Financial advisors looking to save costs, improve productivity and meet compliance standards recognize the importance of an effective document management application that goes above beyond Adobe Acrobat – but thus far the options remain fairly limited.

That’s one of the key takeaways from Financial Planning’s 2011 Tech Survey. While nearly 42% of respondents said they use Acrobat as their exclusive document management solution – up a whopping 74% from 24% in 2010.

However, Adobe Acrobat is not document management software, nor is PaperPort, which checked in at 9%. Add that to the "other" answers, most of which were not document management solutions, and readers can infer that about 70% of advisors do not use true document management software.

This lack of penetration in the document management space poses an opportunity and challenge for document management vendors. Clearly, these firms have done a poor job explaining the benefits of their products to their prospects.

“It’s vitally important,” said Mary Kusske, president of Burnsville, Minn.-based Kusske Financial Management. “We need to have documentation in place for compliance.”

Kusske’s firm is currently using Redtail for document management but recognizes that her firm could be more productive if a vendor could find a way to piece together all the disparate apps she and her team needs to service their clients and meet regulatory guidelines.

“I sure wish all CRM systems would integrate with each other,” she said. “We have Morningstar Office for investment data management, Bill Good for marketing and Redtail for document management for compliance and we use Microsoft Outlook for day-to-day interaction.”

Some vendors are making an effort to meet this demand – with mixed results.

One vendor, Laserfiche, invests a considerable effort trying to educate advisors, appearing at conferences, sponsoring research papers supporting financial services organizations. Trumpet, a consulting firm and Worldox reseller, also offers heavy client education, as does Fujitsu, the premier manufacturer of workgroup scanners.

Matt Robbins, vice president of Dietz Wealth Management Group in Centennial, Colo., said his doesn’t use Acrobat and has instead gone with Laserfiche for document management.

“We even submit new business to our B/D through [Laserfiche],” he said. “Not only does it keep us organized, it saves money on shipping and allows us to process business faster.”

“Since it’s on the cloud, we can access our client files anywhere that has an Internet connection,” he added.

Redtail, which offers a low-cost, cloud-based solution, led the field with 19% share. As one would expect of a low-cost provider, Redtail was strongest (23%) in the $500,000 and less revenue segment and much weaker (6%) among firms with $3 million or more in revenue. Laserfiche was No. 2 at 10%, up from 6%. Its strength was firms with revenues between $500,000 and $3 million.

After PaperPort came DocuPace, at 6%, up from 4%. Their sweet spot is the $1 million to $3 million advisor, where they captured 9%. NetDocuments, another cloud-based solution, is winning over advisors, jumping to 3% from 1%. Worldox and Pershing/iNautix also showed modest gains.

FP's analysis shows some advisors are still a bit clueless with regard to document management software. Studies have shown the return on investment can be substantial.

One example: The average employee who walks to a file cabinet to retrieve a document wastes about 10 minutes retrieving it before returning to their previous task, an informal study by Technology Tools for Today indicated. If that person stops to chat with a colleague, the time lost is closer to 20 minutes. Multiply all that time by all your employees times the number of working days in a year, and you can begin to see the time savings.

Document management software also allows firms to control document access, as well as what they can do with it (view, edit, copy, print, forward, etc.). From a compliance and security standpoint, many view document management software as essential.

William Nicrosi, an investment counselor at Leavell Investment Management in Mobile, Ala., said his firm uses Acrobat to create PDF files but doesn’t use it for document management.

“Document management is very important to us but we struggle with the implementation of a paperless office,” he said. “Being able to convert all types of files to an Acrobat PDF file is wonderful.”

“But we would be willing to pay for a consultant that can offer a complete solution – that works – for document management. We are in the business of planning and investing – not document management.

For more details and insight, please review the full version of Financial Planning’s 2011 Technology Survey.


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