In this case study, the Registered Investment Advisor in Texas explains its journey to use technology to improve operations and growth.

The following article, by Dustin Stiefel, of US-based Steward Wealth Management, sets out the lessons learned in how technology enabled that Texas-based business to achieve growth. The case study explores what worked and how the changes have led to a measurable improvement in results.

Case studies are a classic example of the adage "show, don't tell". This is a case of letting the hard details do the talking. The editors of this news service are delighted to share these insights; of course, readers who want to query these details, or provide their own views and examples, are most welcome to contact us, at tom.burroughes@wealthbriefing.com  We really value case studies, and urge other wealth management organizations to share their experiences, positive or negative, with us and the Family Wealth Report community.

I have a confession to make: I used to be jealous of financial advisors who had RIA practices with $1 billion in assets under management, but I don’t envy them anymore. Why? Because when I saw what it actually took to build a firm with $1 billion in AuM, I realized I didn’t have the time or interest to pursue that goal.

My business partner and I established our firm, Steward Wealth Management, in Colleyville, Texas 10 years ago. We’ve been fortunate to be able to grow our AUM from $8 million at the outset to approximately $225 million as of January 1, 2017. Unlike many of our industry colleagues, we are not looking to grow our firm’s size in assets or staff. We consider our firm to be a lifestyle business, so until we wind it down, our goal is to be able to manage around the same amount of clients as efficiently as possible, creating more time for client interactions and the ability to be out of the office for more quality time with our families.

But about a year ago, we realized that our firm’s technology setup wouldn’t allow us to meet this goal over the long term.

When we established Steward, we obtained portfolio accounting and reporting, trading and rebalancing, and client relationship management applications from three different vendors. This arrangement worked well for a while, but eventually, the applications’ lack of meaningful integration required us to spend far too much time on many different tasks. For example, data aggregation took us an hour-and-a-half to two hours each day to complete because we had to export data out of different systems, clean it up, and then import it into other systems.   

Eventually, we came to the conclusion that if we wanted to spend less time behind our desks, we would have to upgrade to a fully integrated wealth and client management technology platform that would help us run our business more efficiently.

My partner and I consulted the members of the Dimensional Fund Advisors study group that we belong to, which consists of practice leaders from 12 Southern wealth management firms. We meet on a quarterly basis to discuss our businesses and share ideas, and as it happened, several of our fellow members were in the process of implementing a new wealth management technology platform and provided us information about the vendor.

However, after we performed our due diligence on that provider, my partner and I realized that the solution it offered was, basically, a glorified single-sign-on. The product’s capabilities were focused on helping firms attract new clients - and that wasn’t our priority. We wanted to become more efficient at serving the clients we already had, so we could have more time to do the things we wanted to do outside our office.  

Then, another member of our study group told us about Envestnet | Tamarac’s (Tamarac) Advisor® Xi portfolio and client management technology platform for independent RIAs. When we completed our due diligence, we decided to adopt Advisor Xi because it offered a single platform to make us more efficient as a back office, and it was focused on practice support as opposed to helping us establish a sales pipeline. In addition, Tamarac would be able to assign us a dedicated support team to assist us with any technical issues, and work with us to personalize applications and processes for our firm.

We implemented all three of Advisor Xi’s core applications over a six-month period in 2016, during which we also began construction on our firm’s new office and revamped our company logo and branding. While this was indeed a busy time, we dedicated ourselves to learning how to use each of the Advisor Xi applications - the Advisor View™ portfolio management, reporting, billing and client portal application; the Advisor Rebalancing® trading and rebalancing program; and the RIA-centric Advisor CRM® system - and the nature of the integration between the three programs.

Tamarac’s software was specifically designed for independent advisors to dramatically streamline their operations and scales to meet the needs of the largest RIAs, but we are a two-man shop with one assistant, and we don’t have a compliance or trading group (and this isn’t going to change). Our dedicated Tamarac implementation and support team worked with us to customize the platform to meet Stweard’s specific goals.

After the Advisor Xi platform was personalized for us, and our transition was complete, we began to experience greater efficiencies across our practice which will make it possible for us to spend less time in the office while strengthening client service and relationships.

Ensuring no interruption in service

Prior to our technology upgrade, we had developed a guidebook of manual paper processes so that a client service associate, or another third party, could step in to manage any account management task if necessary. However, our adoption of Tamarac’s unified web-based platform has made our business more transparent and is gradually eliminating the need for all manual paper processes. As a result, if my partner and I are on vacation, or if we ever decide to hire another client service associate, someone will always be able to step in and manage all processes electronically, ensuring our clients will never experience a disruption in service.

Shorter rebalancing workflow

The process of placing a trade, sending it to our primary custodian (Charles Schwab & Co.), validating the trade, and submitting it used to require 26 clicks from start to finish. Today, the process only necessitates eight clicks, and we have the peace of mind that comes from knowing our data is accurate.

One reason is that, thanks to Tamarac’s integration with Schwab, we don’t need to access multiple systems to complete a trade. We just need to click the “rebalance” button and approve the trade in Advisor Rebalancing, which then automatically sends the trade to Schwab, and we go to Schwab from within Advisor Rebalancing for validation and submission.

When you consider the hundreds of trades we make every year, going from 26 to eight clicks to complete trades saves us a lot of very valuable time. And on top of that, Tamarac automatically cleans up our data sets, and makes it easy for us to regularly perform tax-loss harvesting across all accounts as opposed to just once a year.

Furthermore, in addition to no longer having to spend one-and-a-half to two hours per day exporting and importing data, we can now export our daily reconciliations to Tamarac, which saves another one-and-a-half to two hours every day.

Fewer phone calls from clients

The interactive client portal in Advisor View, which is customized with our firm’s logo and look, has served as a useful resource for those clients who used to call us frequently to find out monthly or daily returns. About 75 per cent of our clients who are under 60 now log into the client portal to access account data and reports, which has saved us time we previously spent on unnecessary phone calls.

Customized reports that keep clients focused

The client portal provides our clients with up-to-date news and commentary from a wide variety of media outlets, and while we are glad to offer access to as much information as possible, we also understand that too much financial data and analysis can be detrimental for clients who lack the expertise to properly digest and contextualize it.

There’s a lot of information out there, and some of it is destructive. Therefore, we only include an account’s or an investment’s long-term track record in reports, and call attention to active traders who have tried to predict the future and were wrong, such as those traders who predicted Hillary Clinton would win in November. Our capability to create these personalized reports helps us combat the noise our clients see in the media, without using numbers, while emphasizing our core belief that predicting the future isn’t the way to beat the market.

An extra $50 million in AuM in a year

The operational efficiencies generated by our unified technology platform helped us grow our AuM by $50 million last year, and also enabled us to decrease our client service associate’s weekly hours from 40 to 21.

Succession planning is a top priority for any lifestyle business, but if the above trends continue, our firm’s technology platform can afford us the luxury of running our business effectively for another 20 or 30 years. During that time, my partner and I can be in the office for a few hours a day or week, and then allow our technology applications to take care of running the back office while we play golf with clients.

Dustin Stiefel is Co-Founder and Principal of Steward Wealth Management (www.stewardwealthmanagement.com), a Colleyville, Texas-based firm.