A new survey of advisors finds that an overwhelming majority of them understand the importance of front and back office operations, yet few are happy with their current operations.
In fact, 91 per cent of advisors agree that back office operations are important or very important to their firm’s success, according to the new survey by leading open-architecture TAMP provider FTJ FundChoice and WealthManagement.com. While advisors widely recognise the importance of operations, nearly 40 per cent report having no involvement in their firm’s front and back office decisions. Furthermore, only 24 per cent of advisors report being very satisfied with their firm’s front or back office operations.
“You’re only as strong as your weakest link,” says Cory Kendall, executive vice president of sales for FTJ FundChoice. “It’s clear that advisors, whether at a large wirehouse or running their own practice, are keenly aware of how critical front and back office operations are to the client experience. In fact, solutions like FTJ FundChoice are designed to eliminate front and back office inefficiencies and streamline advisor operations. But even though they understand the importance, it’s surprising to see how many advisors are bootstrapping their operations.”
For example, the survey finds that nearly 60 per cent of advisors maintain their back office in-house. And among the 35 per cent of advisors who utilise a mix of in-house and outside vendors, most use more than one provider. To address these inefficiencies, Kendall says outsourcing operations can help streamline practice management, allowing advisors and staff to increase their productivity.
Surprisingly, cost is not the main consideration when it comes to improving operations. In fact, the survey finds that advisors rank cost as their least important concern when planning their back office, behind meeting compliance requirements, efficiency and ease of use.
“Figuring out where to spend resources depends in large part on the customer experience the advisor wants to deliver,” says Kendall. “The advisor’s approach to operations plays a key role in the value a firm provides to its clients.”
The survey was conducted in December 2018 and gathered opinions from nearly 300 wealth management professionals, including financial advisors, registered investment advisors, financial planners and executives. The objective was to investigate how these professionals participated in their firms’ decisions about front and back offices, as well as the challenges they face in building these areas of their practices. From their responses, it becomes clear that advisors would benefit from taking a more active approach to building stronger, more durable front and back office operations. Doing so will help support their practices today and in the future.