Future-Proofing RIAs With a New Productivity Toolkit

New research on the “Fundamentals of the RIA Market” - recently conducted by WealthTech firm Docupace - goes into detail on key market demographics, segments, and business functions in the marketplace. The report outlines that while a maturing market, there is plenty of room for the RIA industry to grow. Key industry megatrends that are propelling this growth dynamic include the emergence of new technologies, trends towards hyper-personalization, shifts from support to value generation enabled through technology, and the rise of platform ecosystems.

The study though also determines the need for RIA advisory firms to digitize, streamline, connect, and automate their operations. This need has led to an abundance of technology solutions that unfortunately were initially inflexible, expensive, and had a clunky delivery model. Based on this research and need, Docupace just announced the launch of a new RIA Productivity Suite designed to optimize operations for all sizes of advisory firms.

To learn more about this research and the evolving needs of the RIA market, we reached out to the research sponsor and Institute member Michael Pinsker, Founder and President of Docupace – a leader in cloud-based, FinTech, digital operations software for the wealth management industry. We asked them questions to understand how RIA firms, through their technology choices, can both future-proof and competitively differentiate themselves in our rapidly changing business environment.

Hortz: What was your motivation in building your new RIA Productivity Suite offering?

Pinsker: We have been focused on supporting the wealth management/financial advisor space from our early years in business. Our offerings started with document management and workflow for advisor offices in 2004. That focus led up to driving operational efficiencies for the back offices of broker/dealers and other financial institutions. As the industry has continued to evolve and the RIA channel has matured, we identified a clear need to deliver the same level of scalable and efficient operational solutions to the RIA marketplace, as we have been to the independent broker/dealer space. It was very exciting to see us double down on the RIA advisor experience and differentiated value propositions that Docupace can strategically support.

Hortz: Your firm did extensive research on the RIA Market before developing your new Productivity Toolkit. Can you share with us what you uncovered about RIAs and the RIA marketplace that informed your thinking and design process?

Pinsker: Through our research and collaboration with known industry consulting firms, we learned that there are many different flavors to an RIA firm and the market is pretty expansive. That said, there are many similarities in what each firm needs and it is what we tapped into. The end-user experience was a critical component of the need. The ability to leverage seamless integrations with other products that RIAs use on a daily basis – like CRM and financial planning tools – was a must. That is why we designed our offering with the mindset to create a suite of tools that seamlessly works together and allows an RIA firm to experience productivity gains right out of the gate.

Hortz: What did you determine were the main barriers standing in the way of RIA growth and building scale?

Pinsker: Many RIA firms operate in what we would call a “startup” mode - small operations and limited resources. When you are operating in that mode, there are pluses and minuses. On the one hand, you can be very nimble in servicing your customers through relationships; on the other hand, it is hard to compete with others who have both relationships and also have resources to incorporate technology to allow them to scale, grow, and provide better service to their customers. If a firm is not investing in technology to streamline their operation, that firm simply would not be able to scale and compete in this marketplace.

The other barrier is the mindset of being afraid of change. The industry is evolving. Technology is advancing at an unprecedented speed, and if the mindset is to continue to do business the same way they have done for decades, it will cause a firm to find themselves, and be seen as, outdated and without the competitive ability to provide the best service to its customers.

Hortz: How did you design your technology to address these most pressing RIA industry needs?

Pinsker: The key to our product design was the underlining architecture of the platform. We have leveraged key components of the platform, but also layered in our new integration architecture to allow us to seamlessly integrate with other systems at scale. The offering is both “out of the box” and flexible at the same time. This means that we can easily adjust for the subtle nuances different RIA firms have, while preserving the consistency of the platform and the simplicity of the user experience.

Each firm gets out of the gate the same benefits of document management, predefined workflows and pre-bundled forms, but then can select the CRM they are using and a custodial relationship they can rely on. This way there are no customizations needed, the cost is contained, and the benefit provided is relevant to each RIA firm.

Hortz: What exactly are the different elements or features that comprise your Toolkit? What challenges do they address?

Pinsker: Our RIA Productivity Suite is a specially designed toolkit for advisory firms empowering them to digitize, streamline, and automate their operation. Its capabilities include a robust workflow engine with prebuilt flows, straight-through-processing, and a custodial forms library with bundling capabilities, automation, rules-based data validations, dynamic forms processing, document management, and out-of-the-box CRM integrations.

This comprehensive combination of capabilities allows advisory firms to fast track their digital transformation journey. The Productivity Suite enables RIA firms to reduce operational costs, improve efficiency, attract top-tier talent, strengthen recruiting, and enhance client experience.

Hortz: Was your RIA Productivity Suite built strictly with internal resources or did you have any strategic partners or consultants that provided any support in the development process?

Pinsker: We started out by leveraging existing capabilities of our Docupace operations platform, then we partnered up with industry-leading consulting firms, especially the Ezra Group, to look at the industry, identify needs, and then figure out the best way to apply our technology to build the solution. One of the elements that came out of the collaboration is the need for seamless integrations with other core systems. As a result, we completely redesigned our integration architecture, in order to accommodate the needs of the market.

Hortz: How did you manage your strategic partnership and the development process between your two firms?

Pinsker: First, we identified the areas of expertise for each firm and clear scope of engagement. Then we set up a team composed of members from both firms to collaborate and define the solution that we were planning to configure. It started with leveraging Ezra’s vast experience in the space and their knowledge not only of the needs of RIAs, but also an understanding of what solutions exist today in the marketplace and what gaps we can tackle in order to create an impactful offering for advisory firms.

We then layered in our expertise and vast knowledge base in the space of creating scalable and purpose-built technology solutions. The collaboration within the team has been amazing and it led to the creation of a product that makes a difference for our clients. Lastly, using the Docupace platform as a foundational building block allowed us to fast-track the development and configuration of the offering.

Hortz: What is the bottom-line business case for this operational transformation? How does it enhance both client experience and the advisor-client relationship?

Pinsker: It starts with basic building blocks, workflow, document management, forms bundling, and validation rules. Then we add in the integrations from various CRMs, custodians, and eSign providers. The seamless integration allows a user to navigate from one system to another with ease and purpose, sometimes not even realizing that the data in one system has been coming from another. That approach lets users of the platform have data at their fingertips when needed in the process and it also drives the user through the journey with ease.

The workflow engages an advisor, the back-office support personnel, and an investor in the process at an appropriate step, making it easier for them to navigate the complexities of the workflow. The one-and-done data entry capability eliminates double entry and human data entry errors, thus reducing the NIGOs dramatically. Just driving NIGOs into single digits has a significant impact on the experience firms have both internally and in serving their clients.

At the core of RIA Productivity Suite, it significantly reduces operational costs, increases efficiencies for operations, and liberates advisors from onerous paperwork. All these capabilities are driving a delighted user experience and enhances the advisor-client relationship so that an advisor can focus on the client, instead of on the paperwork and workflow.

Hortz: What advice or recommendations can you share about the mindset and tools needed by RIAs to future-proof their firms and build competitive advantage in our rapidly changing business environment?

Pinsker: There are many different tools available in the marketplace, and it can be confusing.

First, selecting a technology partner or a few key partners to align your firm with, is key. This will set the advisory firm up with the ability to adapt to changes and rely on the partners who will have solutions that will help firms stay ahead of future changing market conditions, instead of lagging behind. Traditional business models are being threatened with obsolescence while digital operational transformation is allowing firms to build the future.

Secondly, whatever the tools you select, you have to make sure that they are open and ideally integrated with key systems in your operation. Having point solutions that are isolated could be hard to manage in the long run and may cause additional operational pain.

Third, you want a firm that has been in the space for a while and understands the needs of RIAs and the transformation that is happening in the marketplace. Technology firms like Docupace have seen several market changes and have not only adapted over the years, but set up their clients to be in a ready state to be able to weather the future -the ongoing storms of changing market conditions and regulatory pressures.

Related: Applying AI Into Investment Management