Operational Efficiency in a Complex Profession

By Jim Perhacs, Managing Director, Chief Operating Officer

As an independent financial advisor, you already know that keeping your operations running smoothly is crucial to your success. Balancing daily tasks while also maintaining operational efficiency is challenging for all business professionals (myself included). Whether you’re a solo practitioner or running a large team, here are three tips to help financial advisors optimize your business operations and protect your bottom line.

1. Automate Your Processes

Identifying where you can automate to reduce manual labor, decrease processing times, and eliminate errors is one of the best areas of focus for wealth management leaders. I recommend keeping this as a standing agenda item for calls with your team. A big efficiency driver here is focusing on billing.

For our wealth management firm, advisor fees are automatically generated quarterly and we work with our custodians to ensure completeness in billing specifications. We provide an estimated forecast report via e-mail typically during the second to last week of the quarter prior to billing for advisors to review. Seems simple but referencing this automated report allows advisors to ensure rep codes and billing specs are accurate. These verification checks on a quarterly basis mitigate inaccuracies and help lessen NIGO’s (not in good order) files.

Interesting stat: Companies that automate their accounting processes have a 68% reduction in processing time and a 78% reduction in errors, according to a study by the Aberdeen Group.1

2. Outsource Strategically

Strategically outsourcing functions that are not areas of strength or are too time-consuming is critically important in today’s fast-paced world. Some opportunities we frequently see our advisors outsource are IT support, marketing, and investment management. Outsourcing can help save on labor costs, training/hiring of staff, and valuable time away to perform these functions.

One example here is our proprietary WealthSuite investment management platform, which is a great solution for outsourcing investment management and saving time. Additionally, Private Advisor Group offers a variety of pre-qualified resources that cater specifically to the financial profession to strengthen business operations and save time.

Interesting stat: nearly every advisor who outsources reports improvements in their business, including asset growth (91%), higher business valuation (84%), lower operating costs (79%), increased personal income (83%), and easier compliance & audit processes (95%).2

3. Implement Lean Principles

Lean principles are a set of management practices that focus on eliminating waste and maximizing value. Implementing lean principles helps you create a culture that fosters continuous improvement, innovation, and growth. A few focus areas here encompass: optimization and assignment of work; creating knowledge and a dedicated plan for client engagement, support, and follow-up; and standardizing procedures with checks and balances across the team for consistency and accuracy.

Interesting stat: A study by McKinsey found that companies that implement Lean principles achieve an average of 15%-30% improvement in productivity and a 20%-50% reduction in errors.

The challenge of a never-ending to-do list is the story of most entrepreneurs. My hope is that you can embrace change, introduce routine, and ensure that you’re prepared to handle the unexpected in your business with strong operations and procedures so that your business can run whether you’re at the office or away on holiday.

1 Aberdeen Group, “The Strategic Value of Accounts Payable Automation

2 Source: The Impact of Outsourcing, AssetMark 2022

3 McKinsey, “Lean management the next frontier

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