Practice management challenges facing firms in a new decade

February 28, 2020 by Charles Jacques

Practice management challenges facing firms in a new decade by Advicent

About the author

Charles Jacques

Business development representative

Charles Jacques is a business development representative at Advicent, the financial planning technology provider of choice for nearly 100,000 financial professionals.

Problems, challenges, pain points, obstacles… you can use any number of words to describe the complications that advisors face in the financial planning process as we enter a new decade. At Advicent, we view these as opportunities for us to improve and display how we have been preparing to empower practices for the future of financial planning – and those opportunities are available today.

Cerulli recently released its U.S. Advisor Metrics 2019 report that summarizes, with statistical data, the largest challenges advisors face today and the most important areas for FinTech companies to provide innovative solutions that address them.

Let’s take a look at some of these practice management complications and how FinTech can help alleviate them.

61 percent of advisors express a lack of process mapping as a major problem for their practices.

Without a well-defined financial planning process, advisors put themselves at risk of day to day inefficiencies in the planning process and more importantly, they increase the risk of missing complex and constantly changing regulations. As demonstrated by the quick approval of the SECURE Act and ongoing Reg BI battle, change can come swiftly in the financial services industry.

Using NaviPlan, advisors are empowered to define what a financial plan is for their clients by creating streamlined, repeatable processes that are entirely flexible to be structured the way the advisor determines is best for their clients. A roadmap composed by the advisor promotes a greater understanding of the process from start to finish and creates an environment that promotes productivity. With 61 percent of advisors also citing inconsistent procedures within the same practice as a source of inefficiency, a process map is essential for any growing practice to remain organized and ready for growth.

Additionally, a well-documented planning process complete with time stamps throughout all steps, allows firms to stay ahead of the regulation curve and justify their final recommendations. This is crucial as more states seek a fiduciary standard for both advisors and broker-dealers.

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68 percent of advisors indicate serving too many non-ideal clients as a key concern.

During this new decade, advisors will see an increasing number of young clients seeking financial advice while they are in the accumulation stages of their lives. These clients will need financial plans that are scaled down to their specific current lifestyles and advice that can grow as their unique long-term needs evolve. So not only do advisors see serving these younger clients as a challenge taking time away from clients that are more valuable currently, such as the high-net-worth segment, but 61 percent also say that scaling their offerings across client segments is a top-three challenge. This means advisors need to be dynamic and move away from their processes structured exclusively for wealthier, nearing-retirement age clients. Developing new practices to serve the up and coming generations is key.

Interestingly, the Cerulli report tells us that the top two benefits FinTech brings to the table directly address these challenges for advisors. FinTech helps (1) reduce time spent servicing less profitable accounts and (2) makes it easier to attract young clients. Connecting these dots between practice management challenges and the benefits of FinTech is crucial and is what will be done by practices that are best suited for long-term growth.

With a recently updated user interface, NaviPlan is designed to allow advisors to effortlessly add or remove details from clients’ plans and include the most relevant information in client reports. Further, with the NaviPlan client portal, clients are encouraged to be more engaged with their advice making meetings more efficient and conversational, while also freeing up the advisor’s time to focus on high-value clients.

68 percent of advisors list insufficient time to learn new technology as a FinTech barrier.

Changes to technology seem to come more frequently than the mailman, but it is important to stay current with industry trends and connect the benefits with the investment into education.

Heavy technology users in this industry spend 34 percent less time resolving client service problems, freeing up time to address any number of other tasks. At Advicent, education is the underlying goal driving everything we do; we have an extraordinary support team, eTraining resources with endless tutorials and training videos, and a virtual Learning Center filled with education enabling everyone to understand all of the comprehensive details of our software. I encourage you to check out a post from Kyria, our director of learning and support, on tips for learning new financial software.