When it comes to running a financial advisory firm, paper is a big problem - a problem that Hirst Wealth Management, based in Massachusetts has overcome by turning over a new leaf.

Here, Tim Wacker talks about how Hirst Wealth Management has taken its three-person firm completely paperless. Wacker is a technical writer for NBN Communications, a writing and research services company.

Regulatory compliance and convoluted client account histories mean industrial-sized, gray filing cabinets are decorations de-rigueur for financial advisory firms of any size. Searching for and working with the files in those cabinets have become an ever-growing cost of doing business. Not only does this invite regulatory wrath, but it also takes up scarce time that could be devoted to advising clients. These problems are particularly acute for smaller advisory firms whose competitive edge is that individual attention which is ever-so-important in times of turmoil in financial markets.

Faced with such turmoil and a burgeoning business opportunity in the wave of retiring Baby Boomers needing annuity services, Hirst Wealth Management, a three-person financial advisory firm based in New Bedford, MA, decided it was time for a big change. It wanted to eliminate the challenges of paper management and focus on what it does best: manage its clients’ portfolios. It took a little over a year to do just that.

“Hirst literally has no filing cabinets in its office and that's unheard of in this industry,” said William Peyton, president of document imaging services company IP Digital, which is assisting Hirst in its transition from paper.

“Many businesses start out with that intention and get halfway there,” Peyton said. “But eventually they leave some part of operations organized in filing cabinets. Hirst really is paperless, and it has helped them be very efficient.”

In the paper-heavy world of financial consulting, efficiency equals success which is seeing a dramatic up-tick in various measures at Hirst since its decision last year to shift gears in its long-running effort to completely computerize operations. One of those measures is the roughly $100,000 return on investment being realized since that decision. Another is how Hirst is now able to take on many more customers for the one licensed advisor the company has: Leonard Hirst, the company’s owner and president. All without taking on more staff.

The first step, and arguably the largest from an operational standpoint, Hirst said, was converting all the firm’s paper records into electronic images. This allows for storing and retrieving those documents in a digital form, not from file cabinets, but from servers in computers that take up a tiny fraction of the floor space. This allows for using keywords, phrases, and numerals to instantly locate those records in those computers.

For Hirst that conversion to electronic records started several years ago when it first purchased its Laserfiche electronic records management systems. While the new system saved hours each day not spent with filing cabinets, Hirst was still forced to print out and manually process the paperwork involved in many client transactions. Particularly when government auditors came a-calling.

However, the transition to electronic images can mean much more than simply eliminating paper, Peyton says. It also opens an organization up to a whole new way doing business, a step Hirst decided to undertake a little over a year ago.

Using electronic automation to improve efficiency

In mid-2014 Hirst upgraded its Laserfiche system to include numerous software modules now allowing it to automate not just the storage of its records, but the handling and processing. IP Digital has been assisting the firm with building automated processes for onboarding and off-boarding clients, using the system’s electronic Workflow module.

Now, when Hirst Wealth Management receives a document, it is scanned and automatically sent to the upgraded enterprise content management system. ECM is more than electronic records storage, Peyton said, it is using software to do the time-consuming manual tasks involved in handling paper. Using Laserfiche’s Workflow software, a document that is opening up an account will automatically be routed from the office administrator to an advisor so that assets can be handled.

For example, if a retired client requests money, Hirst Wealth Management uses Workflow for withdrawals. Often, the client will have more than one account, and the question becomes which account to use for the withdrawal and how to handle taxes, depending on the account.

Workflow alerts the wealth manager, and the wealth manager can answer the questions and get the distribution processed. If the client doesn’t have the cash available, Workflow lets Hirst’s assistant know when it will be available. The assistant can then set up the distribution to occur via direct deposit when the money is available and can notify the client when to expect the deposit.

“Workflow makes sure nothing slips through the cracks,” Hirst said. “It’s not that people are incompetent; it’s that people are overworked. If you use...Post-Its, you’re ripe for errors, and when it comes to client funds, there is no room for errors.”

The office is closed, but the business isn’t

Through the use of another software module in the system called Web Access, Hirst Wealth Management can also retrieve client records from anywhere there is internet service. This allows for conducting as much business as possible outside of the office. If a document comes in while Hirst is out of the office, his assistant can scan it into Laserfiche, and he can review it from anywhere with an internet connection. Something that comes in real handy when Hirst has business outside the office, which is often.

“For business reasons, we have to travel frequently,” Hirst said. “Now, we can take a week or two or three away and the office and business doesn’t skip a beat.”

The transition to ECM has been a game-changer at Hirst Wealth Management, which consists of Hirst, his wife and one administrative assistant. The firm manages the finances of 215 households and is still looking to grow. Most wealth management firms with just one wealth manager, according to Hirst, tap out at 100 to 150 clients. Being paperless helps woo clients, as well. Propsects are very impressed when Hirst explains how his firm uses document management software to secure their data and what policies and procedures surround it.

“From the beginning, we’re setting ourselves apart,” he said. “Clients like that paper files aren’t out in the open for anyone to view, particularly since many of elderly clients are increasingly worried about identity theft.”

Efficient even during compliance activities

Finally, like all wealth managers, Hirst has to comply with regulations and be able to produce information if audited by government entities. One audit required him to produce documents from a ten-page list, which was approximately 15,000 documents. But because Hirst Wealth Management now has all its documents stored electronically, they are easily exported to a USB drive and hand-delivered by Hirst himself.

Because his firm is paperless, Hirst can even set up regulators with a laptop and access to the system, providing them with a self-service way to audit accounts. Moreover, the system has been designed so that only authorized individuals can alter the records accessed in it.

Looking at the entire picture, the decision to take the business from electronic records management to ECM has done more than just eliminate paper files from Hirst Wealth Management. It has enabled the firm to take on more clients while still providing personalized, responsive service; comply with all applicable regulations; and provide Hirst with the freedom to work offsite, knowing that he will have everything he needs at the click of a mouse.

“With a paper system, if you filed something in the wrong place, there’s a good chance you’ll never find it again,” Hirst said. “With Laserfiche, I don’t worry about that or a lot of other things.”