You’ve been hearing about the paperless office for years. Yet, it seems the mound of printed matter in a financial-advisory office only continues to grow. But if you can manage to digitize your office, you’ll save big. According to a recent industry white paper, an investment in digital-document management can save as much as $40,000 for what it defined as “emerging” registered investment advisory (RIA) firms (defined as those with $500,000 to $999,999 in annual revenue); larger firms (the paper defined as “enterprise firms,” or those with more than $4 million in annual revenue) can save upwards of $300,000. The study—commissioned by a software company (surprise!)—argues that digitizing paperwork can increase the value of the advisory by about $200,000 for emerging firms, and about $3 million for enterprise firms. The survey was performed by Nexus Strategy, an RIA consulting firm, and commissioned by Laserfiche, a manufacturer of software and systems for document management.
Take, RegentAtlantic Capital, a fee-only RIA in Chatham, N.J., with $1.8 billion in AUM, 14 CFPs and about 900 clients. The firm went paperless in 1996, a move that added up to quantifiable savings for the firm. Christopher Cordaro, a wealth manager at Regent Atlantic, says he “couldn’t believe the cost of copiers.” Cordaro remembered asking himself, “Why do we need a copy machine anyway? We ought to check into document imaging because it’s not going to be much more … and it really wasn’t.” Cordaro says, “For the same cost of a copier, we bought a scanner, some software and got started.” The firm saved $7,000 by buying a $3,000 scanner instead of a $10,000 copier, according to Cordaro, and each wealth manager saved 10 minutes a day by not having to get up to retrieve paper files, which he says adds up to $42,000 annually.
“Over the years I talked to a lot of different firms about document imaging, and people get really hung up on it. Advisors who don’t implement a paperless office make such a big deal out of it, when really it’s pretty simple. You just need a scanner and Adobe PDF,” says Cordaro.
For those who need help, there are many “how to” resources, including document software providers Laserfiche and Cabinet NG. Bryan Kelly, principal of Kelly Financial Group, a fee-only RIA in Bel Air, Md., with $140 million AUM, says he read about going paperless in a book about efficient office practices. At the time, Kelly says the firm was smaller, managing $25 million; Kelly chose PaperPort, basic software that works well for smaller firms. “When a client calls, I have their folder in front of me, and I can pull up their documents from home—instantly I have their situation in front of me. I don’t know if you can put a price tag on that; I think we’ve had a huge return on investment,” Kelly says. He also says shop around. Small firms should beware of being “upsold” by big software companies—in some cases, small firms can get by with a scanner and some software.
Another big benefit? According to the white paper, a paperless office cuts down on storage space, which costs money, and makes firms more efficient in interacting with clients and regulators says Jeffrey Green, director of compliance/senior consultant for Laserfiche Solutions Group.
JFS Wealth Advisors, a 30-member staff (10 advisors) managing $836 million AUM, had a room filled with about 16 file cabinets, says Laura Blaire, the firm’s administrative officer. “We took that same room that housed our supplies, a printer and all those file cabinets, and we now house four staff members, so the conversion of usable space is very important,” says Blaire. While the Cabinet NG software cost JFS roughly $30,000, Blaire says the return on investment is high, and significantly benefited the firm: “Look at the time savings in not searching for files, being able to access the system remotely, not having to pay someone to put the file folders back in the cabinets, and not having to purchase and house additional file cabinets.” Indeed, the white paper found that paperless firms enabled greater back-office efficiency, and estimates such efficiencies add up to a 20 percent savings in staff time.
However, reaping the rewards of a paperless office takes planning and time, says Blaire. After looking at paperless solutions in 2004, Blaire says, JFS spent a year building a system that would be sustainable over time and compatible with their growth before people in the firm started using the paperless software in 2005. “We picked a year and determined that anything that year and newer would get scanned in, and anything later would get archived in boxes,” she says.