The findings in this blog post come from our annual survey of over 1,800 registered investment adviser (“RIA”) firms conducted in the first quarter of 2021. This proprietary RIA in a Box study is paired with publicly accessible data provided by the Securities and Exchange Commission (“SEC”). The goal of our annual study is to understand different options that comprise each firm characteristic, and to determine whether specific characteristics impact the growth, size, or operational efficiency of an RIA firm. In this blog post, we will explore our survey results in response to document storage software systems used by RIA firms.
Proper documentation and storage are challenges RIAs of all sizes face. However, these tasks can be daunting, as advisors expand the size of their firms and headcount increases. Document accumulation is a natural product of firm growth so it is important to establish an efficient and scalable storage system early on. Fortunately, the market for cloud-based document storage solutions has expanded dramatically over the last decade. As it becomes more common for teams to work remotely and across multiple offices, cloud-based document storage solutions can help RIA firms meet regulatory compliance requirements, reduce hardware costs, streamline operations, and improve the client experience. Starting at around $10 to $20 per user per month, an advisor can benefit from secure cloud storage for all client files and firm documents, making document storage software a compelling return on investment to all investment advisory firms.
It’s also important to understand the common misconception between document storage and archiving. Document storage systems generally serve as the client file and general file storage systems for RIA firms. On the other hand, archiving solutions such as the MyRIACompliance Archiving and Review Platform are generally more focused on long term storage of client communications and advertising materials sent via email, posted on social media, displayed on a website, etc. Data storage and archiving technology systems are separate but essential systems for RIA firms.
Document Storage Systems Adoption Year Over Year
RIA Adoption Rate of Document Storage Systems
Following the adoption rate of customer relationship management (“CRM”) software at 53% of all RIA firms, 50% of surveyed RIA firms have adopted a document storage or management system. Like other core technology solutions, larger firms are much more likely to adopt a document storage solution compared to emerging firms. While document storage software penetration has plateaued in recent years, advisory firms are most likely to adopt a document storage solution first in relation to a CRM or financial planning solution. We attribute this purchase behavior to the essential nature of document storage systems, increased comfort with cloud-based solutions, and low upfront financial investment generally required. We continue to recommend that investment advisers use more secure, paid versions of cloud storage solutions when possible given the security features, operational efficiency, and robust back up capabilities.
RIA Document Storage Systems Adoption by Firm AUM Size
The Top RIA Document Storage Systems
In the past, Box and Dropbox have dominated the RIA cloud document storage space, but Microsoft has recently emerged as the industry leader with its cloud-based Office 365 document storage capability. There are also a handful of financial advisor-focused document storage solutions, such as Redtail and Docupace, that continue to gain increased adoption in the RIA space. RIA firms using Sharefile in their technology stack have dropped from 16% to 13% in the past year.
Both Box and Dropbox offer free consumer-focused versions for general storage solutions but are not specifically designed for the investment adviser or broader financial services industry. Advisors need to be selective as to which solution is the best fit for their firm as the task of changing document storage providers is typically cumbersome. RIA firms should also strongly consider document storage solutions with features designed to meet relevant regulatory requirements.
Firms utilizing our MyRIACompliance software platform benefit from our integration with Docupace, a digital document management system that uses government-grade encryption to maintain security. The integration allows a joint Docupace and RIA in Box MyRIACompliance® subscribers to leverage single sign-on to assess the Docupace Vault to consolidate their physical and digital records.
This post is the fourth of five blog posts that focus on the core technology solutions available to investment advisory firms. Our most recent post focused on portfolio management and reporting systems. In the final post, we will provide an analysis of our findings on financial planning solutions.