IPS Generation Time Reduced by 75% With AI-Powered Tool

IPS Generation Time Reduced by 75% With AI-Powered Tool

Executive Summary

Ferguson Estate Planning, a prominent RIA firm, faced significant challenges in efficiently generating personalized Investment Policy Statements (IPS) for their growing client base. The manual IPS creation process was time-consuming, hindering advisor productivity and delaying investment execution. By integrating Golden Door Asset’s recommended AI-powered IPS generation tool, Ferguson Estate Planning reduced IPS creation time by 75%, freeing up valuable advisor time and enabling them to focus on strengthening client relationships and pursuing new business opportunities.

The Challenge

Ferguson Estate Planning manages over $500 million in assets for approximately 300 clients. Their previous IPS generation process was a significant bottleneck, severely impacting advisor productivity and client onboarding efficiency. Each IPS was painstakingly crafted manually, requiring advisors to gather client data from multiple sources, assess risk tolerance using outdated questionnaires, and customize the document based on individual financial goals and circumstances.

Before implementing the AI-powered solution, a single IPS would take an advisor an average of 3 hours to complete. This included:

• Data Gathering & Input: 1 hour spent collecting information from client interviews, questionnaires (often incomplete), and various legacy systems. Many clients provided inconsistent or incomplete information, requiring follow-up and further delays.
• Risk Assessment & Profiling: 30 minutes spent manually calculating risk scores based on subjective interpretations of client responses. This process was inconsistent and prone to human error, potentially leading to mismatched investment strategies.
• IPS Drafting & Customization: 1 hour spent manually drafting the IPS document, ensuring compliance with regulatory requirements, and tailoring the investment strategy to the client’s specific needs. This often involved extensive revisions and back-and-forth with senior partners.
• Compliance Review & Approval: 30 minutes spent submitting the drafted IPS for compliance review, which sometimes resulted in further revisions and delays.

This manual process translated into over 900 hours annually dedicated to IPS creation, representing a substantial opportunity cost for the firm. Advisors were spending less time on crucial activities such as financial planning, client communication, and business development. Furthermore, the lengthy onboarding process delayed investment execution, potentially costing clients opportunities to capitalize on market movements and achieve their financial goals. For example, if a client intending to invest $200,000 had their investment delayed by two weeks due to IPS creation delays during a period when the market increased by 1%, they would potentially miss out on $2,000 in gains. The firm also recognized the increasing competitive pressure from firms offering faster and more personalized onboarding experiences.

The Approach

Ferguson Estate Planning recognized the need for a more efficient and scalable IPS generation process. After evaluating several potential solutions, they chose to integrate an AI-powered IPS generation tool recommended by Golden Door Asset. This decision was based on several factors, including the tool's proven ability to:

• Automate Data Gathering: The tool integrates directly with Ferguson Estate Planning's existing CRM and portfolio management systems, automatically populating IPS templates with relevant client data.
• Enhance Risk Assessment: The tool utilizes advanced algorithms to assess client risk tolerance based on a dynamic questionnaire and behavioral finance principles. This provides a more accurate and objective risk profile compared to the previous manual approach.
• Personalize Investment Strategies: The tool generates customized investment strategies based on client risk profiles, financial goals, and time horizons, ensuring that each IPS is tailored to the individual client's needs.
• Streamline Compliance: The tool incorporates pre-approved language and regulatory disclosures, simplifying the compliance review process and reducing the risk of errors.

The implementation process involved several key steps:

1. Data Integration: Establishing secure connections between the AI-powered tool and Ferguson Estate Planning's existing systems. This involved mapping data fields and ensuring data integrity.
2. Workflow Customization: Configuring the tool to align with Ferguson Estate Planning's specific workflows and compliance requirements. This included customizing IPS templates and setting up approval processes.
3. Advisor Training: Providing comprehensive training to advisors on how to use the new tool and leverage its features to enhance client service.
4. Pilot Program: Conducting a pilot program with a small group of advisors to test the tool and identify any potential issues.
5. Firm-Wide Rollout: Rolling out the tool to all advisors after successfully completing the pilot program and addressing any feedback.

The Golden Door Asset team provided ongoing support and guidance throughout the implementation process, ensuring a smooth transition and maximizing the value of the new tool. They helped the firm identify and address any potential challenges, such as data inconsistencies or workflow bottlenecks. They also provided ongoing training and support to advisors, ensuring that they were able to effectively leverage the tool to improve their efficiency and client service.

Technical Implementation

The AI-powered IPS generation tool is a cloud-based platform that integrates seamlessly with Ferguson Estate Planning’s existing technology infrastructure. The key technical components of the implementation include:

• API Integration: Secure APIs connect the tool to Ferguson Estate Planning's CRM (Salesforce) and portfolio management system (Black Diamond). This enables real-time data synchronization and eliminates the need for manual data entry.
• AI-Powered Risk Assessment Engine: The tool uses a proprietary algorithm based on Modern Portfolio Theory (MPT) and behavioral finance principles to assess client risk tolerance. The algorithm considers factors such as age, income, investment experience, and risk aversion to generate a personalized risk profile. It uses a 1-10 risk score, with 1 being extremely conservative and 10 being extremely aggressive.
• Customizable IPS Templates: The tool provides a library of pre-approved IPS templates that can be customized to meet Ferguson Estate Planning's specific branding and compliance requirements. These templates include sections for investment objectives, asset allocation guidelines, risk management strategies, and performance reporting.
• Natural Language Generation (NLG): The tool uses NLG technology to automatically generate text for the IPS based on client data and risk profiles. This ensures that the IPS is written in clear and concise language that is easily understood by clients.
• Compliance Workflow: The tool includes a built-in compliance workflow that streamlines the review and approval process. This ensures that all IPS documents are reviewed by a compliance officer before being delivered to clients. The compliance workflow allows for tracking of all changes made to the IPS, as well as documentation of the rationale behind those changes. All IPS versions are archived for future reference and audit purposes.

The entire system is built on a secure, SOC 2 compliant platform, ensuring the confidentiality and integrity of client data. Data is encrypted both in transit and at rest, and access controls are implemented to restrict access to sensitive information. The system is regularly audited to ensure compliance with industry best practices and regulatory requirements.

Results & ROI

The implementation of the AI-powered IPS generation tool has yielded significant results for Ferguson Estate Planning:

• IPS Generation Time Reduced by 75%: The average time to create an IPS has decreased from 3 hours to just 45 minutes. This frees up 2.25 hours per client, allowing advisors to focus on higher-value activities.
• Client Onboarding Time Reduced by 50%: The overall client onboarding process has been streamlined, reducing the time from initial consultation to investment execution by 50%.
• Advisor Productivity Increased by 25%: Advisors are now able to handle 25% more clients without increasing their workload.
• Client Satisfaction Improved by 15%: Clients are more satisfied with the onboarding experience due to the faster turnaround time and more personalized investment strategies. The firm's Net Promoter Score (NPS) increased from 60 to 69.
• Cost Savings of $50,000 Annually: The reduction in IPS generation time has translated into significant cost savings for the firm. With 300 clients and a time savings of 2.25 hours per client at an average advisor hourly rate of $75, the annual cost savings are approximately $50,000 (300 clients * 2.25 hours/client * $75/hour = $50,625).
• Increased Assets Under Management (AUM): The improved onboarding process and increased advisor productivity have contributed to an increase in AUM of 10% over the past year.

The ROI calculation is as follows:

• Annual Savings: $50,000
• Implementation Cost (One-Time): $15,000
• Annual Software Subscription Cost: $10,000
• Net Annual Benefit: $50,000 (Savings) - $10,000 (Subscription) = $40,000
• ROI: ($40,000 / $15,000) * 100% = 267%

This represents a substantial return on investment for Ferguson Estate Planning, demonstrating the value of leveraging AI-powered tools to improve efficiency and enhance client service.

Key Takeaways

• Automate Repetitive Tasks: Identify time-consuming and repetitive tasks in your workflow and explore opportunities to automate them using AI-powered tools.
• Prioritize Data Integration: Ensure that your systems are integrated to enable seamless data flow and eliminate the need for manual data entry.
• Focus on Client Experience: Streamline your client onboarding process to provide a faster and more personalized experience.
• Invest in Advisor Training: Provide comprehensive training to your advisors on how to use new tools and leverage their features to improve client service.
• Measure Your Results: Track key metrics to measure the impact of your technology investments and identify areas for improvement.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors automate compliance tasks and generate accurate client financial plans, empowering them to deliver personalized wealth management services at scale. Visit our tools to see how we can help your practice.