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#ItzOnWealthTech Ep 29: Corralling Workflow Automation with Ray Mulligan, Impact Financial Systems

Posted by on Oct 24, 2019 in Podcasts
#ItzOnWealthTech Ep 29: Corralling Workflow Automation with Ray Mulligan, Impact Financial Systems

“We’re helping firms get away from stacks of paper with sticky notes that say ‘sign here’ and moving them to a fully digital rep transition process.”

— Ray Mulligan, IFS

Ray Mulligan brings more than 25 years of experience in consulting and financial services to IFS. As the company’s MD, Product Strategy, Ray manages product strategy, innovation and business planning for the company’s business process automation solutions. He also drives new business development by identifying and developing new solution opportunities.

Ray joined IFS in 2012, after having successfully implemented IFS’s solutions at Wachovia Wealth Management (now Wells Fargo). During his time as Chief Operating Officer for Wachovia, Ray managed all aspects of wealth management support functions, including call centers, credit operations, risk management, customer experience and branch office support. As a former client of IFS, Ray has a unique perspective and the experience needed to ensure that IFS’s solutions deliver exceptional results to our clients.

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This episode of Wealth Management Today is brought to you by Ezra Group Consulting. If your firm is evaluating new technology or looking to improve your current wealth platform, you need to contact Ezra Group. Don’t spend another day using technology that doesn’t offer an elegant user experience. Your advisors and clients deserve better and you can deliver it to them with the help of Ezra Group.

Topics Covered in this Episode

  • IFS products and new things they are looking to build [04:03]
  • The customization required when clients use IFS [06:30]
  • The different engines that make up the IFS workflow [07:52]
  • The benefits of interfaces for different CRMs for firms [08:27]
  • Discussion about the analysis IFS’ clients can do with the data they are capturing [09:39]
  • How their clients can take advantage of the rules to build and mitigate risk with their account opening [10:50]
  • Trends Ray is seeing around onboarding [14:57]
  • Why we are fighting the move towards client self-service[18:56]
  • How IFS helps broker-dealers build a digitally collaborative onboarding experience [24:12]
  • Ray discusses some of the new things that are coming down the road on the 2020 roadmap [25:37]
  • The maximum number of custodians a broker-dealer can have [26:45]
  • How the advisor transition product works [28:19]

Companies & People Mentioned:

Other Resources

If you are interested in more information about some of the topics Ray and I discussed, these blog posts would be useful:

wealth management consulting

Complete Episode Transcript:

Craig: Welcome to this episode of Wealth Management Today. I’m here live in Charlotte, North Carolina at BB&T Ballpark, a lovely minor league baseball stadium here in the heart of Charlotte. I’m sitting here with Ray Mulligan, Head of Product for Impact Financial Systems. Hey Ray, thanks for having me here at the Propel 2019 client conference.

Ray: Thank you, it’s been a great conference. We appreciate you playing a part and being here with us.

Craig: I’m glad I could help. It was fun and insightful, and I learned a lot. We’re here to talk a bit about the conference and what came out of it for people who missed it, and about IFS. So tell me a little bit about IFS’ products and how being Head of Product, how you lead them and what kind of new things are you looking to build?

Workflow is a Heavy Lift

Craig: It is exciting to hear about because this is the kind of technology that people don’t notice, because it’s not the flashy, colorful stuff; it’s behind the scenes. But it’s way more important if you think about it; anybody can build a UI, but being able to design and develop this kind of workflow, comprehensive system that can connect multiple parties, multiple interfaces, and work seamlessly and flawlessly with hundreds of thousands of accounts and advisors, that seems to be a much heavier lift.Workflow Automation

Ray: Yeah that’s absolutely right, Craig. As we see the best people in the industry doing best of breed across the various platforms and systems, including custodians, between that and the integration of the PE firms buying up multiple companies and staying with their custodians, the real need is to provide an orchestration of a kind of universal process, whether it’s transactions such as money movement or account opening. What these firms are finding themselves in the situation of doing is putting their advisors in situations where they have to go to three, four, five, six systems to get an account open. It can start anywhere from a CRM like a Salesforce or a Redtail, integration with TAMP providers like Envestnet, multiple custodians, forms, vendors. And so we take all that and put it together in a single process that reduces a lot of that friction and allows them to just attract more advisors and push that out actually all the way to their client for direct self-servicing.

Craig: So when clients use IFS, does it require a lot of customization?

Ray: Well, it’s a funny thing. Every time we get together with a prospect, we talk about the processes that they do. And what we found is every firm that we deal with does account opening differently, so we’ve built a great combination of solid products with huge functionality, with a nice configuration layer on top of it. Because everyone has a puzzle piece that we need to fit into with either their custodians, providers, or other vendors. So we provide both the functionality of a product with the configuration of a customized solution for them.

Craig: It seems like a lot of broker-dealers would be interested in something like that.

Ray: Well we are growing rapidly, and although many people have never heard of us, we’re behind some of the biggest broker-dealers in the country.

Craig: That’s impressive, yeah. I saw some of the broker-dealers who were here today and I was impressed. I didn’t realize that you had all of the top 10 broker-dealers in the country.

Ray: Yeah, we’re a well-kept secret unfortunately.

Workflow EnginesWorkflow Automation

Craig: Yeah, you got to get the word out. One of the things I always find interesting about this technology is how there’s so much going on behind the scenes of it; it’s not as easy as people think. How many different engines do you have that make up the IFS workflow?

Ray: The IFS platform is made up of a few components. One is obviously a UI and being able to gather the data in a wizard-like fashion. We also have a business rules engine; every company comes with a set of business logic. Some of that is their own, some of it is constructed by their legal and compliance department, some regulatory. And we create documents within our application, we do workflow, and we do a myriad of interfaces for things like Salesforce and Redtail.

Craig: So interfaces for different CRMs – why would a firm need that, and what’s the benefit of plugging that into the workflow?

Ray: What we found is firms have spent a lot of money investing in CRM technology so that their advisors can track their clients and prospects through their entire life cycle. A lot of data’s collected during that process and in the CRMs, so when you come to opening a new account for that prospect or existing client, it’s only natural that you should be able to reuse all of the data that you’ve collected. So we make it very easy to bring that data into the new account process. Our goal is to, whether you have part of the data or all of the data or if you collect it as part of the new account opening process, we can feed that back to your other systems. So you collect it once within your enterprise and reuse it over and over again.

Craig: One interesting thing I heard, it was actually on my panel that I was moderating with some IFS customers, was the power of the data you’re capturing. One of the panelists, the head of ops for one of the big broker-dealers mentioned that you capture a lot of data and it allows for retroactive analysis. What’s some of the analysis that your clients can do with the data you’re capturing?

Ray: That’s a great question. It’s kind of one of those unknown or are not thought about processes. Once you know how many transactions each advisor is doing, the types of transactions, how long each one takes, how many are going straight through, you can start looking at all of your processes. And especially in the world of fraud and risk, understanding where you have opportunities to either change processes or eliminate processes, adding kind of an artificial intelligence layer on top of that to say, let’s look at this and be either predictive or respond differently when it happens. It’s just a real treasure chest full of data in this world of big data, and being able to do data analysis.

Craig: You mentioned risk, and I know a lot of your clients use your workflow product and your new accounting product and linking it into compliance, because that’s the key – you can’t open an account without compliance approval, and it is driving a lot of their risk management. How do they take advantage of the rules to mitigate risk when they’re opening new accounts?

Ray: Yeah, that’s a great question. So as you think about any supervision process or compliance process, it’s an interrogation of the data and the client. So things like suitability, the type of transaction they’re doing, the amount of transaction, where are the trends, where the money’s moving to. A lot of that we build right into our business rules engine, so it becomes much more of an exception process. So when you know that every transaction is being evaluated on all of your checklist of criteria before it gets to the compliance queue, then you already know that most of that work’s been done and you can focus on the outliers and the things that fall outside of your parameters. So it saves a lot of time, and it guarantees that every single transaction that goes through our system is validated the same way.

Craig: Well consistency is important for compliance.

Ray: Absolutely. And auditability is very important, and it’s built into every process within our system; a full audit trail of every keystroke and every approval process.

Craig: So there was some interesting stats I heard, that when they reviewed their rules, they reduced them by 30% using your system?

Ray: It’s amazing. This is not a sexy technology but it’s hugely valuable, both in terms of experiences we’ve talked about and risk mitigation. And so what we’ve seen is, as our firms have adopted our technology, not only have their revenues continued to rise as they’ve attracted more advisors and generated more revenue, but the costs associated with supporting that revenue declined significantly. We’ve seen numbers 30, 40% decline in expenses and upwards of 98% straight-through processing. So that’s a huge benefit, both in reducing the friction and increasing the experience for both the advisor and the client.

Craig: I want to take a little break from this episode to talk to you about one of my favorite sponsors, the Invest in Others Foundation. Invest in Others is a non-profit, you can find them at investinothers.org. They look to raise money and give out awards to charities that are sponsored by financial advisors, so it’s financial advisor’s favorite charities and charities that they spend a lot of time supporting. Invest in Others looks to get sponsorships from the industry and funnel that money to advisor’s favorite charities. I like this non-profit, I think you should take a look at it. Again, that’s investinothers.org. They have a couple other programs: one is a Grants for Good program, delivering money to different needy organizations and needy groups. They’re also starting a corporate awards program, which is going to be a little bit different but still within the industry and another way for financial services and wealth management corporations to help donate money to people in need. I like Invest in Others, I think you should take a look at them at investinothers.org.

Invest In Others

Paper-Based Workflow

Craig: it is amazing when I talk to broker-dealer clients, how many are still relying on paper.Workflow Automation

Ray: Yeah. A lot of our prospects are still using fax machines and paper-based processes. We are a data-driven architecture and platform, so although we still need to produce forms and documents when required, everything we do is based on the data we collect.

Craig: Indeed, and one of the other sessions at the conference that I found insightful was the onboarding trends. You guys help onboard more accounts in the US than probably any other vendor. So what are some of the trends you’re seeing? One the ones you mentioned was advisor-client interactions. How is that improving?

Ray: Yeah, I think what we’re seeing now is with the advent of the robos, we had the advisor less experience. And now we have a much better experience with both our independent broker-dealers, self-clearing firms, where they want the advisor part of the process, but they also want the client part of the process. So let me walk through a typical scenario. There’s an advisor that has a prospect within their CRM. They bring that prospect data into our application. They immediately send an email to the prospect, inviting them to sign up for the portal and enter some additional information about who they are, some of their demographics, and maybe something like a risk profile questionnaire. We gather that information and the advisor can then take it forward to produce a proposal for which accounts need to be opened, send that back to the client, they can review that proposal. All paperless, all electronic, easily communicated between the advisor and client. A hybrid solution, which is the best of both worlds, where the client can enter the data at any time, night or day on their own system, on their own schedule, on their phone if they want to. And the advisor is in contact with them the whole way through the process. So that’s the ground that we’re breaking, it’s that collaborative, hybrid experience between advisor and client.

Craig: How about the amount of data that’s being moved back and forth? There seems to be a lot of that, and I think it would be reduced if they were using your product. Am I off base on that?

Ray: No, that’s absolutely right. We try to eliminate any data redundancy, often as if we just took that last example. You don’t have all the information you need to open an account with your prospects, but what we allow you to do is as you fulfill that information to open the account, we feed that back to the CRM system. So once we’ve captured that data within your enterprise, it can be used anywhere.

Craig: I’m sure a lot of firms have found places to use that data.

Ray: Absolutely, and it’s dynamic as well. So when we’re going through an account opening event, it very well could be getting additional information through their CRM. So we have to keep a bi-directional way to keep those in sync. The other thing that we do is we treat every household account opening as a single event with multiple accounts, multiple products. A lot of account opening solutions out there are only allowing you open up an account for a product. We allow brokerage, advisory accounts, even held at TAMPs, direct business; as many accounts as you have in the household could be opened all at one time, with one document collection and one signing ceremony.

Craig: It seems that people don’t realize how many different types of accounts there are, different locations for an account to be coming in from. It’s like the advisors are out there selling and they’re not thinking about how operations is going to deal with it and how they’re going be able to present that to their client, if it’s all different locations. You don’t want to give the clients too many different ways to open an account, you want it all to be consistent in the client experience.

Ray: Yes. We call our solution unified account opening, or universal account opening. And it is that, where you can as an advisor or a sales assistant in one event, open direct business accounts at mutual funds, annuity accounts, managed accounts, and standard brokerage accounts all in one process, with one set of documents. So we don’t double up on ATVs or terms and conditions, the client gets one consolidated electronic set of documents that they can sign.

Craig: And I believe that’s unique in the industry.

Ray: I think it is, I don’t know if anybody else doing this.

Client Self-Service

Craig: I haven’t heard of anybody else. The other trend I saw was the movement towards client self-service, which you would think would be natural and everyone would want it, but for some reason we’re fighting that one. Why are we doing that?

Ray: I think as we continue to see the age of the population and the age of the advisor group go up, there’s a tendency to think that they would not want to do online processing. They want to be involved with phone calls or even fax machines. I think the reality is that with Amazon, Apple, and others, everyone is now used to doing their transactions directly. And clients don’t want to call a call center or call their advisor to do things like request money out of their account. So everything that we do now has a component of exposing that through the client portals to the client directly, to do that transaction whenever and wherever they want. I think that is now become kind of universally accepted that that is a good thing, and that the clients want their advisors to make that available, and the advisor’s value proposition is not about doing administration.

Craig: Yeah, what advisor thought that their business model was helping clients with check requests? That they couldn’t live without that.

Ray: Yeah, I think those advisors that think that that’s their value add are not going to be in the business much longer.

Craig: I can’t imagine that they would be. The other interesting thing I heard at the conference was how broker-dealers are building out these tools using IFS. They’re bringing these business rules into your rules engine rather than having them spread out amongst all these different systems, like this is in the client portal and this is over here, this is over there. And then when things break, you have to debug that. And when you’re maintaining it, you’re maintaining business rules in multiple places. So talk about why you have the ability to bring all those rules into IFS and your rules engine.

Ray: Right, that’s huge. Many of our clients are multiple channel distribution, so the client can interact via their APIs, through their website, through their call center, or directly with an advisor. So when you’re building those applications, you don’t want to have to put all the business logic in each one of those places. And so what many of our clients have done is consolidated all their business logic within our application, which allows that ability not to have to maintain it. And when you have changes or need to test it, it’s all in one place. The other thing that does is it provides the opportunity to make it look and feel as you need it to for your particular environment, but the guts of the system don’t change. And that’s the hard part we feel, so we have a very solid product that then we can layer both look and feel and specific business logic on top of.

Craig: And it seems as though it’s relatively simple to add new rules.

Ray: Yeah, absolutely. One of the things that we come up against quite frequently is the fact that there are options to build this yourself and to buy partial solutions. What we found is in a number of cases we’ve come after that has been tried, and going with IFS because it’s a mostly pre-built and it’s very configurable. Not only is it shorter for getting it implemented, but the cost is much lower.

Out-of-the-Box Solutions

Craig: Would you say it’s an “out of the box” solution for some firms?Workflow Automation

Ray: Yes. Our out of the box solution is fully functional as it is. We don’t have any firms that don’t change something, if it’s just their forms and their workflow that they want to change, but it’s fully functional as it is.

Craig: What’s nice about your system from what I understand, it’s very different from other enterprise software. Like when you buy SAP, you change your business to work the way SAP works, not the other way around. But with your product it seems like clients can go in and change it to work anyway they want.

Ray: That’s right. We very often find ourselves in a situation where there’s a lot of things that have been determined before we get there, and we make the puzzle piece fit exactly what needs to fit. So we think of ourselves as an orchestration engine, with the person that sits between all of these different systems and processes and has to make it work seamlessly and frictionlessly for the advisor.

Craig: I’ve always liked that term, the orchestration layer, right? You’re moving things around and you’re saying, you guys go here and you guys go there. Before you came along, there was no one to do that. Or each application would send the data where it thought it needed to go, but there was no central control point.

Ray: That’s right, yeah. We take all the data that you have in your enterprise that we can use, whether it comes from your custodian or in-house systems, and we present that in such a way that we take the knowledge of where the accounts being opened or what kind of transaction needs to be done out of the equation and make it simple and straight forward.

Craig: Darn you, why are you making everything so easy?! Another thing I heard during the panel that I thought we could talk about was a digitally collaborative onboarding experience. So how does IFS help the broker-dealer build a digitally collaborative onboarding experience?

Ray: I think there’s a big difference between what some people call an onboarding or workflow process and digital enablement. We’re all about the data, and collecting the data in such a way that we can seamlessly create documents if we need to (we won’t if we don’t have to). But then all the interfaces that need to be updated as part of that process, there’s no re-keying anywhere in the process and we only go to paper if it’s absolutely a requirement. So we have a number of clients now that are actually even doing their approvals for their documents electronically, without actually creating a document. So you can go from beginning to end, prospect to open account, without ever creating a piece of paper and now never having to re-key any information that seems.

Craig: Revolutionary. Let’s talk about some new things that are coming down the road on the 2020 roadmap. You’ve been in business for a while so you’ve got a lot going, but you’re still adding more. And you started out with self-clearing broker-dealers, moved to multi-custodial broker-dealers that see the value in your product, and now you’re adding some support for additional custodians. Can you talk about that?

Ray: Yeah, I think it’s important both in the industry and for our product set to be able to support where we’re going with the RIA market and the smaller broker-dealers, where there is a great need for this type of automation and process consistency. But some of them use different custodians and clearing firms than we’re used to in the past. So we’re adding this year Schwab and TD Ameritrade, since they are predominant players in that market space. We already work with Pershing, Fidelity, FIS, and Envestnet. And so we just continue to add those connectors to make our product available to more folks.

Too Many Custodians?

Craig: That seems like a worthy goal. So what’s the maximum number of custodians that a broker-dealer can have?

Ray: Well, it’s unlimited from our platform perspective. I think the most we’ve seen is three – it’s hard to keep up after that.

Craig: I’m sure it’s hard for a broker-dealer to keep up, and they lose the benefit of scale if they have too many custodians. I usually see two.

Ray: Yes, because you can value price across both of them and you could go either way. We’ve actually had some of our clients change backend systems without ever changing our application. So it doesn’t affect the advisor if you wanted to change your clearing platform or your custodian.

Craig: Right, and that’s an interesting aspect that I think a lot of firms aren’t realizing. That when they bring your product and they become custodian agnostic, they also become wealth platform agnostic. So if you bring in any of the top vendors, whether it’s Envestnet, Vestmark, or Fiserv, any of the big broker-dealer systems, you’re now dependent on them for your account opening. If you change then your whole experience changes, because you’re tied to that vendor. If they would implement this independent account-opening solution, then you’re agnostic and not only to custodians but to your platform too, right?

Ray: Yeah, that’s true for both the account opening process and the asset movement. So you can think about being able to transfer accounts or advisors from one platform to the other seamlessly, with no impact to their experience.

Craig: And how does the advisor transition product work?

Ray: Yeah, that’s a great question. Because there is so much competition for highly qualified advisors in the marketplace, there are a lot of brokers moving from one firm to another, and that is a very painful process in a lot of cases. So we’ve taken what we’ve learned from our onboarding process, and we’ve added to that the ability to take a book of business for an advisor, moving from one firm to the next, and uploading that into the onboarding process. Again, with the same client collaboration, by providing them the ability to fill in any missing information. if it’s a protocol firm and we have very limited information, then we make that available to the client to fill in that information that we need to open the account. So same idea, we’re trying to get away from the stacks of paper with sticky notes that say sign here in FedEx boxes, and moving to a fully digital rep transition process.

Craig: I’m just imagining all the time that takes.

Ray: Time, cost, and experience for those clients moving. We want to make it as untraumatic as possible.

Craig: That would be a more scalable solution.

Ray: Absolutely. For those firms that are growing, not doing something like this in an automated fashion is hugely expensive. And this is the first interaction and experience they have with that advisor, so you want it to be a good one.

Craig: Yeah. Firms need to think more about their advisor experience – what’s their onboarding? We all talk about the client onboarding, but what about the advisor onboarding? What’s their experience? Because as we always say, the client’s first experience with the broker-dealer and advisor is the onboarding. The same goes for the advisor.

Ray: Yeah, it’s almost that your advisor-client from a BD perspective, because they can move their clients with them, is almost more important than your client.

Craig: Almost not quite. Clients are still the number one most important part. And that’s all the questions I have at the moment Ray. This is enlightening thanks so much.

Ray: Thanks for being here, and I enjoyed our time together.

Craig: I’m glad I could make it.

Ray: Thank you Craig, see you back here soon.

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#ItzOnWealthTech Ep 29: Corralling Workflow Automation with Ray Mulligan, Impact Financial Systems

by Craig Iskowitz