Close Close

Practice Management > Compensation and Fees

Tech Trouble, Ops Issues

Your article was successfully shared with the contacts you provided.

Which areas of operations and technology are most challenging for your firm? That was the main question The Collaborative and Advisor Perspectives asked in a survey of 322 individuals representing 315 firms, half of which classify themselves as either investment advisors or wealth managers. The results show that document management, customer relationship management (CRM), and portfolio management rank as the most problematic areas, while billing and trading are the least worrisome.

Mike Slemmer, principal of The Collaborative and co-founder of ATA, notes that these issues are coming up due to an evolving relationship between RIA firms and their custodians. “When it comes to these top three areas and systems that RIAs need, they historically have not gone to custodians for them,” he says. “However, it seems it’s becoming what’s required and custodians will have to participate to keep those RIA firms as their client.”

Respondents were also asked to identify their biggest unresolved problems in each area they ranked as the most problematic. When it came to document management, the amount of paperwork required by custodians and regulatory bodies was the number one answer. Others included having a process that mirrors the firm’s prospect-to-client transition needs, including input to ancillary systems; having the trained staff–and enough staff–to organize the documents, and then get it into a paperless system; differing formats and documents required by both regulatory agencies and custodians; and the perceived cost of imaging equipment and software.

The biggest frustration when it came to CRM is the lack of integration with other systems–portfolio management, document management, planning, custody, and especially e-mail. Other issues that interviewees cited were a lack of “user friendliness,” and many responses indicated that process and incentives around the use of CRM systems is a big problem–managing workflow of tasks, research, and projects; knowing when and how to update information; how to use it best to communicate with clients and prospects; and motivating everyone in the firm to actually use the system.

As for portfolio management, a lack of good trading and rebalancing tools, and being unable to include outside assets were cited as major obstacles. Efficient rebalancing at a reasonable cost that considers relevant factors such as the tax impact, transaction costs as a percentage of trade amount, and short-term redemption fee exposure for mutual funds subject to such fees was also cited, as was the inability to seamlessly include data from other custodians, with most complaints centered on performance reporting.

The survey, conducted in May 2008, was released to highlight the launch of, a Web-based resource from The Collaborative for wealth management professionals, and also revealed respondents’ levels of satisfaction with custodial support. In fact, while 83% of respondents rated the overall operations and technology support and systems from their custodian as “excellent” or “very good,” 47% say their custodian doesn’t support them in any of their top three most problematic areas. Slemmer says RIAs are generally happy with their custodian–”If they weren’t, they’d leave”–but the disconnect is most likely because the custodial relationship is driven by the quality of the relationship manager that an RIA has at its custodian. So firms can have a good relationship with the custodian, but still yearn for more in these three areas.