Debunking Three Big Myths about Your Operating Model

Evolving your operating model. Building for efficiency and control. Leveraging your technology to its greatest capability to harness your data, improve your advisors experience, and create a best-in-class investment and reporting experience for your clients. Those are a few examples of the challenges C-suite leaders across the wealth and advisory businesses at banks and trust companies face as they grow.

As if thinking about all these disparate goals wasn’t enough, many of us fall into the trap of believing wealth management‘s urban legends that disrupt logical thinking. That’s right. Our industry is full of technology myths that feed into firms’ decision making. We confront them every day in our work with clients and conversations with prospects. So today we’re going to debunk three of them and help banks and trust companies streamline their operating model.

Myth 1: Implementing the Latest Technology Solution Will Solve my Business Challenges

Sadly, this is not the case. It's common for people to see a technology solution in the market and think if they have that tool, daily tasks will be easier, and they will be more productive. In reality, the opposite is true. Firms rarely add just one solution, and those individual technology solutions accumulate quickly. Each requires maintenance and integration with the other solutions. That custom integration can be costly and time-consuming.

To avoid unnecessary cost and maintenance time, firms should work through a three-step system to select the right technology solutions process, people, then technology.

Saying you’re using “Salesforce” or “AI” sounds great, but are they delivering the support you really need? Picking a technology solution to implement should never be step one. First, your firm should have clarity around what challenge you are working to solve, something my colleague Bryce Carter, head of Bank Trust client delivery at F2, says not every firm is doing, based on his recent research with our national cohort of firms.

"Every firm has an operating model," he told InvestmentNews about the research. "The question is whether it's intentional or accidental."

When I spoke to a senior leader at one of our clients during a recent industry event, he echoed that thinking, “You have to understand what you are trying to do manually before you begin to automate it”. There's no amount of technology (even, and especially, AI) you can throw at a problem and expect that it will be solved without first working through the challenge, your goals and needs to accomplish them.

Myth 2: Adding Controls and Procedures Adds Time to My Processes

It actually does the opposite. Strong controls reduce errors and protect the firm against fraud, saving time and many headaches.

Margie Christensen, managing director at F2 has shed light on the challenge, and importance, of strong procedures.

“Everyday wealth management firms face serious risks from every direction—cyberattacks, fraud, money laundering, regulatory requirements, and even human trafficking. In addition to responsibly managing investments for clients, firms must protect their clients’ personally identifiable information and limit crime. It only takes one incident to ruin a firm’s reputation, incur substantial fines, or both,” Margie wrote.

“By streamlining processes and strengthening and documenting controls, firms can better protect themselves from criminal activity such as cyber-attacks while designing experiences that further delight their clients,” she added.

But, factoring all those components into your processing time and operational costs will create far bigger spends than spending the time building, and following, operation controls and procedure documentation. Spend a little time up front to save much more time than you spent in the long run.

Myth 3: We’ve Always Done It This Way So That’s Why It Works

Another one that needs to go away. My colleague Michael Perez, managing director at F2 has been working on a series of articles about the challenges within trust platform conversions (he shared some really great insights you can find here).

While discussing his theme, we got onto AI (doesn’t everything end up at AI these days!) AI can play a major role in trust platform conversions, like helping with overwhelming the volume of data assessment required. While Mike noted it can’t and shouldn’t do everything (there are components where a human needs to be in the loop to get to final conclusions), it can do a lot more than a matching function in excel could do, and we must adjust our approach to conversions to take advantage of better technology.

The same can be said for operating models. Unfortunately, the “that’s the way we’ve always done it” mindset is the default mindset for many firms. There are many valid reasons why a particular process was designed, but it’s important to recognize that how you’ve done something in the past should not determine how you do it in the future. Learn from the current state, but don’t follow it blindly, because you’ll just end up with a slightly more efficient model of your existing process, and you’ll spend way too much money on good technology.  

Understand technology capabilities. Whiteboard problems you face. Outline your current limitations, bottlenecks, and risk points. Challenge yourself to break the mold of your current structure.  You don’t have to implement everything that goes on the whiteboard, but if you don’t consider the possibilities, you’ll never have the opportunity to make them happen.

Drop the Myths to Modernize Your Operating Platform

Throwing these myths away will help you modernize your operating platform and take advantage of the technology capabilities that exist today. You’ll also be well positioned to decrease your risk and drive toward a more efficient and effective environment for your advisors, trust officers, clients, and operations teams.

Contact us to upgrade your operating model.