June 18, 2013
Envestnet | Tamarac
, part of Envestnet, Inc. (NYSE: ENV), a leading provider of integrated web-based portfolio and client management software for independent advisors and wealth managers, has released a white paper showing that financial advisors at independent RIA practices with some degree of technology integration earn approximately 20 percent more in annual income than their counterparts at independent RIA practices with no technology integration.
The white paper, entitled
RIA Productivity and Profitability: Integration Pays
, was produced by
, an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry. The study was undertaken to examine the impact of technology integration on the profitability of independent RIA practices, and is based on the results of an online survey of 201 primary financial advisors at independent RIAs conducted by Aite Group in
"Since independent RIAs are small shops that have been built from the ground up, there is often a tendency to source technology components from vendors or acquire them from custodians, which often leads to systems that do not integrate well with one another," said
, Group President, Envestnet | Tamarac. "But advisors that use an integrated solution experience more efficient and profitable practices."
The study found that RIAs with some level of integration have almost twice the amount of assets under management (AUM) as RIAs with the same size staff but with no integration — approximately
more in client assets on average. Practices with integrated technology also produce an average of
more in annual revenue than their counterparts with no integration. In addition, the study revealed that the staffs of firms with at least some technology integration spend 32 percent less time on operation processes than the staffs at firms with no integration at all, freeing up approximately 40 weekdays each year for every employee to engage in more revenue-generating activities, including client management and prospecting.
Despite the obvious benefits of technology integration, only 7 percent of advisors surveyed stated that their firms' business applications have deep and meaningful cross-product functionality. More than 30 percent, on the other hand, said their firms have no technology integration. This study's findings prove that these advisors can increase their firms' profitability by adopting integrated technology platforms.