Streamlined Custodian Setup Cuts Time by 65%

Streamlined Custodian Setup Cuts Time by 65%

Executive Summary

Reeves Institutional Advisors (RIA) faced a significant bottleneck in their client onboarding process: the manual custodian account setup. This laborious process, involving multiple paper forms, manual data entry, and extensive back-and-forth communication, delayed clients from investing and impacted client satisfaction. By establishing direct relationships with key custodians and implementing an automated form completion and submission system, Reeves RIA slashed custodian setup time by 65%, enabling faster client funding and enhanced onboarding experiences.

The Challenge

The traditional custodian account opening process presented a major pain point for Reeves Institutional Advisors. Prior to implementing their streamlined system, the process was highly manual and time-consuming. New clients would often experience a frustrating delay between signing their advisory agreement and actually being able to invest their assets.

Specifically, the challenge revolved around the following issues:

• Cumbersome Paperwork: Each custodian required its own set of forms, often 10-15 pages in length. Completing these forms manually was prone to errors, requiring advisors to spend significant time reviewing and correcting applications.
• Manual Data Entry: Information from the client onboarding package had to be manually re-entered into each custodian's forms. This duplicated effort was inefficient and increased the risk of data entry errors. Advisors were spending an average of 4 hours per client just on data entry for custodian forms.
• Multiple Signatures and Delivery: Forms required multiple signatures, often necessitating physical mail delivery and long turnaround times. Chasing down signatures and tracking form submissions consumed valuable administrative resources. The average time to obtain all necessary signatures and physically mail the documents was 3 days.
• Communication Overhead: Following up with custodians to check on the status of account openings was a constant drain on advisor time. With an average of 3 follow-up calls per account opening, advisors were spending approximately 1.5 hours per client in custodian-related phone calls.
• Missed Investment Opportunities: The delays in opening accounts prevented clients from immediately capitalizing on investment opportunities. A client with $500,000 to invest, for example, might miss out on a potential 2% gain ($10,000) during a two-week delay in account setup, illustrating the real financial cost of inefficiency.
• Client Frustration: The slow onboarding process often led to client frustration, negatively impacting the overall client experience and potentially hindering referrals. A post-onboarding survey revealed that 40% of new clients felt the custodian setup process was "too slow and complicated."

These challenges combined to create a significant drag on Reeves Institutional Advisors' operational efficiency, impacting profitability and hindering their ability to focus on providing personalized financial advice. The firm estimated that the inefficiencies in custodian account opening were costing them approximately $50,000 annually in lost productivity and missed investment opportunities.

The Approach

Jonathan Reeves, CEO of Reeves Institutional Advisors, recognized the urgent need for a more efficient custodian onboarding process. He adopted a two-pronged approach: establishing direct relationships with key custodians and implementing technology to automate form completion and submission.

1. Building Direct Custodian Relationships:

Reeves prioritized building strong relationships with the firm's primary custodians. He proactively reached out to senior management at these custodians to explore opportunities for collaboration and streamlining processes. This included:

• Negotiating Streamlined Agreements: Reeves negotiated agreements with custodians that allowed for more efficient account opening procedures. This involved standardizing forms, reducing signature requirements where possible, and establishing dedicated contact points for Reeves Institutional Advisors.
• Direct API Access: Reeves sought and obtained direct API access to custodian systems. This allowed for the seamless and automated exchange of data between Reeves' internal systems and the custodians, eliminating the need for manual data entry and paper forms.
• Collaborative Training: Reeves worked with custodians to provide ongoing training to his staff on the latest account opening procedures and best practices. This ensured that the team was fully equipped to handle custodian-related tasks efficiently.

2. Implementing Automation Technology:

Reeves invested in technology solutions to automate the form completion and submission process. This included:

• Web-Based Client Onboarding Portal: A secure web portal was developed where clients could complete their onboarding information online. This portal was designed to be user-friendly and intuitive, guiding clients through the process step-by-step.
• Automated Form Filling: The client onboarding data was automatically populated into the required custodian forms. This eliminated the need for advisors to manually re-enter the information, saving significant time and reducing the risk of errors.
• Electronic Signature Integration: The system integrated with electronic signature platforms, allowing clients to sign forms online quickly and securely. This eliminated the need for physical signatures and mail delivery.
• CRM Integration: The system was tightly integrated with Reeves' CRM system, providing a centralized view of the client onboarding process. This allowed advisors to track the progress of each account opening in real-time and proactively address any issues.
• Automated Status Updates: The system automatically tracked the status of account openings with the custodians and sent notifications to advisors and clients when key milestones were reached. This kept everyone informed and reduced the need for manual follow-up.

By combining these strategic initiatives, Reeves Institutional Advisors created a streamlined and efficient custodian onboarding process that significantly reduced the time and effort required to open new accounts.

Technical Implementation

The technical implementation involved integrating multiple systems and leveraging custodian APIs for seamless data transfer and automation.

• Custodian API Integration: Direct API connections were established with Schwab Advisor Services, TD Ameritrade Institutional (now Schwab), and Fidelity Institutional. These APIs were used to:
  • Automate Account Opening: Submitting new account applications directly to the custodian systems.
  • Retrieve Account Status: Checking the real-time status of account openings.
  • Download Account Documents: Accessing necessary account documentation electronically.
• Web Form Development: A secure, responsive web form was developed to collect client data. This form:
  • Utilized Data Validation: Implemented real-time data validation to ensure accuracy and completeness.
  • Employed Conditional Logic: Displayed only relevant questions based on client responses.
  • Integrated with CRM: Seamlessly transferred client data to the firm's CRM system (Salesforce).
• Data Mapping & Transformation: A data mapping engine was used to translate client data from the web form into the specific data formats required by each custodian's API. This engine:
  • Supported Multiple Custodians: Handled different data formats and requirements for each custodian.
  • Enabled Data Transformations: Performed necessary data transformations, such as formatting dates and converting currencies.
• Electronic Signature Integration (DocuSign): DocuSign was integrated into the workflow to allow clients to electronically sign required documents. The integration:
  • Automated Document Routing: Automatically routed documents to the correct parties for signature.
  • Provided Audit Trails: Maintained detailed audit trails of all signatures.
• CRM Integration (Salesforce): The entire onboarding process was tracked within Salesforce, providing a centralized view of client onboarding status. This included:
  • Automated Task Creation: Automatically created tasks for advisors to follow up with clients.
  • Real-Time Reporting: Provided real-time reporting on key onboarding metrics, such as account opening time and completion rate.
• Security Measures: The entire system was designed with security in mind, including:
  • Data Encryption: All data was encrypted both in transit and at rest.
  • Multi-Factor Authentication: Multi-factor authentication was required for all users.
  • Regular Security Audits: Regular security audits were conducted to ensure compliance with industry best practices.

The implementation leveraged a microservices architecture for scalability and maintainability. Services were deployed on AWS cloud infrastructure using containerization (Docker) and orchestration (Kubernetes).

Results & ROI

The implementation of the streamlined custodian account opening process yielded significant results for Reeves Institutional Advisors:

• Reduced Custodian Setup Time by 65%: The average time to open a new custodian account decreased from 8 business days to just 2.8 business days.
• Increased Client Satisfaction: Post-onboarding surveys showed a 40% increase in client satisfaction with the onboarding process. The percentage of clients who found the custodian onboarding process "too slow and complicated" dropped from 40% to 5%.
• Improved Advisor Efficiency: Advisors spent significantly less time on administrative tasks related to account opening, freeing them up to focus on client relationships and financial planning. Advisors now save approximately 2.5 hours per client, or 31.25% of a 40 hour work week given 5 new clients per week.
• Faster Funding of Accounts: Clients were able to fund their accounts and begin investing sooner, allowing them to capitalize on investment opportunities more quickly.
• Reduced Errors: The automated data entry and form filling processes significantly reduced the number of errors in account applications. The error rate decreased from 8% to less than 1%.
• Cost Savings: The reduced administrative workload and improved efficiency resulted in an estimated annual cost savings of $75,000. This includes savings from reduced labor costs, fewer errors, and faster funding of accounts.

Specifically, the time savings broke down as follows:

• Data Entry: Reduced from 4 hours to 0.5 hours per account.
• Signature Collection: Reduced from 3 days to almost instantaneous with electronic signatures.
• Follow-Up Communication: Reduced from 1.5 hours to 0.25 hours per account.
• Overall Time Savings: 5.75 hours reduced to 0.75 hours for a net reduction of 5 hours.

The ROI from this project was substantial, significantly improving operational efficiency, client satisfaction, and the bottom line. The initial investment in technology and process improvements was recouped within the first year of implementation.

Key Takeaways

1. Prioritize Custodian Relationships: Building strong relationships with your custodians can unlock opportunities for streamlining processes and improving efficiency.
2. Embrace Automation: Automating manual tasks, such as data entry and form filling, can significantly reduce errors and free up valuable advisor time.
3. Integrate Systems: Integrating your CRM and other key systems with custodian APIs can provide a centralized view of the client onboarding process and improve data accuracy.
4. Focus on Client Experience: A smooth and efficient onboarding process can significantly improve client satisfaction and build stronger client relationships.
5. Measure and Track Results: Regularly measure and track key metrics, such as account opening time and client satisfaction, to identify areas for improvement and demonstrate the value of your initiatives.

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