Rethinking the New Account Process for Financial Advisors

Our industry has been through quite a bit over the past three years. The evolution of the TD Ameritrade and Schwab integration has inspired many of us to look up and wonder which direction is right for us.

In this ever-evolving landscape, a lingering issue remains—the new account process. While technology has advanced in numerous sectors, the new account opening procedure at custodian firms hasn’t matured. Often neglected, advisors have shied away from focusing on solving new account opening for a myriad of reasons.

Some of these might sound familiar: It seems ridiculous to try to convince behemoths to care about your firm’s annoyances. It’s an operations issue, not a sales issue, so the pain can be smoothed over without needing as much empathy as it deserves. It’s too complicated to try to nail down solutions.

New accounts are a critical aspect of how you increase your AUM.

While IRAs and standard account types are virtually one lock thanks to modernization at custodians – It’s Alts, Insurance, and other providers that require wet signatures that tend to mess everything up.

It impacts your client experience.

It can make or break your team.

In light of all this, financial advisory firms must assess their new account processes critically, particularly when they operate in a multi-custodial environment, manage third-party assets, or are contemplating firm mergers. I want to challenge you to ask five vital questions to refine and improve your new account process.

1. Is Your Process Rogue?

You risk inconsistency and error whenever you don’t have a standardized process. Equally important, you can’t scale if everyone is doing what is right in their own eyes. Moreover, in the age of acquisitions and firm mergers, having a rogue or inconsistent process can exacerbate challenges in integration. It’s essential to ensure that your process is robust and fool-proof.

2. Is Your Process Consistently Curated?

Financial firms need to invest time in refining and improving their processes. Working ON your business instead of just in your business is the only way to make your business better. This means you not only fix problems when they occur, but you proactively seek opportunities for improvement. Implementing the changes you identify and outline provides consistency in your client experience. This way, no matter who handles the account—whether it’s a veteran advisor or a newcomer—every client will have the same positive experience.

3. Is Your Process Digitized?

It’s 2023. Like most of the world, your clients are used to engaging technology for their wants and needs. You don’t have to be Amazon or Google right now, but you’re behind the curve if your process isn’t digitized.

A digitized process is not just more efficient; it also reduces manual errors and ensures data integrity. At a minimum, core information should be easily populated and stored in a digital format that can be accessed and processed seamlessly.

4. Is Your Process Moderately Integrated?

Your new account process shouldn’t exist in a vacuum. It should be integrated with other systems—whether it’s portfolio accounting, risk assessment, trading, or custodial services. These platforms must work together smoothly to ensure your process is as streamlined as possible. Failure to integrate could leave you feeling stuck and prevent your firm from embracing modern solutions.

5. Is Your Process Complementary to Your Custodian?

Finally, does your process align with the services provided by your custodian? Are you continually updating it based on what your technology providers can offer? A complementary approach will make the relationship more fruitful and will enable both parties to serve the client better.

Mergers and Acquisitions

For firms considering or undergoing mergers and acquisitions, aligning new account processes becomes even more critical. The process you inherit might either be superior or inferior to what you currently have. Therefore, it’s vital to remain agile, continually refining your standardized process to fit the new landscape.

Conclusion and Challenges

If you’re a financial advisor, it’s time to engage in some weighty introspection. These five questions are not just rhetorical but demand answers that could redefine how effective and client-friendly your new account process is. The onus is on you to either adapt or risk falling behind in an ever-evolving industry landscape.

So, take up the challenge. Assess your new account process, find the gaps, and fix them. Your future in the financial advisory landscape may very well depend on how well you modernize and streamline this fundamental process.