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Optimizing Your Client On-Boarding Process

By Cindy Sealey, CFA

Issue 94
October 2013

The on-boarding process sets the tone for the relationship between an investment manager and its new clients. Get it right, and few clients will even notice. Get it wrong, and clients will question the credibility of your operations or even second guess their decision to choose your firm. Success means acquiring and retaining clients, so the importance of a well-defined and efficient on-boarding process cannot be overstated.

On-Boarding Challenges

The on-boarding process is among the most complex of all client facing activities. Reams of documentation are exchanged between a client and the investment management firm, and distributed throughout the organization, most of which requires approvals, signatures, and validations. On-boarding requires finalizing legal agreements, Know Your Customer (KYC) and Anti Money Laundering (AML) activities, opening client accounts on multiple systems, and transitioning incoming assets. Each of these activities engages multiple groups throughout the organization, such as client service, legal, compliance, and operations. Given these complexities, without well-defined and coordinated procedures, errors such as misplaced information, breakdowns in communication, and duplicated efforts are likely. The right hand needs to know what the left hand is doing in order to properly manage all the hand-offs and moving parts.

Is your client on-boarding process efficient? Can you…

  • Share intelligence learned through the sales process with those responsible for on-boarding?
  • Go to a centralized source to find all templates and documents used in the on-boarding process?
  • Quickly handle client changes to legal agreements?
  • Easily ingest, track, and refresh client artifacts?
  • Access a single global view of clients from an AML/KYC perspective or equivalent?
  • Easily share information across the various teams involved in on-boarding?
  • Communicate status easily?
  • Limit the rekeying of information into multiple systems?

If your firm answered “No” to more than three questions, you might need to improve your on-boarding process.

Many firms find it difficult to gain a top-down view of the complete on-boarding process, or to properly coordinate each step. Investment managers are just now beginning to develop client facing strategies aimed at providing a holistic view of all client on-boarding activities. But for many firms, transparency into each step of the process is incomplete.

How to Get Started
Define Goals

Before you get started on an on-boarding project, think strategically about the process. What are you trying to accomplish? Are you trying to improve the overall client experience, or just reengineer one part of the process? Answers to these types of questions will help determine the likely scale of the project.

Standardize Data

The on-boarding process is typically data intensive, and it’s time consuming to get everyone in the firm to agree on data definitions, owners, sources, and usage. But standardizing data is often the best place to start your improvement project. Much of the data is gathered through discussions, forms, and artifacts such as articles of incorporation. Once data has been gathered, it is used by many different groups to complete their portion of the on-boarding process, such as client service, legal, compliance, and operations.

With so many data attributes used by different groups across the organization, there’s always a risk of inconsistencies in labels and definitions. Take the word, “client” for example. One group might think of “client” as the contact, another group might feel the client is the legal entity your firm is contracting with, and another group might think of the client as the parent company or legal entity. It is important to gather a list of all data elements needed, and resolve any differences in naming conventions and definitions early on.

Creating a data dictionary can help an organization track data labels, definitions, source systems, and consuming systems, and help trace the lineage of key pieces of data. Teams want to know where data came from, how it was derived, whether it was changed along the way, and if so, who changed it. Instituting data governance can help keep the usage consistent.

Define Roles and Communication Methods

Efforts around data are well worth it. While it takes longer to get everyone to agree on data definitions, owners, sources, and usage, it creates a solid framework for data governance.

- Cutter Associates Client

On-boarding is all about getting the right people doing the right processes at the right times. To understand who is supporting each component of on-boarding, it can be helpful to survey participants in relevant roles about their involvement in tasks, from areas such as sales, portfolio management, relationship management, client service, client reporting, performance, and legal. Results of these surveys often reveal that roles and responsibilities are not clearly defined. In other cases, the survey results might prompt movement of certain tasks to another group or role, for more efficient processing.

Often, an employee understands only his or her portion of the on-boarding process. Getting all parties together and walking through the complete on-boarding process can highlight the interdependency of everyone’s efforts. It can also help identify missing steps and duplicate work. By reviewing who’s responsible for each task, employees gain a broader understanding of the entire process, including who is most suited for performing each task. Often, the various groups are unsure about what information others need and how to best communicate it. Firms can realize benefits by reviewing communication methods and information handoffs between groups.

Redesign the Process

New firms have a unique opportunity to optimize their on-boarding process, but as the firm matures, adding new products and services, the on-boarding process may lose some efficiency. Firms will often take tactical steps to bring new clients on quickly, overlooking the benefits of a more strategic on-boarding process. But firms can re-optimize the process by getting all parties together again to walk through the process. When redesigning the process, consider the interdependency of steps, define workflows, and clearly understand when data is available. After you’ve redesigned the process, document it with updated policies, procedures, and training materials, and establish an annual review of the process to capture any changes necessary.

Leverage Technology 

Firms need to get their processes in order first. Technology can certainly help, but clearly defined processes are the first step.

- Senior Vice President,
Cutter Associates Client

Once data and groups are clearly defined, and the on-boarding process has been redesigned, consider technology enhancements that could enhance on-boarding in terms of workflow, data movement between systems, and architecture of data structures.

Data improvement efforts might look at how data is captured, where it is housed, and how it is shared between systems. Data can be captured from stored documents and electronic forms, or it can be entered through the CRM system or other user interfaces. Because much of the data for on-boarding involves client and product, you might want to create client and product master structures—data repositories providing a single golden copy for each of these data domains.

A common complaint about on-boarding processes is the need to re-key data into multiple forms or systems. Technology can help with the automation of data flow into other systems. By understanding where data is needed, firms can choose the right technologies such as ETL or workflow tools to help it move smoothly.

Benefits of On-Boarding Improvement Efforts

  • Ability to generate fees sooner
  • Increased potential to cross sell additional products and services
  • More referrals from clients due to positive experience
  • Reduced client turnover
  • More efficient resource allocation
  • Better views into process status
  • Fewer mishandled communications and handoffs between teams
  • Measurable efficiency through metrics
  • Faster addition of new products and services

Workflow is one of the most requested functions for on-boarding, but workflow requirements vary depending on the complexity of the firm and on-boarding process. For larger firms with many new accounts and teams spread across multiple locations, implementation of a workflow tool might make sense. For smaller firms with a handful of new clients per month, a CRM-based workflow or checklists might suffice.

On-Boarding as a Differentiator

Client on-boarding is a key part of the client lifecycle. Optimizing an on-boarding process for clients does not have to be daunting. By standardizing data, defining roles and communication methods, and leveraging technology, you can set the right tone with clients, create scalable and efficient business processes, and improve the employee experience for those servicing clients. In times of limited opportunities for differentiation, on-boarding can help your firm improve its competitive advantage.


About the Author

Cindy Sealey has over 25 years of experience in the investment management industry. She has consulted to investment firms on their institutional sales & client service practices, operations, data management, and strategic technology direction. Cindy has conducted system searches for client reporting, RFP, CRM, performance, accounting, performance, portfolio management, risk management, equity research, and GIPS composite systems. Prior to joining Cutter Associates, Cindy served as Vice President and Head of Operations for a division of Guggenheim Investments, where she led mutual fund accounting and administration; institutional accounting, billing, and client reporting; SMA operations, performance reporting (GIPS®); fixed income performance, attribution and risk reporting; fixed income investment team support, insurance reporting, asset management technology, and equity and fixed income trade settlement. Cindy holds a B.B.A. from Washburn University and is a CFA® charterholder.