Envestnet’s Jim Patrick says it overcomes inertia by prioritizing intel, efficiency and scale.
On Sept. 19, Jim Patrick of Envestnet will speak at External IT’s inaugural Wealth Management Technology & Cybersecurity Summit in New York. This event gathers industry leaders and influencers for a day of collaboration and networking on the most crucial matters impacting their businesses. This blog is the second in the series of profiles of speakers for the upcoming summit.
Just as a turbocharged engine produces more horsepower than a typical engine without taking up much more space, a turbocharged RIA gets more growth-oriented work done without requiring much more time or manpower. Unlike an engine, however, getting extra kick out of your practice isn’t quite so simple as installing an add-on part under the hood of your car.
“RIAs that take their practice to the next level get past their own inertia,” says Jim Patrick, Executive Vice President, Head of Advisor Services, which provides integrated portfolio, practice management, and reporting solutions to financial firms. “They do this by gathering and analyzing a high level of useful data, by implementing processes that make the firm more efficient, and by adopting tools that expand the scale of the firm’s services.”
Inertia Is The Enemy
For many RIAs, complacency with their old ways is the biggest obstacle to achieving above-par growth. Patrick notes that businesses can reach a ceiling of complexity that managers initially struggle to rise above, until they become frustrated that their operational methods produce diminishing returns, so managers gradually lower their expectations. When the most ambitious and driven managers hit that ceiling, they seek to change their operational methods instead of plodding along the same course.
Occasionally, external forces such as the threat of regulatory upheaval or unfavorable audit results can inspire RIAs to adapt. The Department of Labor’s fiduciary rule and the Securities and Exchange Commission’s cybersecurity sweeps are prime examples. But sometimes all it takes is for the RIA owner to get older. As advisors age, they may wish to take longer vacations without being tethered to financial markets or toiling away at performance reports. Doing so often requires stagnant firms to move on from outmoded and labor-intensive systems.
Relevant Growth Metrics
In order to properly track a firm’s growth, its managers must use the proper metrics. That depends on the nature of the RIA and its strategic goals, says Patrick. A mature practice whose owner is in succession planning mode probably needs to focus on profit growth in the years leading up to a sale. A younger practice whose owner has decades left in the business might benefit from growing a particular client niche, such as surgeons or computer programmers.
To be sure, top-line revenue can make sense as the primary growth metric for those rare firms that already operate at maximum efficiency. An underlying metric that can influence growth in profit, revenue and client base is the amount of time staff spends on any given task. In this case, the shorter the time the better, because that frees the team to get yet more work done. As a general rule, software that automates repeatable steps can improve this metric.
Full View of Client Data
As important as firm-level data is for growth, it would not exist without clients to service. Envestnet believes capturing meaningful client-level data is equally important, says Patrick. The firm’s Envestnet | Yodlee offering does this by accessing both sides of the client’s balance sheet. “You cannot be a fiduciary who makes reliable assumptions about client assets and liabilities without sufficient data,” warns Patrick.
Since wealthy clients tend to hold assets in multiple accounts across various institutions, Envestnet’s APIs facilitate account aggregation, account verification, fund transfers and online bill payment. Advisors with a full view into their clients’ financial activities will be better positioned to offer innovative guidance. That in turn aids client retention and client referrals. Moreover, a full view of client data allows advisors to determine which clients are worth cultivating.
Efficiency and Scale
Patrick sees software integration as one of the clearest ways of turbocharging efficiency. When a firm’s portfolio management, financial planning, CRM, business administration and cybersecurity apps all communicate with each other and conduct automated tasks, advisors can spend less time searching for data, rekeying information and crunching numbers. Those advances free advisors to increase their time engaging with clients. Today, the most productive advisors regularly engage clients through mobile devices from virtually anywhere, at nearly any time.
As for maximizing scale, robo software may be essential for many RIAs. It’s hard to deny the power of tools that allow an advisor to both tap younger, lower-asset investors and expand the client base significantly, without taking on a crippling workload or cost burden. Indeed, Envestnet’s Advisor Now tool offers turnkey digital advice for that very purpose. “We view digital extension of advice as a key component for certain constituents,” says Patrick. “It’s not robos versus advisors. It’s robos enabling advisors.”
To learn more about practice management and Envestnet, register here to attend the Summit.
Jim Patrick provides the leadership and strategic vision to all of the Advisor Services teams within Envestnet. These divisions span the institutional and advisor sales teams (both RIA and Enterprise Sales), the Enterprise Consultant teams, and the Practice Management team that focuses on innovative solutions for Envestnet’s growing client base. He also leads the efforts in the development and distribution of insightful investment intelligence through innovative technology that leverages our consulting services, research, and investment solutions.
Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open-architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully-aligned standard of care, and empower advisors to deliver better outcomes.
Envestnet | Tamarac’s web-based platform for independent RIAs, Advisor® Xi, deeply unifies portfolio management, modeling, rebalancing, trading, billing, and reporting with a client portal and enterprise-level client relationship management (CRM) system.
Envestnet | Yodlee is a leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services. More than 1,000 companies, including 11 of the 20 largest U.S. banks and hundreds of Internet services companies, subscribe to the Envestnet | Yodlee platform to power personalized financial apps and services for millions of consumers. Envestnet | Yodlee solutions help transform the speed and delivery of financial innovation, improve digital customer experiences, and drive better outcomes for our clients and their customers.