Independent RIA practices that have integrated their technology platforms earn approximately 20% more in annual income than their counterparts at independent RIAs with no technology integration, Envestnet | Tamarac said in a white paper released on Tuesday.
The paper also found that registered investment advisors with some level of integration have almost twice the amount of assets under management as RIAs with the same size staff but no integration, totaling an average of $90 million more in client AUM.
“When asked to prioritize technology spending in areas they would like to improve, independent RIAs cite increasing the level of technology integration across their platform as the top item to which they would dedicate part of a proposed technology budget,” says the white paper, “RIA Productivity and Profitability: Integration Pays.”
The paper was produced for Envestnet | Tamarac by the independent research and advisory firm Aite Group, which conducted its online survey of 201 primary financial advisors at independent RIAs in March 2012.
Practices with integrated technology produce an average of $100,000 more in annual revenue than their counterparts with no integration, according to the paper.
“Since independent RIAs are small shops that have been built from the ground up, there is often a tendency to source technology components from vendors or acquire them from custodians, which often leads to systems that do not integrate well with one another,” said Stuart DePina (left), group president of Envestnet | Tamarac. “But advisors that use an integrated solution experience more efficient and profitable practices.”
Envestnet | Tamarac is part of Envestnet Inc., a provider of integrated web-based portfolio and client management software for independent advisors and wealth managers.