is distributed among over 17,000 firms, with the vast majority employing fewer than 10 practice members. In contrast, the wirehouse channel is composed of four firms, each supporting thousands of advisors. Unlike their peers in the wirehouse channel that spend millions annually on operational support and streamlined technology, most RIA firms are responsible for managing their own technology and operational support. With most RIA firms being relatively small and having limited technology budgets and expertise, the primary advisor invariably has his or her hand in many operations and client management functions that limit the amount of time the advisor can spend acquiring new clients and ultimately growing the practice. Unfortunately, due to primary advisors in RIA practices having their hand in many aspects of firm operations, they often cannot see the forest for the trees. Sourcing the right technology applications and outsourcing core operational functions helps RIA practices operate more efficiently and overcome these obstacles, which in turn allows more time for advisors to hunt for new clients and thus grow their practice. In order to realize these benefits, advisors in RIA firms need to embrace change. Produced by Aite Group and published by Advent Software, this study aims to provide insight into the challenges that financial advisors in RIA firms face in growing their practice. The goal of this study is to provide financial advisors within RIA firms a better understanding of how their peers in both the wirehouse channel and other RIA firms are structured and operate and provides advice on solutions to aid advisors and their staff in operating more efficiently and growing the practice. METHODOLOGY The analysis in this report leverages a March 2012 online Aite Group survey of 534 financial advisors. The financial advisor sample includes representatives from the wirehouse and RIA wealth management channels. Among all advisors surveyed, 68 are affiliated with wirehouses and 184 are affiliated with an RIA firm. For comparative purposes, wirehouse advisor and RIA respondents are segmented by the size of their practice based on client assets under administration and/or management. The sample size for the small-practice and large-practice wirehouse segments has a margin of error of approximately 13 points at the 90% level of confidence; for the small-practice RIA segment, it is 10 points at the 90% level of confidence, and for large-practice RIA segment it is 19 points at the 90% level of significance. Given the size of the research sample for the advisor segments examined in this report, the data provide directional indication of conditions in the market Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 4

5 A COMPARISON OF THE RIA AND WIREHOUSE LANDSCAPE Although the wirehouse and independent RIA channels each boast a similar number of financial advisors, each channel differs significantly in its makeup. The independent RIA channel has over 57,000 financial advisors compared to roughly 55,000 to 56,000 with wirehouses. The average advisor in each channel has a strikingly similar profile in terms of age, gender, and experience. Beyond these most basic descriptive metrics, the two channels are very distinct. The wirehouse channel is made up of only four institutions, but those four firms control the largest slice of U.S. wealth management industry assets. As of the end of 2012, advisors in the wirehouse channel managed or administered over US$5.5 trillion in client assets under management (AUM). In stark contrast, the independent RIA channel is made up of over 17,000 SEC or state-registered firms collectively managing close to US$2 trillion in client assets (Figure 1). With there being so many more independent RIA firms than wirehouses amid a similar number of advisors, it is clear wirehouses employ thousands of financial advisors while the typical independent RIA has only a handful of financial advisors. This is borne out by research conducted by the Investment Adviser Association (IAA) and National Regulatory Services (NRS) that shows 69% of SEC-registered RIA firms employ fewer than 10 full- and part-time nonclerical employees. When factoring in state-registered RIA firms (those with under US$110 million in AUM), the percentage of RIA firms with fewer than 10 employees grows even higher. Figure 1: Distribution of Financial Advisors, Firms, and Client Assets Across Wirehouse and RIA Firms Number of Financial Advisors, Number of Firms, and Client Assets Across Wirehouse and RIA Firms, End of ,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90, , , , , , , , , , , ,000 Wirehouses 4 55,666 $5,502 RIAs 17,901 57,283 $1,894 Number of financial advisors Number of firms Client assets (US$ billions) Source: Company reports, Aite Group $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Similar to the comparison of firm size in each channel as measured by number of advisors, the wirehouse practices surveyed tend to be larger in terms of client assets than are independent 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 5

6 RIA practices. The majority of wirehouse practices surveyed eclipse US$100 million in client assets (63%). On the other hand, the distribution of independent RIA practices surveyed is more heavily concentrated among those firms with less than US$100 million in client assets. Only 28% of independent RIA practices surveyed have a minimum of US$100 million in client assets (Figure 2). What is driving this phenomenon? Why is the average wirehouse practice larger in terms of client assets than is an independent RIA practice, despite the struggles in the wirehouse channel and the relative success of the RIA channel in growing client assets? The answer lies mainly in the juxtaposition of wirehouse advisors having the streamlined support of a large institution with multimillion dollar operational and technology budgets to support its army of financial advisors against a plethora of comparatively small independent RIAs firms, each responsible for the firm's own operations and technology setups. Despite these inherent challenges, independent RIA firms have an opportunity to level the playing field with wirehouse practices and to renew their focus on growing their practice in terms of client assets. We compare wirehouse and independent RIA practices falling into two ranges: small practices, defined as those with between US$30 million to US$99 million, and large practices, defined as those with between US$100 million and US$1 billion in client assets. These segments were chosen precisely because they encompass the vast majority of advisors surveyed in each channel as well as removing the outliers that are either very small or very large in terms of an average advisory practice. Figure 2: Distribution of Client Assets Under Administration and Management by Book of Business for Wirehouse and RIA Segments Q. What is the approximate amount of client assets within your practice (e.g., the book of business)? (In US$; N=68 wirehouse respondents) Q. What is the approximate amount of client assets within your practice (e.g., the book of business)? (In US$; N=184 RIA respondents) Less than $10 million $10 million to $29 million 3% 6% Less than $10 million $10 million to $29 million 13% 21% $30 million to $59 million $60 million to $99 million 13% 15% 28% $30 million to $59 million $60 million to $99 million 14% 25% 39% $100 million to $149 million $150 million to $199 million $200 million to $299 million $300 million to $1 billion 26% 6% 12% 15% 59% $100 million to $149 million $150 million to $199 million $200 million to $299 million $300 million to $1 billion 10% 5% 5% 4% 24% More than $1 billion 4% More than $1 billion 4% Source: Aite Group survey of 534 U.S.-based financial advisors, Q Small RIA practices tend to operate in teams more frequently than do small wirehouse practices. Approximately 50% of small RIA practices employ a team structure, whereas close to seven out of 10 small wirehouse practices are made up of a single advisor (Figure 3). There is no significant 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 6

7 difference in practice structure among large wirehouse practices and large RIA practices, because roughly three-quarters operate in teams. RIA firms generally require more people to operate than does a similar-sized wirehouse practice, and this is evident even among small practices. Figure 3: Practice Structure Q. How would you describe the structure of your practice? Small-practice wirehouse FAs (n=19) 68% 32% Small-practice RIA FAs (n=72) 51% 49% Large wirehouse FAs (n=40) Large-practice RIA FAs (n=44) 25% 32% 75% 68% Solo Team-based Source: Aite Group survey of 534 U.S.-based financial advisors, Q A closer look at practice structure in terms of the number of practice members in addition to the primary advisor reveals that RIA practices employ approximately 50% more people than do similar-sized wirehouse practices. Small RIA practices report having an average of 1.6 more people per team than do small wirehouse practices. Only 56% of small RIA practices have fewer than four practice members; 79% of small wirehouse practices do the same. Likewise, large RIA practices have an average of 2.7 more team members than do large wirehouse practices. Furthermore, large RIA practices are more likely to have over 10 team members than do large wirehouse practices (25% of large RIA practices compared with 13% of large wirehouse practices; Figure 4) Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 7

8 Figure 4: Number of Employees in Addition to Primary Financial Advisor Per Practice Q. How many people work in your practice (employees and independent contractors), including you? Ave. Small-practice wirehouse FAs (n=19) Small-practice RIA FAs (n=72) 56% 79% 35% 16% 5% 10% % Large-practice wirehouse FAs (n=40) 53% 35% 13% 5.7 Large-practice RIA FAs (n=44) 30% 45% 25% % <4 4 to 10 >10 Source: Aite Group survey of 534 U.S.-based financial advisors, Q Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 8

9 ADVISOR TIME ALLOCATION A key tenet of practice growth (in terms of AUM) is closely aligned with efforts spent by clientfacing personnel on client acquisition and prospecting. The more bogged down that advisors become while solving client service issues or reconciling data, for example, takes time away from growing the business through acquiring new clients. A typical response by an advisor in a small RIA practice is to hire more support staff as the firm grows in order to alleviate the operational burden on an advisor and free up time to spend on client acquisition and prospecting. The reality is that despite their best intentions, advisors in large RIA practices spend a similar amount of time on client acquisition and prospecting as advisors in small RIA practices on average, despite employing more people (Figure 5). This suggests that as RIA practices grow, they are employing more people yet not operating more efficiently. The inability to scale their business through improving operational efficiency is evident in that the primary advisor does not have more time to hunt for new clients. This can serve as a deterrent to growing the business, because in theory if the business cannot scale, the revenue generated by increased AUM may be offset by higher operating expenses (i.e., employing even more people to support business growth). Figure 5: Primary Financial Advisor Time Allocation in the RIA Channel Q. Please allocate the percentage of time you spend on each task. 53% 56% 23% 24% 14% 13% 10% 8% Client acquisition and prospecting Client management Operations processes Investment research Small-practice RIA FAs (n=62) Large-practice RIA FAs (n=39) Source: Aite Group survey of 534 U.S.-based financial advisors, Q Unlike primary advisors in large RIA practices, the primary advisor in a large wirehouse practice spends more than twice as much time on client acquisition and prospecting than does the primary advisor in a small wirehouse practice (Figure 6). Although a large wirehouse practice has more team members than does a small wirehouse practice, on average a large wirehouse practice still has fewer practice members than does a large RIA practice. The greater allocation toward client acquisition and prospecting by the primary advisor in a large wirehouse practice 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 9

10 compared with an advisor in a small wirehouse practice suggests that wirehouse practices exhibit a greater ability to scale their business operationally as they grow. The difference in time spent on client acquisition and prospecting between advisors in a small wirehouse practice and those in a large wirehouse practice is mainly attributable to the variation in time spent on client management tasks. A further drill-down into time spent by the primary advisor on specific tasks that in the aggregate comprise client management uncovers the major differences: Small-practice wirehouse advisors spend 13% of their time on financial planning compared with 8% of time spent by advisors in large wirehouse practices. Small-practice wirehouse advisors spend 16% of their time on trading and rebalancing compared with 9% of time spent by advisors in large wirehouse practices. Small-practice wirehouse advisors spend 14% of their time on customer service compared with 8% of time spent by advisors in large wirehouse practices. Small-practice wirehouse advisors spend 4% of their time on proposal generation compared with 7% of time spent by advisors in large wirehouse practices. The increase in time spent on proposal generation by advisors in large wirehouse practices positively correlates with the increase in time spent on client acquisition and prospecting by advisors in large wirehouse practices. RIA practices are challenged in supporting an efficient operating environment that can scale with growth in the business due to a lack of budget and expertise. Emerging technology solutions are becoming available that neither require great expenditure nor in-depth technological expertise to support and may make operating a larger practice more palatable in terms of being able to provide the same level of client management and service without increasing support staff. Technology and the ability to scale the business go hand in hand Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 10

11 Figure 6: Primary Financial Advisor Time Allocation in the Wirehouse Channel Q. Please allocate the percentage of time you spend on each task. 66% 52% 19% 20% 21% 9% 6% 8% Client acquisition and prospecting Client management Operations processes Investment research Small-practice wirehouse FAs (n=18) Large-practice wirehouse FAs (n=38) Source: Aite Group survey of 534 U.S.-based financial advisors, Q Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 11

12 BEHIND THE SCENES OF RIA PRACTICES Advisors in large RIA practices indicate that their firm has a greater propensity to outsource portfolio accounting and related operations tasks such as data reconciliation and fee billing than do advisors in small RIA practices. Nevertheless, fewer than half of advisors surveyed in both small and large RIA practices indicate that their firm currently outsources these functions (Figure 7). Firms that maintain these operations functions in-house not only have to dedicate employees toward completing these tasks, they must also acquire and maintain the underlying technology applications. Operational risk is magnified by firms choosing to control these functions in-house, and invariably the primary advisor is spending time on these tasks often despite hiring more support staff to relieve him- or herself of these duties. Figure 7: RIA Outsourcing Q. At your firm, are portfolio accounting and operations tasks (e.g., data reconciliation, fee billing, etc.) outsourced to an external service provider? Small-practice RIA FAs (n=59) 66% 34% Large-practice RIA FAs (n=38) 53% 47% No Yes Source: Aite Group survey of 534 U.S.-based financial advisors, Q Overall, advisors in both small and large RIA practices that do not currently outsource portfolio accounting and associated operations tasks show tepid interest in doing so in the future. Advisors in a large RIA practice show greater interest in outsourcing than do advisors in a small RIA practice, as a combined 15% of advisors in a large RIA practice "probably" or "definitely will" outsource these tasks compared with 5% of advisors in a small RIA practice. Still, 60% of advisors in large RIA practices "definitely" or "probably will not" outsource these functions; 69% of advisors in small RIA practices say the same (Figure 8). The generally lack of acceptance toward outsourcing portfolio accounting and related operations tasks is a perfect example of the hesitancy of advisors in RIA practices to embrace change. Change is necessary in order to spur growth. Portfolio accounting, data reconciliation, and producing monthly invoices, while important to the viability of a RIA practice, is not a core competency or competitive differentiator for the firm. These are functions that must be completed accurately and in a timely fashion, and they only generate feedback from clients 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 12

13 when done incorrectly. Outsourcing represents the unknown for many RIAs, and the need to give up basis points in exchange for outsourced services can initially be a barrier to change. The opportunity cost is far greater, as most adopters of outsourcing have overcome the cost through a combination of reducing in-house expenditure and increasing revenue due to more time spent on acquiring new clients. Beyond the financial benefits, outsourcing allows the primary advisor to spend more time on what he/she loves doing working with clients and lessens the number of fire drills a firm encounters due to operational issues. Figure 8: RIAs' Future Views on Outsourcing Q. How likely is your firm to consider outsourcing the portfolio accounting and operations function? Small-practice RIA FAs (n=39) 18% 51% 26% 5% Large-practice RIA FAs (n=20) 30% 30% 25% 10% 5% Definitely will not Probably will not Might or might not Probably will Definitely will Source: Aite Group survey of 534 U.S.-based financial advisors, Q Mobility has swept through the general population, fostering an environment of on-demand information from virtually anywhere. Financial advisors and their clients are no different. The increasing immediacy of requests for information and expected responses has changed the manner in which advisors must operate to meet these new service expectations, which have quickly become table stakes. Approximately 60% of advisors in small and large RIA practices alike can access the advisor dashboard while away from the office, inclusive of mobile/tablet devices, laptop computers, and any computer with an Internet connection. This still leaves approximately 40% of advisors who are either tied to their office computer, do not have access to a dashboard, or do not think it is applicable to them (Figure 9). The fact that only 6 out of 10 surveyed advisors can access their advisor dashboard while away from the office unnecessarily restricts the manner of access for advisors. In order to operate more efficiently, advisors need increased access to their tools on demand and not be restricted by their physical location or be tied to one machine. That might have worked in days of old, but today's clients do not want to wait for an advisor to go back to the office and follow up later. Likewise, advisors need the flexibility to have access to their tool set while out of the office in 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 13

14 order to operate more efficiently, which ultimately allows them to allocate more time towards client acquisition and prospecting. Figure 9: Availability of Advisor Dashboard Q. Please indicate if a business application is available to you for each of the following capabilities and how you access them. Advisor dashboard (book overview, alerts, etc.) (N=60 small-practice RIA FAs) Q. Please indicate if a business application is available to you for each of the following capabilities and how you access them. Advisor dashboard (book overview, alerts, etc.) (N=39 large-practice RIA FAs) Not applicable 18% Not applicable 10% Applicable but not available 5% 42% Applicable but not available 5% 38% Available only from my office computer 18% Available only from my office computer 23% Available while away from the office (e.g. laptop, mobile phone, tablet, any computer with an internet connection) 58% Available while away from the office (e.g. laptop, mobile phone, tablet, any computer with an internet connection) 62% Source: Aite Group survey of 534 U.S.-based financial advisors, Q A similar situation exists with regard to the availability of other key business applications. Between approximately 30% and 40% of advisors in small and large RIA practices are limited to accessing applications such as account aggregation, rebalancing, performance reporting, and ad hoc reporting tools from their office or do not have access or think it is applicable to them (Figure 10) Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 14

15 Figure 10: Limited or Unavailability of Key Business Applications Q. Please indicate if a business application is available to you for each of the following capabilities and how you access them. Available only from my office computer, available but not applicable, or not available. Advisor dashboard Account aggregation Portfolio rebalancing 32% 28% 31% 42% 38% 38% Performance reporting Ad hoc reporting tools 23% 33% 33% 36% Small-practice RIA FAs (n=60) Large-practice RIA FAs (n=39) Source: Aite Group survey of 534 U.S.-based financial advisors, Q Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 15

16 CONCLUSION A major factor for the success of RIAs is their laser focus on understanding client requirements and fine-tuning their proposition to specific client needs. While time spent with clients and prospects is the key ingredient of a successful financial advisor practice, it is other tasks that frequently occupy advisors. As shown in this paper, technology and operations are areas most RIAs are managing themselves directly and spending a great deal of time on. Clearly, for many RIAs these parts of their business are neither a passion nor an area of expertise, which explains why many RIA firms are run on technology platforms that might have fit their firm size and business model when the firm was started but are no longer providing a good base for continuous growth. As a result, very few RIA firms have managed to grow their practice beyond US$100 million in client assets. Recent years, however, have provided a fertile business environment for RIAs, as the dominant wirehouse firms have been dealing with the effects of the financial crisis. Being able to take advantage of these growth opportunities for RIAs requires a scalable operating model, something many firms don t possess. These RIAs have to embrace change and potentially replace the technology backbone of their firm. The availability of technology platforms that are hosted by vendor firms can greatly reduce or even eliminate the need for in-house installed applications and at the same time provide scale by leverage vendor resources as required. RIAs that engage the right technology partner will be in a much better position to grow their practice in a profitable manner Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 16

17 CHOOSING THE RIGHT OUTSOURCING TECHNOLOGY THE ESSENTIALS There are a number of outsourcing portfolio management and reporting solutions on the market and they vary widely in their capabilities. Today s advisors need to gain efficiencies wherever possible to keep up with their clients demands today and in the future. To maximize your growth potential, a portfolio management and reporting platform must meet a number of essential criteria. V E N D O R O F F E R I N G Outsourced reconciliation The right platform increases productivity by outsourcing reconciliation of all investment performance data. The platform vendor should fully reconcile data received from custodians or through aggregators daily to provide your clients with up-todate market values through a thorough, automated reconciliation process combined with experts who research and manage exceptions. This offering should include full reconciliation of cash, positions, and transactions on a daily basis. Custodial interfaces and account aggregation The right portfolio management and reporting platform should have daily or intraday data integrations with a broad range of custodians and single sign-on, contextual linking, daily reconciliation, and cost basis integration with major custodians. Data sources should include direct interfaces with primary custodians and aggregation of assets from nonstandard custodians and accounts. Additionally, the system should have the ability to manually enter and maintain outside assets such as real estate, hedge funds, private equity and other assets that clients have in their entire wealth plan. The right custodial integrations will save you time and allow you time to focus on your work. Limited overhead The platform should limit investment technology and back-office operations overhead and expenditures. Web-, SaaS-, and cloud-based solutions are often the best fit for advisors wanting to stay ahead of the curve and keep overhead costs at a minimum. Vendor viability The provider should have the track record and resources to assure you that it will be there to support your platform for the long term and that it will continually reinvest in enhancements to the solution. C L I E N T C O M M U N I C A T I O N T O O L S Client reporting and portal The platform should provide valuable, easy-to-use reports for clients and prospects to understand how the advisor is managing their portfolio. Reports and views should be available 24x7 so that clients can gain access to the information they need. The platform should also provide daily performance data for an accurate reflection of the clients wealth via a client portal and mobile options. Complete picture of assets The right platform helps the advisor show his or her clients a complete view of their assets, not just those that that advisor manages. Clients value being able to see all of their assets, including IRAs, 529 plans, assets with other money managers, or even 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 17

18 valuable artwork, along with the assets that the advisor manages in one complete view of their wealth. A D V I S O R T O O L S Flexible and configurable A platform should provide elegant, configurable reports and views that enable firm-level platform and report configuration. Advisors should look for platforms that feature their own branding, including the advisory firm s logo, customized client reports, customizable asset classification schema, account groupings and customized or blended benchmark selections to match the way the advisor views his or her business and wants to tell the firm s story. Mobile access As mobile phones and tablets have become part of daily life for advisors and many of their clients, the platform should be Web-based and offer mobile options via native apps, such as an ipad or iphone app. Advisors desiring to project a tech-savvy image to clients should also consider a platform with the option to brand their own apps for themselves and their clients. Firm-level and advisor team-level reports The system should allow access to firm-level reports and dashboards to support the internal management of portfolios, accounts, advisors, and money managers with a dynamic, data query engine that displays returns over time. Advisors should have the ability to customize the views easily to match the way they invest. The solution should allow advisors to prepare for client meetings and calls faster and more effectively. Portfolio rebalancing The solution should offer an easy-to-use, multi-custodial rebalancing solution integrated into its portfolio management platform, where the data resides. It should also offer rebalancing of assets managed outside of the practice without additional work to compile the data in multiple custodial or stand-alone systems or offline spreadsheets. Client-billing system The chosen platform should allow advisors to easily manage advisory fees and produce billing statements for clients. It should be able to handle multiple billing methodologies based on basis points, flat fees, calculation methods, and tiered schedules as well as customized options such as the ability to exclude outside assets or non-managed accounts. Advisors should be able to create and run their billing in the platform and offer seamless export to Excel to easily upload directly to custodians for direct debiting. S O L U T I O N A T T R I B U T E S A N D S E R V I C E S Ease of use The platform should be sufficiently intuitive to minimize the learning curve and get up and running quickly. Additionally, a purpose-built platform for advisors should not require extensive training to use, as all advisors need to be able to quickly view their clients portfolios or households and share that information seamlessly with clients with a click of a mouse. Constant innovation A platform that supports your growth must also be constantly enhanced at least quarterly to keep up with changes in the advisory world and should also focus on constant efficiencies that affect advisors daily workflows. Easy to upgrade The system must have limited downtime and interruptions to advisors daily workflows and should not require an on-site systems administrator Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 18

19 Limited training required Training should be available, but the platform should not necessitate extensive training. In an era of modern technology, training should typically be included in the cost of the service. Support The system should be backed by knowledgeable, responsive, and dedicated support via phone, , in-product, Web meeting, and desktop sharing. A quality vendor will offer easy ways for clients to share feedback to enhance the solution over time and communication on enhancements. The attributes above reflect several key areas to consider when making the choice to position your firm for growth. Outsourcing with the right solution should free up time to focus on client acquisition and asset growth, help you communicate your story to clients and prospects in a way that instills client confidence and trust and increases probability of client referrals. The right solution can help you gain a competitive versus other independent advisors with less effort Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 19

20 ABOUT AITE GROUP Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group s analysts deliver comprehensive, actionable advice to key market participants in financial services. Headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends. AUTHOR INFORMATION Alois Pirker apirker@aitegroup.com CONTACT For more information on research and consulting services, please contact: Aite Group Sales sales@aitegroup.com For all press and conference inquiries, please contact: Aite Group PR +44.(0) pr@aitegroup.com For all other inquiries, please contact: info@aitegroup.com 2013 Advent Software, Inc. All rights reserved. Reproduction of this report by any means is strictly prohibited. 20