Back office should be top of mind for growing advisory firms

Delivering a remarkable experience is advisers' best way to differentiate themselves, and the back office plays a key role in delivering that experience

Jul 24, 2018 @ 3:03 pm

By Dean Cook

Recently, a colleague of mine suggested that "back office" should be considered a bad word, because it's where things go wrong without accountability.

I respectfully disagree. The back office plays a major role in delivering a client service experience that creates peace of mind. It's the core of an advisory firm, and it's where your promises to clients are fulfilled and your strategy is executed.

This past year, the global investment manager Dimensional Fund Advisors surveyed over 18,000 investors with the help of over 400 participating advisory firms that spanned eight countries. The study found that most investors cite a sense of security and peace of mind as the primary measure of financial adviser value (35%). In comparison, 14% cited investment management as the leading indicator of value.

Unreliable execution of your strategy is a surefire way to lower the quality of your client experience — destroying peace of mind, trust and loyalty. And without superior execution, what do you have to differentiate yourself from competing firms? Competing on price or savvy marketing tactics is a short-term strategy. These methods can get clients through the door, but it's not sustainable.

For as long as I can remember, adviser focus has revolved primarily around investment management (returns). I think we need to go deeper. Investment management is an essential service, but a difficult differentiator. What separates an adviser more readily (in an investor's eye), is his or her ability to deliver a remarkable experience. I call that Disney-fication. That's the capability that sets an adviser apart from the crowd, builds trust and produces referrals.

(More: Future advice business will still require human touch)

I think we need to bring the back office to the forefront of advisory businesses. We have to realize that everyone in an advisory firm is an essential component in the client experience.

It starts with hiring the right people to drive those tasks. And the right people are those who care — those who understand that we are in the business of impacting the well-being of real people.

Your service representatives should be passionate about the importance of their function, detail-oriented and widely accessible. Whether your back office is managed internally or outsourced, if the person on the other end of the phone doesn't care, the client is going to feel it.

We also need to get better at balancing technology and personal touch in the back office. It seems the recent fintech explosion has pushed the focus of advisory firms off course. Advisers now have access to more automated capabilities than ever before. But that doesn't de-emphasize the importance of the personal touch. It actually increases it.

Automation should be viewed not as a way to reduce human contact, but to make it more meaningful. We use technology to better connect with our clients and provide more enhanced services than before, without delay. I think that comes back to mindset. Don't look at streamlining as a way to reduce your workload, but to make it more impactful. Use technology to better control your time, and shift your focus away from the trivial things that need to be done (such as running paperwork, handling account discrepancies and running reports), and put a greater emphasis on value-added client services, such as more comprehensive financial planning, tax guidance or even lifestyle coaching.

(More: Advisers face pressure to automate workflows)

If you're facing higher client turnover than you'd like, it might be time to take a hard look at your business. It's easy to dismiss client retention issues as a by-product of external factors, such as cheaper investment options. That could be the case. But more likely, I think clients leave when the experience isn't right.

You can verify that by having honest, face-to-face discussions with clients who leave. You'll find that it's almost never one thing that causes a client to leave, such as fees or unimpressive returns, but the overall experience.

It may not be sexy, but the back office directly impacts the client investment experience. For advisers who take ownership of their back office and use it as a source of value, it's a differentiator. So instead of treating the back office like a bad word, let's place it at the forefront of our strategies to deliver unparalleled service, every time.

(More: Redefining efficiency in your business)

Dean Cook is president and CEO of FTJ FundChoice.


What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

Nov 13


Best Practices Workshop

For the sixth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video


Financial advisers highlight solutions to increase diversity and inclusion

These Excellence in Diversity & Inclusion award winners suggest short-term changes to help foster D&I in the financial advice profession.

Latest news & opinion

SEC commissioner Stein suggests Congress address differing broker, adviser standards

She said lawmakers may have to change 'solely incidental' language that lets brokers give advice.

Social Security and the fear of missing out

How to lower expectations when clients think they're owed a bigger Social Security benefit.

7 things advisers should do today to boost diversity and inclusion

Creating diversity and inclusion within financial advice firms is challenging, but these InvestmentNews Excellence in Diversity & Inclusion award winners have suggestions that firms can put into practice today

The midterm elections: What's at stake for financial advisers

A shift in control of the House could change the course of important issues, including the SEC advice rule, tax reform and retirement policies.

What to tell your clients after they've won the lottery

The current combined Mega Millions and Powerball jackpots are more than $850 million. What should you tell your clients if they have a winning ticket?


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print