Insight

What I’ve Seen: Challenge Legacy Processes for Operational Efficiency

Dec 13, 2022

F2 Strategy’s Executives in Residence bring years of high-level experience to our clients and with that comes unique perspectives and powerful insights that wealth management firms can use to make critical decisions. Our “What I’ve Seen” series gives the executives an outlet to share their insights with the industry in three categories: driving change, marketing and sales, or customer-centric business.

Dave Malone speaks to driving change through challenging legacy processes to achieve operational efficiency where it matters.

The tsunami of regulatory change that comes at financial institutions consumes extensive amounts of the teams’ time. Firms are desperate to find ways to free up that time through operational efficiency. While they often look for it in the back office, really where they need it most is not always where they look—the front office. When efficiency is added to the front office, it relieves stress for those juggling multiple priorities and gives them time to focus on higher value client, team, and firm initiatives.

Reexamine Legacy Processes

Often, processes build up over time and add incremental weight to the business, but it happens so slowly people don’t notice the massive impact it is having on overall efficiency. Many processes that could be streamlined instead go unchallenged for many years.

Firms should ask questions of the front office team such as, “what takes up most of your time?”, “why do you do it?”, “how do you do it?” to identify legacy processes that are redundant, unnecessary, or could be automated. Once they are known, firms can make decisions related to risk and decide whether to streamline it or stop the process altogether and in either case, liberate the time.

In addition, only fixing efficiency in the back office will never give firms the gains they could realize if they focused on the whole firm. Operations should work with the front office to understand what happens before it gets to them.

Use improving efficiency in the client onboarding process as an example…

“Client Onboarding 1.0” digitizes all the forms. Streamlined for operations, but it doesn’t solve the problem because the process is still inefficient. 

Instead, “Client Onboarding 2.0” brings all the stakeholders (from operations, new accounts, transfers, fraud, compliance, and front office) together to map out the process end to end. It identifies the choke points in the flow and challenges the entire process. The inefficiencies become obvious—things like checking the same data multiple times or requiring approvals for certain types of accounts (and discovering no requests are ever denied).

It gives firms a very clear sense of how to lean the process out and what success looks like. In this example, Client Onboarding 2.0 eliminated nearly 75% of the steps in the process.

Rinse and repeat this model with high-volume processes, including cash management, LOA’s, branch internal controls as well as low volume/high value processes like “death of a client”, and competitive hire transitions. Also find out what processes matter most to advisor teams and what’s getting in the way of that happening.

Challenge first, spend second

The best practice is to engage in this type of work before you make a large technology investment. It puts firms in a much more educated decision to make technology decisions. Often firms will modify an off-the-shelf product or in-house product to fit the process rather than lean out the process and then apply technology. If you simplify the process, you simplify the build, you simplify the rollout.

Changing organizational mindset

Getting buy-in for systemic mindset change across an organization is rarely a slam dunk. In this case, it’s accomplished by highlighting the cost of not doing it in failed projects and ballooning time spent. Often, the root of failed projects can be traced back to fitting a technology into a place it doesn’t belong. It’s also possible to demonstrate the benefits of repurposing existing full-time employees to engage in more valuable activities such as financial planning or attracting more clients.

Additionally, allow for two-way communication. Use advisory boards to maintain a pulse on challenges coming from the front office and have a vehicle for those team members to bring ideas forward. Recently, Sonya Dhar, Frannie McHattie, and Scott Lamont wrote about how F2 Strategy’s Voice of the Advisor surveys allow for this type of data collection.

In most cases, if you’ve framed the change to highlight the ways this will deliver time savings or make life easier, buy-in at the front office level is easy.

If you have questions about examining your legacy processes, get in touch for further guidance.

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