ROI Means Making Every Minute Count More

By Cynthia Stephens, VP of Marketing on Tuesday, April 10th, 2012

Was Benjamin Franklin right in saying that time is money? Some advisors try to evaluate technology in terms of the labor it promises to save them, but the distractions and other hidden costs can overwhelm even the biggest theoretical efficiencies

On the other hand, Financial Planning's latest TechnologySurvey found out that about two-thirds (64%) of advisors calculate that the return on investment a technology purchase provides is a factor of “time saved.”

Have you actually been able to use technology to save time?

You might reduce keystrokes, eliminate manual data entry or reconciliation, improve responsiveness or timeliness. If it means minimizing reliance on part-time operations staff, then any of these factors may reduce your labor costs and save money.

However, many advisory firms have full-time employees that represent a fixed cost. These salaries won’t disappear because you saved them keystrokes or eliminated manual data entry to make their jobs more efficient.

In a 2011 report, the Aite Group team indicates that while the amount of support staff in any RIA firm will depend on the size of the firm, the average RIA employs the equivalent of 1.6 full-time workers per advisor.

How then, can you truly evaluate the ROI / operational efficiency gain from a technology purchase?

Time Allocation of RIA Staff

Sorry, Ben Franklin: time savings do not equal cost savings if your firm has dedicated support staff that are predominately occupied with operations activities.

In my work running a marketing department with full-time employees, I view operational efficiency as reallocating time spent from lower-value activities to higher-value activities.

I think about effectively reallocating each minute of time rather than reducing the total number of minutes my people work.

If a sales development representative can use automated templates to streamline his emails and that allows him to have more conversations with buyers, he may still put in 40-hour weeks either way, but the shift still yields a high ROI for me.

In my role, I speak with many financial advisors who have purchased our account aggregation technology.  As a marketer, I can’t help but ask them about the cost benefit analysis they went through when evaluating ByAllAccounts.

They agree. Our technology doesn’t necessarily reduce overall labor costs, but it does help our clients generate more revenue opportunities for every dollar in their salary budget.

Whether your next technology purchase is a CRM, financial planning application or account aggregation solution, I recommend that you think about how you will reallocate your staff’s time from mechanical operations to those that are more customer-directed.

A Blueprint for Cost Benefit Analysis

Consider one example as a framework for evaluating your next technology purchase.  In this scenario, an advisory firm spends 12 hours per month on manual data entry and reconciliation of 40 accounts.

Operations staff relied on paper statements to ensure that the holdings on the statement matched what was in their system.  If you have 90 holdings and you have to manually check from one statement to another, it is time consuming.

Imagine if you could now reallocate that 12 hours per month.  How would you reallocate them?

Time savings may be an antiquated notion in today’s work environment. After all, does anyone really go home early because one activity took less time than they expected? The real payoff is spending the time your team has more wisely.

I’d like to hear from you.  How do you measure operational efficiency improvements?

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