The surprising hidden value of automation

Software can add efficiency and reduce personnel hours. Everyone knows that. But there are other significant savings to be gained from automation
FEB 27, 2014
Software can add efficiency and reduce personnel hours. Everyone knows that. But there are other significant savings to be gained from automation. In fact, these hidden savings may very well outweigh the obvious benefits. By making operations more efficient and turning more time-consuming responsibilities into delegatable tasks, more of the workload can be tilted toward junior staff. This allows senior advisers to spend more time on marketing and meeting with current and potential clients. What is the value of obtaining new clients? Assuming that the freed-up time could result in just $5 million of new business each year, revenues could increase by $50,000 annually. What if additional AUM is $10 million? And, don't forget, the management fee revenue will compound over time. With automation, the firm may be able to achieve a higher level of client service. This can lead to greater client satisfaction, resulting in additional referrals and lower client turnover. How much is this worth? $50,000 per year? $100,000 per year? Even more? Securities and Exchange Commission compliance examinations will be more easily handled. By using well-chosen software, the adviser can achieve and document greater quality control and consistency. What's the value of a clean SEC audit? An argument could be made that this is worth anywhere from $5,000 to $100,000 or more. The quality control enforced by automation also translates to fewer errors. Depending upon the particular software, this could mean missing fewer deadlines, cutting trading errors and, in general, fewer mistakes. Reducing or eliminating errors means lower restitution payments and decreased risk of losing clients. How can you quantify the unquantifiable? Computerized consistency may easily be worth $5,000 to $50,000 or more. Payroll savings from software may be more easily quantified, just as the “hard” costs of software license fees. Determining the cost/benefit of whether or not to purchase software cannot be focused solely on the quantifiable. The “unquantifiable” savings can easily eclipse the quantifiable numbers. Isn't it time to bring state-of-the-art automation to your firm? What's stopping you? What do you think? Are you talking the talk and walking the walk? What hurdles have you overcome and what remains troublesome? Join the conversation below. Sheryl Rowling is chief executive of Total Rebalance Expert and principal at Rowling & Associates. She considers herself a non-techie user of technology.

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