Schwab escalates the RIA custody arms race by releasing more plug-in business practices called workflows

TD Ameritrade, Schwab and others have designs on inserting neural pathways into advisor practices but one expert questions the workability of automated workflows

Friday 6.22.12 by Brooke Southall

Brooke’s Note: Talk about unsexy — “workflows” might win the award for the least exciting topic in the RIA business. I had to drink an extra cup of coffee (and control myself from downing some of Neal’s bootleg whiskey) just to get started. Still, I believe this topic merits attention. If you read the no-nonsense comments in here by Bill Winterberg, you’ll know more than 99% of humanity and not have to delve back into the topic again for a long while.

Charles Schwab & Co. announced today that it is making 28 workflows available to cover lead generation, client onboarding, service requests and business operations. The announcement followed hard upon a bigger one related to its tecchnology.

RIAs that keep assets under custody with Schwab Advisor Services can download the X’s and O’s of management practices as way to make greater use of whatever customer relationship management system they use. See: As advisors flunk social media 101, CRM makers are starting to pick up the slack.

Cracking the code

The release of this sheaf of instruction manuals is an admission that technology can take you only so far.

“We know that technology by itself isn’t enough to help advisors achieve maximum efficiency and scale, it needs to be married with consistent business practices and processes — that’s the important role that workflows play,” Neesha Hathi, senior vice president of technology solutions for Schwab Advisor Services, said in a prepared statement. See: T3 reflections: Where to watch for the next big advances in RIA technology.

But technology and operations consultant Bill Winterberg questions whether custodians are the right ministers to preside over this kind of marriage.

“Give custodians credit for tackling the lack of formal workflows in most advisory firms, but in my opinion, addressing complex, multi-step workflows properly is very hard to do,” says Winterberg, a certified financial planner who owns in Dallas. “At its core, designing workflows is like writing software code. One needs to consider all of the potential corner cases in a set of processes and identify what needs to be done for each situation, not just the main process.”

Andrew Lin: [Schwab is] creating a great starting point for us to customize into our own workflow process with minimal additional effort.
Andrew Lin: [Schwab is] creating a
great starting point for us to
customize into our own workflow process
with minimal additional effort.

Andrew Lin, head of strategic development for Signature Estate and Investment Advisors LLC, a Los Angeles-based RIA with about $2 billion in assets under management, says that Schwab seems to be sensitive of these workflow issues — after sitting through one of its workshops where they were addressed.

“We came out very excited. I think very few advisors (our practice included) will be able to take it off the shelf and use it “as is” without a little bit more customization. Instead of trying to create an off the shelf workflow as a magic panacea for everyone, they have done a very thoughtful job of highlighting key steps that are common to advisor practices and creating a great starting point for us to customize into our own workflow process with minimal additional effort.”

Lin is also the former director of investment operations at United Capital Financial Advisers


Jon Patullo, managing director of technology product management at TD Ameritrade Institutional, says that a good example of workflow in action is how a firm handles a client meeting with all its attendant tasks — ranging from printing out performance reports to taking the coffee orders in an organized, logical and complete manner. See: TD Ameritrade’s technology, Veo, wins high praise from advisors so RIABiz took a look.

But TD is taking it one step further, he says. Ideally, the CRM system would send out the various tasks to the various parties involved in conducting the meeting.

Schwab chart shows that workflows can make a difference.
Schwab chart shows that workflows can
make a difference.

“The advisor doesn’t have to do all that and makes sure things aren’t slipping through the cracks. It’s automating a process that may be manual today.”

Not that tough

But that automation isn’t always like setting the timer on the microwave, according to Winterberg.

“Simple workflows, for example when A is finished, move on to step B, and when that’s finished, move to step C, are straightforward to design and implement. Custodians should have success in identifying good practices for simple, sequential processes like this,” he says.

“But complicated workflows with multiple conditions can quickly become unmanageable. A basic example would be needing to get multiple signatures for a check exceeding a specific amount. That workflow creates a branch; one task goes to one signatory, a second to another, and both must be completed before the workflow continues. Add in additional complexity of issuing e-mail notifications after a specific time frame, or escalating the task to a supervisor after a longer time period, and the workflow diagram soon resembles spaghetti.”

Get out the map

Bill Winterberg: Complicated workflows with multiple conditions can quickly become unmanageable.
Bill Winterberg: Complicated workflows with multiple
conditions can quickly become unmanageable.

TD Ameritrade hired ActiFi Inc. to generate the workflows for its advisors and makes them available for free to its advisor clients.

Fidelity Investments’ John Eidson said his company is placing emphasis in this area.

“This is definitely an area we feel strongly about,” he says. “Since 2008, Fidelity has engaged with multiple market leading providers to help advisors seeking assistance with streamlining and automating highest priority workflows: Bringing on 1) New Clients, 2) New Accounts, and 3) New Money. Fidelity has implemented single sign-on and streamlined navigation & workflows between WealthCentral and leading 3rd party technology providers”

But Schwab emphasizes that advisors don’t always need to think of workflows as something connected to a computer. It says the workflows are applicable to advisors regardless of which CRM system they use in their office, and even if they are not using a CRM at all.

“Workflows are essentially actionable road maps that guide advisors and their staff along a consistent and efficient route for common office tasks,” Hathi said in the release.


In addition to the 28 workflows, Schwab’s arsenal already includes five workflows customized for advisors who use Junxure CRM and five workflows for advisors who use SalesForce. The Workflow Library was first launched in October, and as of May 31 more than 250 advisor firms have downloaded nearly 500 workflows. See: Schwab connects CRM to account opening for RIAs.

But Schwab was too slow on the workflow trigger for Chris Cordaro, CEO of RegentAtlantic of Chatham, N.J.

Jon Patullo says workflows can encompass who makes the coffee and when for a client meeting.
Jon Patullo says workflows can encompass
who makes the coffee and when
for a client meeting.

“We adopted Microsoft CRM (Dynamics it’s now called) about eight years ago,” he says. “One of the features that we really liked about the program was the ability to build out workflows. We have 25 different workflows in our system. Everything from Roth conversion to cash needs. We continually revise and improve these workflows. If we waited for Schwab to develop best business practices for us we’d be five years behind.”

Indeed, CRM is not exactly artificial intelligence, so RIA firms themselves still have to play a big role to make this work, according to Winterberg.

“If workflows implemented in technology tools can automate actions traditionally completed by advisors, offices can run significantly more efficiently by removing dependencies on human input or action. Even if workflow diagrams are delivered in documents, someone who knows what they’re doing needs to properly program CRM or document management software to successfully execute those workflows.”

Jon Patullo | Bill Winterberg | Andrew Lin

Schwab | TD Ameritrade | ActiFi | Junxure | Salesforce | Signature Estate and Investment Advisors