40% Faster ACAT Processing: Digitizing Document Workflows

40% Faster ACAT Processing: Digitizing Document Workflows

Executive Summary

Harrington Legacy Advisors, a growing RIA firm, struggled with a slow and inefficient ACAT (Automated Customer Account Transfer) process, leading to delayed client onboarding and lost revenue opportunities. Golden Door Asset implemented a secure, digitized document collection and transfer system, streamlining the ACAT process. This resulted in a 40% reduction in ACAT processing time, improved client satisfaction, and an estimated $30,000 increase in revenue during the first quarter after implementation.

The Challenge

Harrington Legacy Advisors, managing over $250 million in assets, experienced significant bottlenecks in their client onboarding process due to their reliance on manual ACAT transfers. The traditional ACAT process involved cumbersome paperwork, frequent communication errors, and lengthy processing times, negatively impacting both client experience and firm efficiency.

Here's a breakdown of the challenges they faced:

• Time-Consuming Paperwork: The ACAT process required clients to manually fill out multiple complex forms, often leading to errors and omissions. Each incomplete form necessitated back-and-forth communication, adding days or even weeks to the transfer timeline. On average, it took clients 12 business days just to complete and return the necessary documents.

• Increased Processing Costs: Manual processing demanded significant administrative overhead. Staff members spent an estimated 15 hours per client solely on tasks related to ACAT transfers, including printing, mailing, reviewing, correcting, and faxing documents. This translated to approximately $750 in labor costs per client at an average hourly rate of $50.

• Client Frustration and Attrition Risk: The lengthy ACAT process caused frustration among new clients eager to begin investing. This negative initial experience risked damaging the client relationship and potentially leading to attrition, with an estimated 5% of new clients expressing dissatisfaction during the onboarding phase. This frustration was directly correlated to delayed portfolio construction and thus, the inability to achieve the financial goals discussed during the initial consultation.

• Lost Revenue Opportunities: The delays in transferring client assets meant that Harrington Legacy Advisors were unable to actively manage those assets and generate revenue. Each day of delay represented lost opportunity in terms of market appreciation and potential gains. With an average transferred account size of $200,000, even a 1% daily fluctuation could mean a significant opportunity cost. Assuming an average return of 8% annually, each day an account remained unfunded represented approximately $43.84 in lost potential revenue per account.

Harrington Legacy Advisors recognized that the inefficient ACAT process was a significant impediment to their growth and profitability, necessitating a more efficient and client-centric solution. They needed a system to reduce errors, accelerate processing, and enhance the overall client onboarding experience.

The Approach

Golden Door Asset collaborated with Harrington Legacy Advisors to design and implement a comprehensive digital ACAT solution. The approach was centered around automating document collection, streamlining data transfer, and improving communication with clients. The key strategic considerations included:

1. Centralized Online Portal: We developed a secure online portal where clients could access and complete ACAT forms digitally. The portal was designed with an intuitive user interface, guiding clients through each step of the process and providing clear instructions. The portal was also mobile-responsive, allowing clients to complete forms from any device.

2. Pre-Populated Forms and Data Validation: The portal automatically pre-populated ACAT forms with readily available client data pulled from the client's CRM and the firm's records, minimizing the need for manual data entry. We also implemented real-time data validation to identify and prevent errors before submission, reducing the number of incomplete or incorrect forms.

3. Integration with Custodial Platform: We integrated the online portal with Harrington Legacy Advisors' custodial platform through a secure API (Application Programming Interface). This integration enabled seamless transfer of completed ACAT forms and client data to the custodian, eliminating the need for manual data entry and reducing the risk of data errors.

4. Automated Communication and Tracking: The system included automated email notifications to keep clients informed about the status of their ACAT transfer. Clients received updates when their forms were received, processed, and approved. Advisors also gained real-time visibility into the progress of each transfer, allowing them to proactively address any issues or delays.

5. Secure Document Management: We utilized Laserfiche, a robust document management system, to securely store and manage all ACAT-related documents. Laserfiche provided secure encryption and access controls to protect sensitive client data and ensure compliance with regulatory requirements.

6. Prioritization Matrix Development: Developed a matrix focusing on accounts with high balances and/or high potential investment returns as top priority for ACAT processing. This ensured efficient allocation of resources.

Technical Implementation

The technical implementation involved several key components and integrations:

• Laserfiche Integration: We utilized Laserfiche for secure document management and workflow automation. This allowed for the storage of client documents in a secure, compliant manner. Laserfiche's integration capabilities enabled us to automate the routing of documents for review and approval.

• Custodial Platform API Integration: We integrated the online portal with Harrington Legacy Advisors’ custodial platform using the custodian’s publicly available API. The integration facilitated automated data transfer between the portal and the custodial platform, eliminating manual data entry and reducing the risk of errors. The API integration used OAuth 2.0 for secure authentication and authorization.

• Secure Online Portal Development: The online portal was developed using a modern web framework with robust security measures to protect sensitive client data. The portal was hosted on a secure cloud platform with regular security updates and vulnerability scanning. The system used encryption both in transit (TLS 1.2 or higher) and at rest (AES-256 encryption).

• Data Validation and Error Handling: Real-time data validation was implemented to ensure data accuracy and completeness. The system provided clear error messages to guide clients in correcting any errors before submission. We implemented a comprehensive error logging and monitoring system to identify and address any technical issues promptly.

• Automated Workflow Configuration: Laserfiche was configured to automate the ACAT processing workflow, including document routing, approval, and archival. The workflow was designed to streamline the process and reduce manual intervention.

• Calculation Methodology for ROI: The $30,000 increase in revenue was calculated based on the average account size of $200,000, the reduced ACAT processing time (40% reduction), and the potential investment returns during the accelerated onboarding period. We assumed an average annual return of 8% and a 2% management fee charged by Harrington Legacy Advisors. By reducing the ACAT processing time, we enabled clients to begin investing sooner, generating additional revenue for the firm.

Results & ROI

The implementation of the digital ACAT solution yielded significant results for Harrington Legacy Advisors:

• 40% Reduction in ACAT Processing Time: The average ACAT processing time decreased from 25 business days to 15 business days, a reduction of 10 days or 40%. This improvement significantly accelerated client onboarding and allowed clients to begin investing sooner.

• Increased Revenue: The accelerated ACAT processing resulted in an estimated $30,000 increase in revenue during the first quarter after implementation. This increase was attributed to the ability to manage client assets sooner and generate returns during the previously idle period.

• Improved Client Satisfaction: Client satisfaction with the onboarding process improved significantly, with 95% of new clients reporting a positive experience. The streamlined process reduced client frustration and enhanced their overall perception of Harrington Legacy Advisors.

• Reduced Administrative Costs: The automated process reduced administrative costs associated with ACAT transfers by an estimated 60%. This reduction was due to the elimination of manual data entry, reduced paperwork, and improved efficiency. The 15 hours of employee time spent per ACAT process was reduced to approximately 6 hours, saving $450 of employee time per client.

• Reduced Errors and Omissions: The real-time data validation and pre-populated forms significantly reduced the number of errors and omissions in ACAT forms. This improvement eliminated the need for back-and-forth communication with clients and further accelerated the processing timeline. The percentage of forms rejected due to errors fell from 15% to less than 2%.

• Return on Investment (ROI): The initial investment in the digital ACAT solution was recouped within the first 6 months of implementation, demonstrating a strong return on investment. The combination of increased revenue and reduced administrative costs made the solution a financially sound investment for Harrington Legacy Advisors.

Key Takeaways

The success of Harrington Legacy Advisors’ digital ACAT transformation offers valuable insights for other advisory firms:

1. Digitize and Automate: Embrace digital solutions to automate manual processes and streamline workflows. Digitization can significantly reduce processing time, improve accuracy, and enhance efficiency.

2. Integrate Systems: Integrate your online portal with custodial platforms and other relevant systems to facilitate seamless data transfer and eliminate manual data entry.

3. Focus on Client Experience: Design digital solutions with a focus on client experience, providing clear instructions, real-time updates, and user-friendly interfaces. A positive onboarding experience is critical for building strong client relationships.

4. Prioritize Security: Implement robust security measures to protect sensitive client data and ensure compliance with regulatory requirements. Security should be a top priority in any digital transformation initiative.

5. Measure and Track Results: Continuously measure and track the results of your digital transformation efforts to identify areas for improvement and demonstrate the value of your investments. Key metrics to track include processing time, client satisfaction, and revenue impact.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors streamline operations, enhance client engagement, and drive revenue growth. Visit our tools to see how we can help your practice.