Navigating the financial services landscape demands efficiency at every turn. Those seemingly small process inefficiencies, often dismissed as nuisances, accumulate over time, translating into substantial losses in time, money, and resources. As the industry intensifies in competition, firms can’t afford to overlook these inefficiencies. Have you calculated the cost to your firm?
In 2023, PreciseFP revealed a staggering $5,060,052 in Practice Management Dollars Saved for users. This isn’t just about numbers; it’s a testament to a transformative approach. Think about the billable hours saved from outdated practices like printing forms, manual data entry, and the tedious processes of office scanning, filling, and shredding paperwork. Beyond the tangible savings, PreciseFP has witnessed audits that once took two weeks streamlined to a mere two hours through the power of technology.
But it’s not just about dollars saved; it’s about a smoother, more efficient way of doing things. Enhancing customer service levels, ensuring a seamless experience for clients, and making talent recruitment a breeze. Stay tuned as we delve into the hidden costs of inefficiency and how PreciseFP is changing the game.
Inefficiencies Lead to Lost Time
As an advisor, you wear many hats. One survey found that only 13% of financial advisors feel they have complete control over their time. But even with other responsibilities, your main goal as an advisor is to serve clients and expand your firm. Inefficiencies can cost valuable time you could otherwise spend in more important pursuits.
Research has found that less than 20% of an advisor’s time is spent meeting with clients. The rest of their time is spent doing other tasks, but perhaps the most inefficient is the 8% spent on administrative tasks like managing paperwork, data entry, and organization. When those tasks take longer than needed because of inefficient systems, the entire workload slows.
Considering the average annual base pay of financial advisors in the United States is around $80,000, advisors waste $6,400 yearly on administrative tasks — and that’s on the low end. Multiply that by every advisor and employee at a firm, and it can lead to significant losses.
Inefficiencies Lead to Incompliance Fees
Staying in compliance saves firms money. But, inefficient compliance processes open the door to potential issues. In 2022, the SEC filed a record number of enforcements: 760 total actions for $6.4 billion in penalties. Those enforcements come from a variety of actions, including civil injunctions, recordkeeping violations, and misleading statements.
When firms aren’t in compliance or don’t have the systems to store and maintain their records properly, routine audits become more of a headache, and there’s a greater chance of having to pay a fine. An extended audit means more time away from clients and potentially lower income, and a violation from the SEC or FINRA can lead to a penalty, a drop in reputation, and time and money spent on legal fees and other filing concerns. The bottom line is this: compliance violations are preventable with the right systems.
Physical Paperwork Cost Firms Time and Money
We’ve already established that advisors spend a lot of time on administrative tasks. And while administrative work is required to keep a firm running smoothly, outdated or inefficient processes can slow things down. One of the biggest culprits is an overreliance on paper.
On average, employees spend at least two hours a day looking for documents or information they or others need to do their jobs. That’s not only inefficient, it’s frustrating. More than 40% of employees say they would consider leaving a job if there isn’t an efficient or easy way to access the information they need.
And then there’s the cost of paper. Financial advising is notorious for overwhelming paperwork, from client onboarding forms to printed regulations and disclosures. Research has found that as much as 3% of a company’s revenue is spent on paper, printing, and storing and maintaining physical files. The average four-drawer cabinet costs around $25,000 to fill and $2,000 per year to maintain. Look around your firm at how many filing cabinets you own and see how quickly that cost adds up.
With the cost of copying, filing, and mailing physical documents, paper may cost up to 31 times more than digital documents. Paper costs your firm money, not just from the cost of the paper itself, but all the time and resources used to store and process the documents printed on them.
Outdated Software Costs Firms Money
To curb paper dependence, firms are moving to digital documents. But without the right software, many advisors are left working on outdated systems that lead to frustrations and friction. In one survey, 65% of advisors reported losing business from clients or prospects because of outdated software — a significant loss of potential revenue and growth opportunities. Conversely, advisors with modern technology are 50% more likely to see growth in new client assets and 33% more likely to get new client referrals.
Repetitive tasks like scheduling and reconciling reports take 41% of advisors an average of two hours or more. Automating those tasks with modern technology can cut that time down significantly, leaving advisors more time to spend on meaningful tasks.
These inefficiencies add friction to the advisor and client experience when firms operate more slowly than necessary, which not only slows progress but can lead to a loss of new clients, lower employee retention, and lost time and resources.
Elevating your data gathering process with PreciseFP goes beyond internal efficiency—it ensures a streamlined experience for your clients. Embrace a digital data gathering approach, and one of the most effective ways is through an integrated, cloud-based data management system. PreciseFP seamlessly integrates with various software, creating a comprehensive system for advisors and back-office staff. This translates to less time and reliance on physical paperwork and more time dedicated to strategic growth. Click here to explore how PreciseFP can lead to enhanced efficiency across your firm, benefiting both you and your clients.
Vice President, Professional Services | Docupace
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