Initiatives to improve productivity

Caroline Deutsch:

Gilly from the interviews, can you give us an example of an initiative that stood out as a positive driver for productivity?

Gilly Green:

Yes. The one that stood out for me was actually quite a small firm and they had increased the number of clients per relationship manager significantly above the average in the group we looked at, which is about 150 to 250, but they were up to 1500 to 2000 for their senior advisors. It's sort of slightly unbelievable, but when you look at what they've done, it's really interesting. And the first things that they've done is they have boosted the admin side, so their ratios of financial planners to admin is 1 to 3, which is much higher than most other firms. What they've also done is they have 5 people just focusing on data, and again, they are a small firm, so the significant number of people percentage wise doing that. But one thing that they've actually done is they've deployed technology and they've really focused on AI. They've focused on automating all of the administrative tasks that they can. They're focused on automating paraplanning reports and then now moving forward with much more compliance and checking under an AI infrastructure. Further to that, they are back to that client conversations. Every new client that comes in the door, they have a conversation and say, this is primarily a digital offering. We are here for you if you want a meeting. And they do have meetings, but absolutely the expectation of the clients coming in the door is that they will offer it online as much as possible.

Caroline Deutsch:

Donal, how about you? Is there one that stood out?

Donal Reid:

Yeah, building on Gilly’s comments around AI, every firm is talking about AI, but there are very few that have really implemented AI effectively. There was one firm that we spoke to that has implemented AI in the context of paraplanning and that has automated a lot of what's been going on in terms of production of paraplanning reports, and they've been running a pilot, it's been successful, they've got efficiency savings of about 20%, but more importantly, their quality scores have improved by 15% as a result of implementing AI to support production of their paraplanning reports. So I think this is a key topic that will gather pace during the course of this year as other firms look to achieve similar savings from a similar type of implementation.

Caroline Deutsch:

So, to both of you, how can outsourcing impact productivity?

Gilly Green:

I think the thing to remember about outsourcing is you are giving into care, your operations, whatever else, to somebody who's actually a profit center to do that, and therefore they're going to invest in it. They're going to cover off all of those productivity improvements because it's in their interest to do so, and they need to be scalable to do what they're doing anyway, so therefore they're definitely not going to be a barrier to your scalability. It's definitely one of the pluses of outsourcing. The other thing to remember is if you are inefficient across your whole business, it means it gives you the time then to focus on investing in the front office. And that is a really important, not just investing in the front office, but your focus as a management team. All of that can really help. I think the third thing of this as well is that your outsource provider is going to be measuring these things. They measure their own productivity, they're very professional at it, and all of those productivity measures are also relevant for the front office. A lot of providers will give you the status of things that are going on as you go. So, don't think of it just as a back office scalability, productivity, it's actually helpful across the whole business just because you have negated the need to actually focus on that and drive your investment through two areas instead of one.

Donal Reid:

The only thing I would add is that firms are sometimes concerned about outsourcing because they think they're going to lose control, but provided you have the right governance and oversight in terms of the performance of your outsourcing provider and you put those steps and measures in place, then this can absolutely work. And there've been a couple of interviews that we had where firms did make decision to outsource and said, well, once we've done it, what a relief. There was no difference in quality and the investment managers may have been concerned prior to outsourcing, but once we've done it, they're absolutely fine. And we freed up valuable investment spend, as Gilly said, to focus on improving client experience and differentiate how we can at the front.