Lean, mean and green: Advisers cut back on paper

Independent advisers are mulling a switch to monthly electronic statements in order to cut costs. The cost of producing, mailing and retaining copies of statements are expenses that advisers are eager to cut from their budgets. They can save thousands of dollars each year by cutting out paper, said Rob Dearman, senior vice president of advisory-practice-and-platforms strategy for National Planning Holdings, the Santa Monica-based broker-dealer network of Jackson National Life Insurance Co. of Lansing, Mich. However, he said, fewer than half of the network's clients have opted for electronic statements. In a bid to speed up the migration, the firm will offer discounts to advisers who switched to electronic trade confirmations. He declined to disclose the discount schedule. But in a year, National Planning will charge advisers more money for using paper confirmations. “First, we'll use a carrot to reward advisers, and then we'll use a stick, so that we'll charge them if they're not using paperless,” Mr. Dearman said. National Planning works with 3,527 advisers and manages $6.8 billion in assets. The cost savings from paperless processes can be significant. For instance, Mike Cox, principal and adviser with Tampa, Fla.-based Invest Financial Corp., estimates that he has saved $20,000 a year, enabling the firm to promote an employee and give him more responsibilities. “We've become more efficient and our labor costs are down,” he said. “People look at paperless, and it scares the bajeebers out of them. If a country boy from Luverne, Minnesota, can figure it out, anyone can.” Simply using e-quarterly statements can save advisers an estimated $4 for every statement, said Eric Clarke, president of the accounting services firm Orion Advisor Services LLC in Omaha, Neb. He estimates that just 25% to 35% of statements are delivered electronically. By the first quarter, Commonwealth Financial Network in Waltham, Mass., intends to offer paperless quarterly statements, said Darren Tedesco, vice president of innovation and strategy. “We're working on it right now, and it would save advisers a lot of money,” he said. “The big savings will be, they don't have to mail them to 400 clients, plus the time of stuffing and licking the envelopes.” This month, Commonwealth announced that its advisers can opt out of receiving paper trade confirmations. Investors can also receive e-notifications, and so far, more than 3,000 clients have enrolled, Mr. Tedesco said.