Study lifts lid on enterprise cost of NIGOs and how wealthtech solution streamlines advisor, client, and back-office experience
In many ways, the COVID-19 pandemic has proven to be a vital accelerant for the wealth management industry, with many firms compressing multi-year timelines for tech adoption into mere months. It was by and large a case of necessity being the mother of adoption, as problems with traditionally manual processes – including client onboarding – mutated from nuisances to full-on obstacles and barriers in the remote-work context.
“Before the pandemic, everything was done very much within the same office space,” Hanspeter Wolf, founder and CEO of Appway, said in an interview with Wealth Professional. “Now with people being physically separated from each other, dealing with all those different loose ends in regards to documents and missing data became much more cumbersome and resource-intensive.”
One of the most obvious pain points during the onboarding experience, Wolf said, involves cases where documents and information are found to be not in good order. NIGOs, as they’re called in industry parlance, can occur when a certain piece of information or data is missing, incomplete, incorrect, illegible, or otherwise fails to satisfy a standard of quality that’s required for firms to meet their regulatory compliance obligations as they open new client accounts.
Obviously, delays and back-and-forth caused by NIGOs during onboarding weighs on the advisor-client experience, and creates a drag on productivity. They also have a negative impact on back-office efficiencies, and ultimately, create pockets of disruption that impede the smooth intake of money into the business.
“The question is, where do you stop those NIGOs?” Wolf said. “And what we've learned from our clients is without having true digital processes in place, there's not a single tollgate where you can spot a NIGO and course correct. You spot them much more on the go, which leads to a lot of uncertainty.”
A recent study commissioned by Appway, titled The Total Economic Impact of Appway Client Onboarding for Financial Services: The Broker Dealer Segment, clearly illustrates the value in having a digital onboarding solution. Focusing on a regional financial services organization in North America with a broker-dealer operation employing 1,000 advisors, the study found that the incidence of NIGOs overall was reduced by 80%, while the portion of accounts with NIGO documents fell from 16% to 3%.
Time-wise, advisors managed to save one hour per new account opened on average, which for the average advisor is five to six hours a month. From a dollar perspective, the solution delivered risk-adjusted benefits of over $12.1 million, including $6 million in advisor efficiencies, $5.4 million saved from a 70% reduction in staff; roughly $480,000 saved from lessened advisor training time; and $220,000 from paper and postage cost savings, which also led to a 29-ton reduction of greenhouse gas emissions.
“As firms were forced to operate on a digital scale, their operations became much more fragmented,” Wolf said. “It soon became clear that firms needed a way to bring together all those loose ends. That’s one of the things we’ve been doing at Appway – what we call ‘connecting the disconnected’ – which had a massive impact with NIGO ratios.”
Because of the different regulatory regimes that they have to comply with, firms in different geographies have to be mindful of different sets of rules. Appway’s record of deploying client onboarding solutions for wealth management firms stretches back 18 years, which includes six years of implementing wealthtech solutions at IIROC firms. Among those systems is a Canada-specific, cloud-based onboarding solution, which Appway recently made available to the Canadian wealth management market.
“Even before, our onboarding solution was already running in the cloud. Our clients were deciding which cloud provider they wanted to use, and they took the responsibility of managing the solution in that cloud environment,” said Harold Reimer, sales director, Appway Canada. “But we found that a lot of firms, especially when you get to smaller Tier 2s and Tier 3s, don’t have the infrastructure or technology staff to do it in-house.”
To accommodate that segment of their Canadian client base, Appway created a more “turnkey” package of their onboarding solution, which is hosted on Amazon Web Services Canada. Because Appway takes care of all the upgrades and maintenance to make sure it’s up-to-date – an important point to focus on in an ever-changing regulatory landscape – Reimer said larger firms have also expressed interest in leveraging the new Canadian cloud-based solution.
Another point of appeal for the Appway solution, he said, was that it’s configurable, meaning it can incorporate the client’s branding, documents, and workflow nuances. More importantly, it can integrate with the client’s other internal and third-party systems, including (but not limited to), CRM, books of record, and archival systems, which makes for easy incorporation into a firm’s technology ecosystem.
From an operational standpoint, Reimer said with the Appway solution, those involved in the onboarding process are guided down a specific digital pathway depending on the type of account a client is opening. The ability of a user to progress down that path is dictated by business rules and form elements specifying what type of information is needed, with digital “turnstiles” that rotate or stay fixed depending on whether a file or piece of information passes certain checks.
“We have some business rules that validate whether the right data type was keyed in, and others that will validate whether a given address is legitimate based on data from Google Maps, for example” Reimer said. “We also have third-party integrations that let our solution, for example, validate whether a scanned passport or driver’s license is authentic.”
If for some reason, a specific document or piece of information has to be updated or corrected, users of the Appway onboarding solution can “pull” the necessary subject matter expert in the conversation to collaborate on the issue, as required at the specific point of the workflow where the issue occurred. That’s not necessarily restricted to people within the firm; according to Reimer, some firms allow advisors to send clients a link, which leads them to a subset of the workflow where they can input and edit data as needed.
“We're integrating with those other normally disparate systems within a firm, and connecting them together so that they have a complete end-to-end solution,” Reimer said.
