In 1975, Businessweek described the workplace of the future, predicting "the paperless office" in which nearly all day-to-day activities were executed and managed by technology. Today, due in large part to the advent of electronic communication, document management and storage applications, financial advisers are getting closer to the concept of a paperless office as more and more look to streamline the operational side of their businesses.
But there are holdouts — one report shows that fewer than half of advisers are fully leveraging technology — who may be hesitating to take advantage of digital solutions because they fear the learning curve, or because they don't know how to apply the solutions to their business, or even where to begin.
Here's a look at what it takes to make the shift to digital back-office processes and why advisers need to make "going paperless" a strategic priority.
Where to Apply Technology
The most valuable technologies are those that provide intuitive digital workflows, optimizing a firm's most paper-intensive processes. For many advisers, those are tasks related to account opening and asset transfers, but they could include those required to conduct risk assessments, reporting, billing, client communication, tax forms and others.
Not only are these time-consuming activities but, without technology, they're also prone to error, redundancy, and inconsistent quality.
A smart paperless technology solution give advisers the ability to:
• Conduct online processes — account openings, rollovers, transfers of assets, trading and alerts.
• Communicate electronically — statements, tax forms, confirms and prospectuses.
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Automate workflows and reporting — compliance and oversight, billing, document management and alerts.
(More: Do financial advisers need mandatory technology adoption?)
How Effective Is It?
There's little argument about the benefits of going paperless. According to McKinsey & Co., automation of financial institutions' back-office processes, such as new client onboarding, account setup, and reporting, has a strong correlation with higher profitability.
This profitability is related to increased efficiencies that affect overhead costs such as printing, postage and staffing levels. In fact, according to Xtrac Solutions, a combined workflow and document management system may reduce operational expenses by up to 15% in just the first year of use.
How Will I Benefit?
The right paperless technology can have a positive impact across the organization:
• Increase efficiencies. Rather than manually filing and searching for documents, they are housed, managed and easily accessible (to anyone with permissions) online
• Save time. Without technology, advisers have to complete a variety of paperwork manually, meet with the client to have the documents signed, then arrange to have it processed. Technology makes it simple to complete all the necessary documents online and even have clients sign them electronically.
• Speed compliance reporting. Electronic storage allows staff to quickly access the documents needed to respond to even the most granular regulatory requests.
• Offer flexibility. Advisers and staff can accomplish what they need to, no matter where they're located, with "anywhere, any time" access to files and resources.
• Reduce errors. Advisers can enter data once, then have fields pre-populate on future forms. The technology is also designed to catch mistakes and allow them to be resolved online before the form is submitted.
• Improve the client experience. With a highly organized and efficient back-office structure, each touchpoint with a client becomes highly efficient and more productive.
Can an advisory firm go entirely paperless? It's not likely; paper will likely always be part of how firms conduct their business. But advisers can eliminate a significant portion of the paper (and the hassles that go with it) — and, as a result, improve quality, efficiency and accuracy.
All that "extra" time you have now? Use that to do what 82% of advisers say they wish they could be doing with their time: growing their business and meeting with clients.
(More: Most advisers could be doing a lot more with tech)
Elisa Garcia is business development manager at Betterment for Advisors.
