When asking financial advisors about what they love most about their jobs, common answers include the ability to help clients live their best lives, the opportunity to build lasting relationships, and the intellectual challenge of analyzing complex planning problems. One answer that rarely makes the list is administrative work, which not only feels like drudgery in itself but also takes time away from more engaging tasks. Which explains why data from the Kitces Research Study on Advisor Wellbeing show a negative correlation between weekly hours spent on administrative work and wellbeing for Senior Advisors (i.e., those with higher administrative burdens tend to report lower levels of wellbeing).
Two options available to advisors for reducing this administrative burden include investing in technology (e.g., software that can automate or expedite tasks) and/or adding team support (e.g., hiring a Client Service Associate [CSA]). However, given the costs of either solution, advisors will want assurance that such investments actually reduce their administrative load – and ideally contribute to greater wellbeing.
Perhaps counterintuitively, data from our forthcoming Kitces Research on Advisor Technology – shared here as an early preview of the full study – indicate that solo firms investing more heavily in tech tools designed for administrative work do not consistently spend less time on this work or report higher levels of wellbeing. In fact, amongst Senior Advisors surveyed, adopting additional technology applications was actually negatively correlated with wellbeing. Importantly, this isn't a warning against adopting advisor technology tools altogether; rather, Kitces Research suggests that such tools are more effective when used to improve the client experience, allowing advisors to attract and serve higher-value clients that increase the firm's revenue productivity. Put simply, when technology is applied to enhance value rather than just to chase efficiency, greater efficiency often ends up following anyway!
By contrast, the data on adding team support tell a clear and consistent story: advisors with staff to support them spend less time on administrative work and are happier for it. For example, unsupported solo Senior Advisors spend 8.6% of their working hours on administrative tasks. That figure declines to 7.4% with the first support hire (typically a CSA) and further to 5.9% with the second hire (typically an Associate Advisor). In addition to reducing the advisor's administrative burden, these hires also expand capacity to bring on new clients (and the revenue they provide). In fact, Kitces Research data show that while the median unsupported solo advisor generates $182,500 in revenue, supported solo advisors generate more than $500,000! Together, these factors likely contribute to the finding that advisor wellbeing improves with the first hire and sees another boost with the second.
Ultimately, advisors looking to reduce their administrative burden – and improve their wellbeing in the process – are more likely to see greater returns from hiring support staff than from adding efficiency-focused technology. Nevertheless, because certain advisor technology tools can enhance client service (and, in turn, help attract higher-value clients who increase revenue productivity), investments in both areas can pay off for a firm's bottom line – and the advisor's wellbeing!
