Vanguard Point Reduces ACAT Processing Time by 60%

Vanguard Point Reduces ACAT Processing Time by 60%

Executive Summary

Vanguard Point, a rapidly growing RIA, struggled with lengthy and error-prone manual ACAT (Automated Customer Account Transfer) processes, delaying asset transfers and hindering client investment timelines. By implementing an automated ACAT processing system leveraging the Altruist platform and its API, Vanguard Point streamlined the paperwork and communication between custodians. This resulted in a 60% reduction in ACAT processing time, allowing clients to be fully invested faster and generating an estimated 5% higher return on transferred assets within the first year.

The Challenge

Vanguard Point experienced significant challenges stemming from its reliance on manual ACAT processing. As a firm focused on personalized financial planning, they understood the critical importance of quickly transitioning new clients' assets to their platform to begin implementing tailored investment strategies. The old process, however, was a bottleneck.

The primary pain points included:

• Time-Consuming Paperwork: Completing and tracking the required ACAT forms manually was an arduous process. Each form required careful attention to detail, and even minor errors could lead to rejection and further delays. For example, a missing beneficiary designation on a retirement account transfer form could add weeks to the overall process.

• Inefficient Communication: Communicating with prior custodians via phone and fax to track the status of transfers was highly inefficient. The lack of real-time updates resulted in constant follow-up calls, tying up valuable advisor and support staff time. Each inbound call to a custodian took an average of 15 minutes, and tracking down a single missing form could involve upwards of an hour of staff time.

• Increased Risk of Errors: Manually inputting data from paper forms into their CRM and portfolio management system increased the risk of errors. These errors could lead to incorrect account setups, delayed trading, and potential compliance issues. A single data entry error, such as a transposed account number, could result in the misallocation of funds and potential client dissatisfaction.

• Delayed Investment Opportunities: The extended ACAT processing times prevented Vanguard Point from immediately investing client assets according to their agreed-upon investment strategies. This meant clients were missing out on potential market gains. Assume an average new client transferred $500,000 in assets. A delay of 30 days in a market with an average monthly return of 1% could cost the client $5,000 in potential gains.

• Client Frustration: The slow transfer process often led to client frustration and negatively impacted their initial onboarding experience. Clients who had just entrusted Vanguard Point with their financial future expected a seamless and efficient transition, and the delays created a negative first impression. One client remarked, "I was ready to start investing, but my money was stuck in limbo for over a month!"

Collectively, these challenges created a significant drag on Vanguard Point's operational efficiency and client satisfaction. They needed a solution that could streamline the ACAT process, reduce errors, and accelerate the time it took to get clients' assets working for them.

The Approach

Vanguard Point's leadership recognized the need for a comprehensive solution to address the inefficiencies in their ACAT processing. They conducted a thorough evaluation of available options, including building a custom solution in-house and adopting third-party platforms. After careful consideration, they chose to implement an automated ACAT processing system using the Altruist platform.

The decision framework was driven by several key considerations:

• Scalability: The solution needed to be scalable to accommodate Vanguard Point's anticipated growth.
• Integration: Seamless integration with their existing CRM (Salesforce) and portfolio management system (Orion) was crucial.
• Automation: The platform needed to automate as much of the ACAT process as possible, minimizing manual intervention.
• Cost-Effectiveness: The solution had to provide a compelling return on investment (ROI) compared to their existing manual processes.

Vanguard Point's implementation strategy focused on:

1. Data Migration and Integration: They worked closely with Altruist to ensure a smooth migration of client data from their CRM to the Altruist platform. A custom integration was built with Salesforce to automatically populate ACAT forms with relevant client information.

2. Process Redesign: They redesigned their ACAT workflow to leverage Altruist's automation capabilities. This included pre-populating ACAT forms with client data, digitally submitting forms to custodians, and automatically tracking the status of transfers.

3. Staff Training: They invested in comprehensive training for their advisors and support staff on the new system. This ensured that everyone was proficient in using the Altruist platform and understood the new ACAT workflow.

4. Phased Rollout: They implemented the new system in a phased approach, starting with a small group of advisors and clients. This allowed them to identify and address any issues before rolling it out to the entire firm.

5. Continuous Optimization: They continuously monitored the performance of the new system and identified areas for improvement. This included working with Altruist to customize the platform to meet their specific needs.

Vanguard Point’s strategic thinking centered around realizing that the cost of inefficiency was far higher than the investment in automation. Delaying client investments represented a direct loss to both the client and the firm's potential AUM growth.

Technical Implementation

Vanguard Point's technical implementation centered around leveraging the Altruist API to streamline the ACAT process and integrate it with their existing systems. Key technical aspects included:

• Altruist API Integration: The Altruist API was used to initiate ACAT transfers directly from their CRM (Salesforce). A custom Apex class was developed in Salesforce to trigger the API calls and automatically populate ACAT forms with client data. This eliminated the need for manual data entry and reduced the risk of errors.

• Data Mapping and Transformation: A data mapping exercise was conducted to ensure that data from Salesforce was correctly mapped to the corresponding fields in the Altruist platform. Data transformation rules were implemented to handle inconsistencies in data formats. For instance, phone numbers and address formats varied slightly between the systems.

• Automated Status Tracking: The Altruist API was also used to track the status of ACAT transfers in real-time. A scheduled process was configured to periodically query the Altruist API for updates and automatically update the corresponding records in Salesforce. This provided advisors with a centralized view of the ACAT transfer process and eliminated the need to manually check the status with custodians.

• Workflow Automation: Salesforce's workflow rules were used to automate various tasks related to ACAT processing. For example, an email notification was automatically sent to the advisor when an ACAT transfer was initiated, and another notification was sent when the transfer was completed.

• Security Considerations: Strict security measures were implemented to protect client data during the integration process. This included encrypting data in transit and at rest, and implementing robust access controls to ensure that only authorized personnel could access sensitive data. The API key for accessing the Altruist API was securely stored and rotated regularly.

• Calculation Methodology for ROI: The estimated 5% higher return was calculated based on the average market return during the time saved by the accelerated ACAT process. Using a benchmark S&P 500 index return, a conservative estimate of monthly return was calculated. This was then applied to the average client asset transfer amount to project the potential return lost during the previously longer ACAT transfer duration, and the return gained by the faster transfer.

Results & ROI

The implementation of the automated ACAT processing system delivered significant results for Vanguard Point:

• Reduced ACAT Processing Time by 60%: The average ACAT processing time was reduced from 25 days to just 10 days. This meant clients were able to start investing their assets sooner, leading to potentially higher returns.

• Estimated 5% Higher Return on Transferred Assets: By reducing the ACAT processing time, clients were able to capture an estimated 5% higher return on their transferred assets within the first year. This was based on the average market return during the time saved by the accelerated ACAT process. For an average transfer of $500,000, this translates to an additional $25,000 in potential gains for the client.

• Improved Operational Efficiency: The automated system significantly reduced the workload for advisors and support staff. They were able to spend more time on client service and business development activities, and less time on administrative tasks. The reduction in manual tasks freed up approximately 20 hours per week for the support staff.

• Reduced Errors: The automated system eliminated many of the errors associated with manual data entry, leading to more accurate account setups and fewer compliance issues. The error rate on ACAT transfers decreased by 80%.

• Increased Client Satisfaction: Clients were impressed with the speed and efficiency of the new ACAT process. This improved their overall onboarding experience and strengthened their relationship with Vanguard Point. Client satisfaction scores related to the onboarding process increased by 25%.

• Increased AUM Growth: By providing a better client experience and improving operational efficiency, Vanguard Point was able to attract more new clients and accelerate their AUM growth. AUM increased by 15% in the quarter following full implementation.

Key Takeaways

Here are some key takeaways for other RIAs considering automating their ACAT processing:

1. Prioritize Integration: Choose a solution that integrates seamlessly with your existing CRM and portfolio management systems. This will ensure a smooth data flow and prevent data silos.

2. Automate Where Possible: Look for opportunities to automate as much of the ACAT process as possible, including data entry, form submission, and status tracking.

3. Invest in Training: Provide comprehensive training to your advisors and support staff on the new system. This will ensure that everyone is proficient in using the platform and understands the new ACAT workflow.

4. Measure and Monitor: Track the performance of your ACAT process before and after implementation to quantify the benefits of automation. Continuously monitor the system and identify areas for improvement.

5. Focus on the Client Experience: Remember that the ACAT process is a key part of the client onboarding experience. Streamlining this process will improve client satisfaction and strengthen your relationship with them.

About Golden Door Asset

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