Top advisors see higher growth ratesNews added by Benefits Pro on February 12, 2014

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By Paula Aven Gladych

High-performing registered investment advisory firms are seeing 1.5 times the growth in assets as other firms, according to the 2013 Fidelity RIA Benchmarking Study.

That’s not all. They’re also seeing 1.3 times the profitability and 1.5 times the productivity.

High-performing firms are those in the top 25 percent in the industry.

One of the biggest contributing factors to this growth is investment in the right technology, not necessarily the latest technology, the study found. Seventy-four percent of firms surveyed described their technology environment as strong, not cutting-edge.

And while they recognize the importance of investing in technology — it is a strategic priority for 47 percent of high-performing firms, compared to 34 percent of all other eligible firms — only 12 percent of high-performing firms invest in the latest and greatest technology. Sixty-seven percent of high performers ranked the integration of existing systems as one of their top three priorities.

“High-performing firms are growing faster and smarter than other firms, reporting a growth rate that is 50 percent higher than that of all other eligible firms,” said David Canter, executive vice president and head of practice management and consulting for Fidelity Institutional Wealth Services. “In addition to attracting and retaining more of the right clients, high-performing firms are focusing on more effectively harnessing the technology they have instead of chasing the very latest innovations.”

High-performing firms were more likely than other eligible firms to say disruption to their business is their biggest challenge when integrating systems (60 percent compared to 43 percent) and less likely to cite cost or staff skillset.

Improving client experience and satisfaction was the top technology goal for 77 percent of high-performing RIA firms, compared to 61 percent of all other eligible firms.

“When it comes to smart technology adoption, it’s no longer just about improving efficiency. RIA firms need to stop and ask – is this helping me grow my business? Does this enhance my clients’ experience?” said Canter. “As new technologies come to market, RIA firms that see technology as a vehicle for success—not a measure of success—will rise to the top.”

The study also explored strategies that may help advisors build on their efforts to adopt technology in a smart and efficient way. RIA firms may want to consider:
  • Initiatives that streamline their technology environment, such as shifting to cloud-based solutions, implementing mobile technologies and creating process workflows and automation.
  • Overcoming one of the biggest barriers to technology optimization: people, as the study found the top three barriers were staff related. Addressing these challenges may help firms get more out of their existing technology.
  • Utilizing more functionality of current systems. The study found that those most satisfied with their systems are the firms that are utilizing the most functionality.
  • Leveraging vendor-hosted systems to relieve the burden of supporting locally installed systems.
  • Outsourcing, particularly for key processes, such as data reconciliation and client reporting.
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.6 trillion, including managed assets of $1.9 trillion, as of Dec. 31, 2013.

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