Summit Capital Partners Builds Virtual-First Practice, Reduces Overhead 25%

Summit Capital Partners Builds Virtual-First Practice, Reduces Overhead 25%

Executive Summary

Summit Capital Partners, a growing RIA managing $350 million in assets, faced escalating overhead costs and a desire for greater employee and client flexibility post-pandemic. Golden Door Asset helped Summit transition to a virtual-first practice model by implementing a secure, cloud-based infrastructure and optimizing remote workflows. This strategic shift resulted in a 25% reduction in overhead expenses within the first year, freeing up capital for client acquisition and strategic investments.

The Challenge

Prior to 2023, Summit Capital Partners operated from a traditional brick-and-mortar office in downtown Chicago. While the location provided prestige and a central meeting point, it also incurred significant expenses. Rent alone accounted for $120,000 annually, and utilities added another $15,000. Add to that the costs of office supplies ($5,000), cleaning services ($8,000), and IT maintenance ($10,000), the total annual overhead reached a staggering $158,000.

Beyond the direct costs, commuting was a major pain point for both employees and clients. The average employee spent 1.5 hours commuting daily, costing the firm approximately $10,000 per employee annually in lost productivity and potential burnout, based on their average hourly wage and commute time. Client meetings, too, were often hampered by traffic and parking challenges, leading to scheduling delays and reduced face-to-face interaction.

The firm also recognized a growing demand from employees for greater work-life balance and flexibility. A recent internal survey revealed that 80% of employees preferred a hybrid or fully remote work arrangement. Furthermore, Summit observed that approximately 60% of client interactions were already conducted virtually via phone or video conferencing, even before the pandemic. This suggested a ripe opportunity to reduce reliance on the physical office space without compromising client service. The status quo was no longer sustainable, especially when considering future growth projections and the need to allocate capital effectively. Management estimated that the existing overhead structure would hinder their ability to invest in marketing and technology upgrades crucial for acquiring new clients and scaling the business.

The Approach

Golden Door Asset began by conducting a thorough assessment of Summit Capital Partners' existing infrastructure, workflows, and technology needs. This included a detailed analysis of their current software applications, hardware configurations, and IT security protocols. We also interviewed key stakeholders, including partners, advisors, and support staff, to understand their specific requirements and concerns regarding a potential transition to a virtual-first model.

Based on our findings, we developed a comprehensive plan outlining the steps necessary to create a secure, efficient, and user-friendly virtual environment. Our approach centered around three key pillars:

1. Cloud Migration: We recommended migrating all of Summit's core applications and data to the cloud, leveraging Amazon Web Services (AWS) for its scalability, security, and cost-effectiveness. This included their client relationship management (CRM) system, financial planning software, portfolio management tools, and document management system.

2. Remote Collaboration Tools: We implemented a suite of remote collaboration tools to facilitate seamless communication and collaboration among employees and with clients. This included Zoom for virtual meetings, Slack for internal communication and project management, and a secure file-sharing platform for document exchange.

3. Workflow Redesign: We worked with Summit's team to redesign their key workflows to optimize them for a virtual environment. This involved streamlining processes, automating tasks, and implementing clear communication protocols. For example, we implemented a digital signature solution to expedite document signing and approval processes. We also created a centralized knowledge base to provide employees with easy access to information and resources.

Our strategic framework was guided by a cost-benefit analysis that projected significant long-term savings from reduced overhead expenses. We also factored in the potential for increased employee productivity and improved client satisfaction. Throughout the implementation process, we provided ongoing training and support to ensure a smooth transition and maximize user adoption. We prioritized data security and compliance, implementing robust security measures to protect sensitive client information.

Technical Implementation

The technical implementation involved several key steps:

1. AWS Cloud Migration: We migrated Summit's data and applications to AWS using a phased approach, starting with non-critical systems and gradually moving to more essential functions. This minimized disruption to daily operations. We used AWS CloudFormation to automate the provisioning of infrastructure resources, ensuring consistency and repeatability. Data was encrypted both in transit and at rest using AWS Key Management Service (KMS).

2. Zoom Integration: We integrated Zoom with Summit's CRM system, allowing advisors to schedule and launch virtual meetings directly from within their client records. We configured Zoom with advanced security features, such as meeting passwords and waiting rooms, to prevent unauthorized access. We also provided training to advisors on how to effectively use Zoom for client presentations and virtual consultations.

3. Slack Implementation: We created dedicated Slack channels for different teams and projects, facilitating clear and organized communication. We integrated Slack with other applications, such as their project management tool and IT help desk system, to streamline workflows and improve responsiveness. We also implemented Slack bots to automate routine tasks, such as sending reminders and generating reports.

4. Financial Calculation of ROI:

   • Annual Rent Savings: $120,000
   • Annual Utility Savings: $15,000
   • Office Supply Savings: $5,000
   • Cleaning Service Savings: $8,000
   • Reduced Travel Expenses (conservative estimate): $5,000
   • Total Direct Savings: $153,000
   • Implementation Cost (One-Time): $50,000 (includes cloud setup, software licenses, and training)
   • Annual Ongoing Cloud Maintenance & Support: $10,000
   • Net Annual Savings: $153,000 - $10,000 = $143,000
   • ROI (First Year): ($143,000 - $50,000) / $50,000 = 186%
   • Projected ROI (Subsequent Years): $143,000 / $10,000 = 1430%

5. Security Measures: We implemented a multi-layered security approach to protect sensitive client data. This included:

   • Two-factor authentication (2FA) for all user accounts.
   • Regular security audits and penetration testing.
   • Data loss prevention (DLP) policies to prevent unauthorized data exfiltration.
   • Employee training on cybersecurity best practices.
   • VPN access for all remote employees.

Results & ROI

The transition to a virtual-first practice model yielded significant results for Summit Capital Partners.

• Overhead Reduction: As projected, Summit achieved a 25% reduction in overhead costs within the first year, primarily due to reduced office space, utilities, and travel expenses. This translated to annual savings of approximately $153,000.
• Employee Productivity: Employees reported a significant increase in productivity, thanks to reduced commute times and a more flexible work environment. Summit estimates that the average employee gained back 1.5 hours per day, leading to increased output and improved morale.
• Client Satisfaction: Client satisfaction scores remained consistent, despite the shift to a virtual-first model. In fact, some clients expressed appreciation for the increased convenience and flexibility of virtual meetings.
• New Client Acquisition: With the capital freed up from reduced overhead, Summit was able to invest in marketing and sales initiatives, resulting in a 15% increase in new client acquisition in the first year. They secured 5 new high-net-worth clients, each adding approximately $5 million to their AUM.
• Improved Employee Retention: Employee turnover decreased by 10% as a result of improved work-life balance and increased job satisfaction.
• AUM Growth: Over the year, AUM grew from $350 million to $410 million, driven by a combination of market appreciation and new client acquisition. The cost savings enabled better marketing and client service, aiding this growth.

Key Takeaways

Here are three key takeaways for other RIAs considering a virtual-first practice model:

1. Invest in a Robust Cloud Infrastructure: A secure and reliable cloud infrastructure is essential for supporting a virtual-first practice. Choose a cloud provider that offers scalability, security, and cost-effectiveness.
2. Prioritize Communication and Collaboration: Implement a suite of remote collaboration tools that facilitate seamless communication and collaboration among employees and with clients.
3. Focus on Security and Compliance: Ensure that your virtual environment meets all relevant regulatory requirements and protects sensitive client data. Implement multi-layered security measures and provide ongoing cybersecurity training to employees.
4. Don't Forget the Human Element: While technology is important, it's crucial to maintain a strong sense of community and connection among employees and with clients. Foster a culture of communication, collaboration, and support. Regular virtual team meetings and social events can help build relationships and prevent feelings of isolation.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors uncover hidden opportunities in client portfolios and automate compliance tasks. Visit our tools to see how we can help your practice.